RSS FeedAs companies battle the recession, bartering comes in handy
First posted on Commercial Law International on Feb 24, 2010.
By: Carsten Lexa
Money helps a lot when it comes to exchanging goods. One buys the goods, pays with cash and takes the goods away. So far, so good. But what if free cash to spend is a rare thing? For example in times like today, when the economy is not doing well and money is scarce?
Today, more and more companies turn to third party networks to contribute and use barter schemes. Of course, bartering is nothing new: It is a medium in which goods or services are directly exchanged for other goods and/or services without a common unit of exchange, e.g. money (according to Wikipedia). Firms routinely arrange exchanges on their own. But cultivating relationships with business partners in such a way, that barter schemes can be discussed and established among each others takes time and presents numerous hurdles. Let´s assume the owner of a restaurant needs printing services with a value of $ 10.000,00. Where can he find a printshop with an owner who is hungry for a $10.000,00 meal?
Formal barter schemes can help. One of the biggest providers for example is Bartercard, the largest exchange network with trades through its network worth more than $ 2 billion and 75.000 members in more than 9 countries. By using such a provider, the restaurant owner in the example above would owe $ 10.000,00 to the exchange network, not the printshop. The provider provides the business partners and makes sure that every member of the network honors the services of the other members. It therefore provides security and accountability, something informal bartering cannot provide in an adequate way.
What are the additional advantages of such barter schemes, other than security and accountability? The biggest advantage is the fact that no money is needed to “pay” for services and goods. Another one is the fact that a member can “buy” services first throught the network and pays later in his own services and goods – sometimes months later, if nobody wants his services or goods earlier. And finally such a scheme can work not only in one country, but – ideally – worldwide, as long as the members accept the scheme.
Even in Germany such barter schemes are tried and – especially among small and midsize compamies – found helpful. But currently, no big exchange networks exist. So, member of traditional business networks try to establish their own barter networks. Reason is that a company owner who knows another company owner through a traditional business network and has done business with him in a traditional way using cash will be more open towards doing barter transactions with this person than with a total stranger.
Is barter the holy grail for companies in recession times? Probably not. But it can be a helpful to do business if cash is scarce. The difficulty is to find the right partner.
For inquiries please contact the author: kontakt@kanzlei-lexa.de
Shell & The Elephant In The Room
First posted on Commercial Law International on June 9, 2009.
By Charles Wanguhu
A report by the Economist Intelligence Unit indicates that protecting a firm’s reputation is the most important and difficult task facing corporations. With the development of global media and communication channels, managing reputational damage is seen as crucial with events undertaken in even the remotest areas affecting the international brand of a corporation.
For Shell the stark reality of reputational damage is all too clear. After years and years of denial and expressing its innocence of the Ogoni affair (it still maintains its innocence), Shell has decided to settle a case brought against it out of court for a sum of 15.5 Million US $. The lawsuit had accused the company of colluding with Nigeria’s former military regime over the execution of Ken Saro-Wiwa and other peaceful anti-oil protesters.
Like Nike before it Shell remains in many minds as the poster child of a lack of corporate responsibility especially in big multinationals. The Saro Wiwa case is largely sited not only in commercial classrooms but across NGO conferences worldwide. Multinationals are viewed as bulldozing their way with the help of corrupt and dictatorial regimes to fulfill their interests with complete disregard to vulnerable communities.
The perception of Shell as the irresponsible corporate persists despite the fact that it has invested millions in engaging communities in areas that it works in and has increasingly taken on human rights in its business models and stakeholder engagement strategies.
In response to the case filed Malcolm Brinded, Shell’s executive director for exploration and production, was quoted,
“While we were prepared to go to court to clear our name, we believe the right way forward is to focus on the future for Ogoni people, which is important for peace and stability in the region.”
The settlement could be seen as a magnanimous move by Shell in some quarters with some already hailing the move as groundbreaking in terms of holding corporations accountable. However when looked at broadly the settlement will be seen as a coup for Shells PR team: instead of having weeks, months or even years of a contested trial where Shells actions or lack of thereof would be once again stirred up in everyone’s mind globally, a quick settlement offers a quick escape route.
All in all $15.5Million may well be considered a bargain when factoring in legal costs, reputation risks and lost revenue. There could well have been some champagne popped at Shell HQs but am sure downstairs in the legal department the wait is on with baited breath to see whether the floodgates have been open.
German Multinational Loses Teapot Battle
Have a cuppa.
First posted on Commercial Law International on April 3, 2009.
It is an understatement to say that the English take their tea very seriously. And it is little wonder why a small teashop in Surrey, England, even when faced with potential financial ruin, would not back down from a much larger German multinational. This is a tale about tea better yet teapots; a David and a Goliath; and lest I forget the rights to uses a logo.
Not long after the Tea Box opened, providing an up-market alternative to the run of the mill ‘main street’ coffee shop, it was faced with a legal challenge from a Duesseldorf based company. It would seem Teekanne, which happens to mean teapot in German, took exception to the hand painted teapot logo that Tea Box was using. Teekanne claimed that it was too similar to its own logo and could cause customer confusion.
What Teekanne wasn’t counting on – I guess they expected such a small time operation to be impressed by its sized and resources and cave in but this is the UK and we are talking a bout tea but I digress. What they were not counting on was that one of the UK’s leading intellectual property firms coming to the rescue of Tea Box. Withers & Rogers LLP took on the case pro bono- for my none legal people out there this means free. This is good to see, as a profession we need more of this. The words pro bono for lawyers as become all too often associated with criminal, civil rights, family or judicial review matters, please don’t read this as a dig at the lawyer who perform such work, they are doing a great community service, however, the community can also be served when commercial law firms take on such cases.
And now back to the story.
After receiving early indications from the UK Intellectual Property Office that it would likely rule in favour of Tea Box, Teekanne promptly withdrew, great for Tea Box but not so great for Teekanne. Not did it lose money from mounting this legal challenge but it also had the effect of improving the market awareness of the Tea Box brand. You could even say that for Tea Box Commercial Awareness Is Global – hahahhahah, sorry about the cheesy plug for the site but hey I am a future lawyer trying to carve out a niche for my self.
