Fred of Fred's Fabulous TV and Stereo Emporium and Sue of Sue's Electronic Supply

have been doing business with one another for over 10 years. Initially Fred was quite

happy with the relationship and found Sue's service to be excellent. Over the past year

and a half, however, shipments form Sue's Electronic Supply have been late with

increasing, and alarming, frequency. Fred has spoken to Sue about this, and while the

problem was solved for a short time, it has recently begun to be a problem again. On the

other hand, Sue's prices are the lowest that Fred has managed to find.

From Sue's perspective, the relationship also began as prosperous. Recently, however,

Fred has hired a new accounts payable clerk, who regularly misses the due dates for

payment and sends the money late. Sue also has suppliers and finds this inconvenient

and that her relationships with her suppliers are deteriorating. As was the case with Fred,

Sue has called and spoken to the clerk, which improved things briefly, but they shortly

reverted to late payments.

Last week Fred ordered a shipment of TVs and DVD players from sue in preparation for

a sale that he was having this past Saturday. He advertised the sale in the newspapers and

on television and had clowns and an elephant on hand. The shipment of merchandise did

not arrive on time and Fred was forced to give rain-checks to his customers. He believes

that he lost significant business. When he called Sue, she told him that she was still

waiting for payment from the last shipment, which was overdue, and was not at all

sympathetic.

In light of the foregoing, and assuming that direct negotiation between the parties has not

been successful, answer the following questions:

(a) List, and briefly explain, in chart form, the dispute resolution mechanisms

available to Sue and Fred and provide three advantages and disadvantages for

each (please explain your answers thoroughly).

(b) If you were advising Fred as to how to proceed, which one of the available

mechanisms would you suggest he select and why and which ones would you

reject, and why?