Question
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.
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?
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