Applying the legal principles of business management correctly is absolutely essential to minimize risk in today's fast changing global business environment. Effective managers must carefully, yet quickly and accurately analyze each situation, diagnose the correct problem and proceed to apply the correct legal solution. In this fast-paced, challenge wrought environment managers and the business organizations under their leadership need a legal framework that will help them make these critical decisions effectively. A case in point is the legal framework challenges facing Riordan Manufacturing.
Riordan is an international plastics manufacturer with 550 employees and $46 million in projected annual revenues. Riordan was initially founded in 1991 and has seen significant growth since its inception. Today Riordan is a global competitor in the plastics market with over 550 employees. Projected earnings exceed $46 million with an intense focus on manufacturing and sale of plastic beverage bottles, custom plastic parts, and plastic fan parts. Recently Riordan has made a strategic decision to move its China operations from Hangzhou to Shanghai within the next five years. This move will necessitate some strategic changes in the legal framework of Riordan Manufacturing and Riordan Industries. This paper will analyze the legal environment including opportunities and challenges of Riordan Manufacturing in the areas of alternative dispute resolution (ADR), enterprise liability, product liability, international law, tangible and intellectual property, legal forms of business, and governance to form a successful governance plan for the company to ensure a successful transition.
Alternative Dispute Resolution
There is a possibility of workplace conflict arising out of the location change in China as job losses in Hangzhou can cause distress for displaced employees. First Riordan must make certain that laying off the Hangzhou employees is in compliance with local laws. Secondly Riordan must have an ADR framework in place to deal with the potential conflicts arising from the lay-offs.
ADR which includes such processes as arbitration and mediation is a more efficient and cost-effective method of resolving workplace conflict than the formal system of presenting competing interests in court. Using ADR also tends to restore or enhance the general relationship between the disputants because the emphasis is largely on the community's or parties' interests, while litigation emphasizes defending conflicting positions. Additionally with ADR the parties develop the accord or resolution themselves and are therefore more committed to the success of the final agreement than the outcome of a lawsuit as ruled by a judge or decided by a jury. ADR also allows the disputants to craft a more creative and flexible resolution than one handed down from a court (U.S. Bureau of Land Management, 2006). Thus Riordan will need to put in place an ADR process that is in accordance with local laws yet can resolve any labor disagreements that can arise out of the relocation plan. Litteral & Finkel , the large international law firm that Riordan has on retainer should cooperate with the company's Chief legal Counsel, Lowell Bradford, to put this framework in place.
One specific method that could be helpful in the China relocation plan would be "interest-based Negotiation" also known as "Interest-based bargaining" and "mutual gains bargaining". Kaiser Permanente, one of the leading providers of managed healthcare in the United States, used this method successfully to ease tension between labor and management after numerous changes and a lay-off. This style of negotiation is based on fully understanding each participant's interests by using a variety of tools such as active listening, rephrasing for clarification, and brainstorming to reach agreement. One of the first advocates for this type of...