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Business conflicts are inevitable. Conflicts may range from small disagreements to big and costly disagreements. Sometimes, if left unattended, minor conflicts may easily become major conflicts, thereby creating devastating consequences for the parties involved.
Businesses may suffer reputational damage, time and resource wastage, and the loss of future investment opportunities (among other ramifications) from business conflicts (Davis, 2012). To avoid these consequences, many businesses prefer to avoid conflict altogether, as opposed to solving them.
However, some businesses are unsuccessful in doing so. The Trump Organization is one such entity that has failed to avoid conflict in the last decade.
This article delves into the intrigues of a recently concluded dispute between the organization and New York-based licensing firm, ALM Unlimited. This paper explains the details of the conflict, including the cost of the conflict, the resolution of the conflict, and the undertones of the disagreement.
Informed of its role in helping the flamboyant real estate developer, Donald Trump, to secure a lucrative clothing contract with Phillips-Van Heusen (PVH) Company, ALM Unlimited named the Trump Organization in a lawsuit for unlawful termination of remittances to its organization (Clarke, 2013). In its defense, the Trump Organization claimed it had wrongfully remitted payments to ALM Unlimited.
The company also said its payment to ALM Unlimited was supposed to be a one-off payment (McCoy, 2011). Moreover, according to Donald Trump, ALM Unlimited played a minimal role in helping the Trump Organization to secure the multimillion-dollar contract with PVH.
In his submissions at a New York court, Donald Trump revealed that his company had received above $3,000,000 in royalties from the contentious deal (Clarke, 2013).
Cost of the Conflict
The cost of conflict is the amount of money a party aims to gain or lose from a business conflict. However, Davis (2012) says that when businesses are in conflict, the cost of the conflict often transcends the amount of money quoted in lawsuits, or the fees paid out to the lawyers.
Instead, he says, “The financial and emotional effects, wasted time, and lost productivity of businesses and individuals contribute to the overall costs of conflict” (Davis, 2012, p. 32). An overexposure of conflict may further lead to more damages, especially when the warring parties have to do business with other companies.
Observers have said that the conflict between the Trump Organization and ALM Unlimited transcends the cost of litigation (McCoy, 2011). They argue that the Trump Organization largely bases its success from the strength of the “Trump” brand.
Therefore, an overexposure of the brand to business conflict paints a bad picture for the company because it hurts the business. McCoy (2011) affirms this fact when he says overexposure is bad for business because other organizations will be hesitant to do business with a defamed brand.
Despite the merit of these arguments, this paper acknowledges the importance of understanding conflict on a case-by-case basis. Stated differently, the business conflict between the Trump Organization and ALM Unlimited presents unique dynamics that inform its cost of conflict.
Concisely, based on the arguments advanced by the Trump Organization and ALM Unlimited, the amount of contention was about $75,000 annually. This is the cost of the conflict. This figure comes from the amount of money paid by the Trump organization to ALM Unlimited (since the two parties started business).
In detail, since the Trump organization entered into the clothing business with Phillips-Van Heusen, it has paid about $350,000 to ALM. The organization made these payments between 2004 and 2008 when it stopped the payments (this has been a four-year stretch).
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Based on calculations of the amount received by ALM international over the four-year stretch, the company wanted periodical payments of $75,000 annually.
Resolution of Conflict
Businesses choose to resolve conflicts in different ways. Some choose to resolve conflicts through personal agreements (business-to-business agreements); others choose to identify an arbitrator to mediate the conflict, while many businesses seek a legal solution to conflict resolution. The conflict between the Trump Organization and ALM Unlimited ended through a legal solution.
A Supreme Court judge, based in New York, ruled that the Trump Organization had no case to answer in the above-mentioned business conflict (Clarke, 2013). The judge sidestepped a sitting jury, which heard the case for close to a week, by issuing a direct order that dismissed the case because of lack of sufficient evidence to show that the two organizations had a binding contract. This ruling ended the four-year conflict.
It is often difficult to predict the ramifications of business conflicts, or their end. However, for ALM Unlimited and the Trump Organization, their conflict was resolved through legal means, without any serious ramifications for any of the parties. The resolution of conflict through the courts should however be regarded as a last resort for doing so because less expensive and expeditious methods exist for solving such conflicts (outside courts).
Arbitration is one example of an inexpensive and expeditious process for solving business conflicts. Nonetheless, regardless of the nature or magnitude of business conflicts, they should be resolved expeditiously because delaying the conflict resolution process only worsens the outcome.
Clarke, K. (2013). The Donald Triumphs at Trial over Clothing Royalties. Web.
Davis, P. (2012). A model for strategy implementation and conflict resolution in the franchise business. Strategy & Leadership, 40(5), 32 – 38.
McCoy, K. (2011). Donald Trump Faces Lawsuits over Business Deals. Web.