Ch 4 Dispute Resolution.docx

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Management and Organizational Studies
Management and Organizational Studies 2275A/B
Frederick King

Dispute Resolution 10/24/2012 7:08:00 PM Chapter 4 Business Activities and Legal Disputes  Business operations – both internal and external – involve numerous interactions that have potential legal consequences examples; o Car accident – must report incident & number of injuries to insurer o Bylaw change – must properly implement amendments proposed by bylaw o Delinquent customer – refusal to pay; management should explore procedure to limit this from happening again ex. Extending credit period  By planning for several risk situations that did in turn end up occurring, a legal dispute is unlikely Resolving Disputes Through Negotiation  Clarification of the Situation o The first step for a manager faced with an apparent conflict is to investigate the situation to determine the nature and extent of the dispute  Manager should contact individuals involved in his own organization and the appropriate people on the other side, to clarify the situation before formulation an approach to the resolution  Managers must set priorities, decide which disputes justify the use of the firms resources, and determine when legal advice is required o Negotiation – a tool that owners and mangers can use effectively to assess, evaluate, and develop resolutions to legal disputes on a relatively informal and inexpensive basis o The goal is to reach a fair and acceptable outcome – most resolution are an informal method  The Negotiating Process o Negotiating an end to the dispute should become managements focus once a good understanding of the dispute has been achieved o Success of negotiations depend on:  The willingness of the parties to compromise and negotiate in good faith  The nature and significance of the dispute  The priority the parties give to its resolution  The effectiveness of those involved in the negotiations  When Negotiations Fail o In the majority of disputes, parties reach settlement informally, often without the involvement of lawyers o In situations that cannot be resolved informally, the business is faced with a difficult choice – cut its losses OR risk the expenditure of more time and more money (suing or getting sued) Alternative Dispute Resolution  How Alternative Dispute Resolution works o ADR – a range of options for resolving disputes  Most common forms of ADR are mediation and arbitration – both involve a person who is independent of the parties and who is experienced in resolving disputes  Mediator – a person who helps the parties to a dispute each a compromise  Arbitrator – a person who listens to both sides of a dispute and makes a ruling that is usually binding on the parties  Binding – final and enforceable in the court o Arbitration is usually chosen by the parties before a dispute arises o Mediators and Arbitrators are often lawyers or retired judges  ADR is likely to be successful when: o Parties wish to maintain commercial relationship o Dispute is complicated – litigation would be costly o Parties need a quick resolution  ADR has worked effectively: o Commercial contract matters o Personal injuries
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