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To: Walter High who wrote (1479)	2/9/1998 12:33:00 PM
From: Robert Graham	Respond to of 164684

Yes, this is what I am referring to. It is the sheer size of B. Daltons orders and how they can be used to to provide a book distributor (increased) business, or take it away, is why the book distributor thinks it is in their best interest for writing off the amount B. Dalton owes as a percentage on the dollar. The book distributor business from my experiences is a very small margin business. So they would not write a large portion off without being promised something in return. So I thinkk you brought up a good observation here. Still, talking to the A/R clerk who handles the B. Dalton account, I noted fear in losing the account altogether was a factor. So I think B. Dalton does us this fear of the book distributor losing the account as a component in its renegotiation of the business. This tends to be a normal part of renegotiation if a company can use this to their advantage. Negotiation and renegotiation is a very common business practice. Each side pursues an equitable arrangement, so for the business relationship to work out, the results of the negotiation need to be financially equitable for both parties. Also, many different means are used in the negotiation process to arrive at an equitable arrangement. However, the businesses which represent a significant part of another company's revenue can indeed negotiate a position that is more profitable to them compared with the arrangement they would normally end up with. IMO renegotiation of ones debts is not the same thing as defaulting. The book distributor would agree to only what is in thier best interest. Now if the book distributor told the bookseller in so many words to "go to hell", and then the bookseller did not pay their debts, this would be defaulting on their previously made credit arrangements. However, as someone has stated here earlier, this business proactice is not condusive to healthy business relationships and can work against them if knowlege of their business practice gets around. There is allot of nonesense that goes around the business world that many would consider unethical business practices, and being done even by the larger and more successful businesses out there. Look at the high-tech sector which IMO is rampant with unethical practices in comparison to other industries that I have come across. How about the practice of sending unordered product to a client so the company can report bogus revenue, but they conveniently send to the same client what is termed as a "side letter" which states that the client can return the product at no hassle and no charge which of course many do. How about the press generated through the corporate PR machine of all of the new clients that the company has signed up implying these arrangements are actual sales. In reality they are agreements for the client to take a look at the product for their purposes with no obligation to purchase. When they do purchase, they are given very generous credit terms which will impact the selling company's bottom line, but still shows up as revenue in the form of A/R. These practices are too commonly used by the high tech sector. What about AOL's illegal amortization of substantial advertisements costs that inflated their profit on their books. Later they were caught and had to back this out. Still their stock is in demand by the investor. It is as though people want to be lied to because afterward they still respond favourably. Then there is the continuing practices by some mailorder booksellers that charge the customer for out of stock items. This business practice has been made illegal on the Federal level because in the past many were doing this just to not fill the backordered item and leave the customer with the charge. The above are just some examples off the top of my head of the more popular business practices that I think many would consider unethical. Such is life in the world of competition and survival of a business. Some are just more agressive than others in pursuing their self-interests and move beyond that "grey area" of business ethics into strictly unethical and even illegal business practices. Bob Graham