Business dispute resolution and key legal principles

Business Dispute

The nature of disputes in business is varied and in some instances they come because of the wrong performance of people. Let us take the case of Mr. Coughlin who retired from Wal-Mart in January finally gave his resignation from the board of directors on March 25th. According to Wal-Mart there was a pattern of expenses account abuses by him, as also the use of incorrect invoices for getting reimbursement of expenses. This action has been accompanied by the sacking of a few other employees also. The investigation into the matter is being carried by the U.S. attorney for the Western District of Arkansas. The matter is also being investigated by Wall Street Journal and they feel that Mr. Coughlin often forced his subordinates to create false bills so that he could get payments for his personal expenses from Wall-Mart. He is now 55 years old and this mode of working has been used by him for more than 5 years and got him payment for hunting vacations, a $1,359 pair of alligator skin boots tailor made for him, as also a $2,590 dog pen for his house. This activity is certainly not expected from a person of the stature of Mr. Coughlin who had earned over $6 million during last year. (Bandler; Zimmerman, 2005)

According to statements released by Wal-Mart the total of such deals entered by Mr. Coughlin is between $100,000 and $500,000. A lot of these activities were centered on the "union project" being handled by the executive. The statement made by Mr. Coughlin to some other fellow employees of Wal-Mart was that the money was required for enticing some employees of Wal-Mart to talk about the activities within the union. The concerned invoices were claimed to be fake but was a method of compensating him for the expenses that he had incurred for paying the concerned employees to talk on the matter. These are all compensations for out of pocket expenses, he claimed. Again paying union leaders for collecting information is a criminal offense as per the existing laws -- under the federal Taft-Hartley Act. This would again bring into question the anti-labor policies being followed by the organization which has been under a cloud for some time. The anti-labor attitude of Wal-Mart has been quite clear since the time the company has been run by Mr. Walton, and that was in 1962. This attitude to labor has given the entire retail industry a very poor image with regard to the retail industry. They have all had to compete with Wal-Mart in prices and that has not been easy. (Bandler; Zimmerman, 2005)

Now let us look at the question of how this rock bottom price is being maintained. Take the case of a gallon-sized jar of whole pickles. This looks almost like an aquarium filled by fat, green pickles. They float within the juice and their shapes are changed by the glass surrounding them. The weight is high - 12 pounds and one cannot carry it with one hand. This entire show is of abundance and is a show of excess, unlikely to be used by the household. Yet the product is an item that Wal-Mart loves and this is called Vlasic's gallon jar of pickles. Certainly the selling of the product is a service by Wal-Mart is a help to their customer, if the customers can use the product as their prices are lower than the price for a quart by most other grocers in the country. At the same time, was it a service for Vlasic? They had spent a number of years getting into the market and establishing their own brand name so that they could get a higher price from the customers. When they started selling from Wal-Mart, it seemed as if they were giving them free. This price led to a lot of purchases from Wal-Mart and that caused a lot of difficulties for the manufacturer. This large jar is giving the manufacturer high figures of sales but is not giving them enough profits, as no manufacturer can make much of profits at that price. It also forced down the prices of pickles also of other manufacturers. The sales from Wal-Mart made the company consume about 30% of the production of pickles from Vlasic. Yet, the profits from pickles of Vlasic had come down very fast -- at least by 25%. This is millions of dollars according to experts. Let us look at the contribution of the company to American retail industry and yet it does not have the largest number of stores. (Fishman, 2003)

The previous chain of The Great Atlantic & Pacific Tea Co. had the largest number of shops all over the country and those numbers have never been repeated. When that group was at its best, it had five times the number of shops that Wal-Mart has now. Of course those shops were smaller in size, but still it had been controlling about 80% of the entire business that was being controlled by the supermarkets. There are now many laws against predatory pricing and many of these had come from the attempts of A&P attempts to muscle over its suppliers. Today, the same sort of problems is being created by Wal-Mart. It is not only a large retailer but it is also the largest company in the world being bigger than Exxon Mobil, General Motors and General Electric. In terms of sales it has sold goods worth more than $244.5 billion in the previous year. Among the retailers, it sells in three months what Home Depot sells in a year and Home Depot is the second largest company. In the category of general merchandise and groceries, it sells more than the total of Target, Sears, Kmart, JC Penny, Safeway and Kroger. (Fishman, 2003) Yet it is a company that breaks all types of civil laws to maintain its position.