Litigation in the Company’s Strategy

Abstract

Many CEOs would agree with Balzac’s concept that a bad settlement is better than a good trial. In business culture, law and management are two different fields that must be kept separate. Law is considered a burden which slows down business tempo, obstructs initiatives, pushes up costs, and, in the worst cases, leads businessmen to be convicted and jailed. This chapter disproves this traditional approach and demonstrates that law may provide companies with additional levers for the benefit of their strategic management. It especially focuses on litigation strategies, which are of the utmost interest when it comes to illustrating how existing legal norms may enhance very different market strategies, be they domination costs strategies or differentiation strategies. Litigation strategies are first considered from a defensive perspective. Based on the case of the well-known French company LVMH, the chapter explains how litigation strategy rooted in competition law may be used to create and preserve core assets such as reputation and other intangible ones. The chapter also deals with offensive strategies. In the field of cost domination strategies, the author describes how liability provisions have been implemented by a French delivery service to contain unbearable rising costs, preserve margin rates, and stay ahead of competitors. The chapter then turns to differentiation strategies with the case of the Leclerc Group’s communication strategy. Since the very beginnings of the company, lawsuits by competitors or regulatory authorities have been utilized as an efficient lever to regenerate the differentiation strategy of the group.