Ethics First…Then Customer Relationships Chapter 2 McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.

2-3 2 Chapter

2-4 Main Topics  Social, Ethical, Legal Influences  Management’s Social Responsibilities  What Influences Ethical Behavior?  Are There any Ethical Guidelines?  Management’s Ethical Responsibilities  Ethics in Dealing with Salespeople 2 Chapter

2-5 Main Topics  Salespeople’s Ethics when Dealing with Their Employers  Ethics in Dealing with Customers  The International Side of Ethics  Managing Sales Ethics  Ethics in Business and Sales  The Tree of Business Life 2 Chapter

2-6 Social, Ethical, and Legal Influences  An organization’s environment is a major influence on how the firm sells its products.  Due to the environmental turmoil in the world of commerce, this chapter is arguably the most important in the entire book.  Begin by asking, “Does an organization have any responsibilities to society?”

2-7 Social, Ethical, and Legal (SEL) influences have a powerful effect on an organization’s marketing program! Exhibit 2-1

2-8 Management’s Social Responsibilities  Social responsibility is management’s obligation to make choices and take actions that contribute to the welfare and interests of society as well as to those of the organization.

2-9 Organizational Stakeholders  A stakeholder is any group inside or outside the organization that has a stake in the organization’s performance.  Stakeholders may have similar or different interests in the organization:  Customers  Community  Creditors  Government  CCC GOMES  Owners  Managers  Employees  Suppliers

2-10 mployees ustomers ommunity reditors overnment wners anagers uppliers Exhibit 2-2: Major Stakeholders in the Organization’s Performance (CCC GOMES) C C C G O M E S Organization

2-11 An Organization’s Main Responsibilities  Economic - be profitable  Legal - obey the law  Ethical - do what is right  Discretionary - contribute to community and quality of life

2-12 Exhibit 2-3: An Organization’s Main Responsibilities

2-13 What Influences Ethical Behavior?  The Individual’s Role  Level one: Pre-conventional – acts in own best interest  A few operate here  Level two: Conventional – upholds legal laws  Most people operate here  Level three: Principled – lives by own code  Fewer than 20% reach level three  The Organization’s Role  At best, most employees in firm operate at level two  How will the situation be handled if no policies and procedures are in place?

2-14 Exhibit 2-4: What Is Your Level of Moral Development?  Preconventional - “What can I get away with?”  Conventional - “What am I legally required to do?”  Principled - “What is the right thing to do?”

2-15 Exhibit 2-5: Moral Development Bell Curve

2-16 Are There Any Ethical Guidelines?  What Does The Research Say?  American adults said by a 3-to-1 margin that truth is always relative to a person’s situation.  People are most likely to make their moral and ethical decisions based on:  Whatever feels right  Comfort in a situation

2-17 How Do You Make Your Moral-Right or Wrong Choices? (Choose One)  Whatever will bring you the most pleasing or satisfying results  Whatever will make other people happy or minimize interpersonal conflict  Values taught by your family  Primarily from religious principles and teaching or Bible content  Other

2-18  What if you found a bank bag containing $125,000? Would you return it to the bank?  Is it fear of being caught?  Not the right thing to do? What Does One Do?

2-19  Out of class, is it okay to copy someone else’s homework assignment?  What keeps you from cheating on an exam when the professor is out of the room?  Is it fear of being caught?  Not the right thing to do? What Does One Do?, cont…

2-20  We all have an internal ultimate moral standard we use to measure good and evil, right and wrong – some people call that their “conscience.”  Most of us know we should return the $125,000 and not copy someone’s homework.  But what would we actually do? Is Your Conscience Reliable?

2-21 Is Your Conscience Reliable?, cont…  If a person’s values are at “Level 2,” they may make decisions based on the situation and what others say and do.  Usually people rationalize their decisions; “I’ll only copy the homework this one time.”  Many people are so accustomed to doing things unethically that they think nothing about it.

2-22 How Do You Know if What Someone Is Saying Is True or Not?  Can there be a moral and ethical standard?  There is no way for you to know if what I am saying is true unless you know what is the truth, and  There is no way to know what is the truth unless there is a truth you can know.

2-23 Exhibit 2–6: How Do You Know Which Fork in the Road to Take? You Need a Moral Compass! “When you come to a fork in the road, take it.” YOGI BERRA

2-24  Factors influencing decisions include friends, family, or things seen on television or in the movies.  Barna Research has found that the leading influences on American ethics are movies, TV, the Internet, books, music, public policy, law, and family. Sources of Significant Influence

2-25 Three Guidelines for Making Ethical Decisions  A standard that: 1.Never changes 2.Offers a fixed point of reference 3.Is separate from you

2-26  Stars can be used for navigation because they are a fixed point of reference separate from you that no one can influence A Fixed Point of Reference You need a fixed point of reference separate from you that no one can influence.

2-27 The Fixed Point of Reference Must Be:  Right, whether people:  Believe it or not  Like it or not  Know about it or not

2-28 What Is a Fixed Point of Reference?  A fixed point of reference refers to something that provides the correct action to take in any situation and never gets tailored to fit an occasion.  How do you know which fork in the road to take?  You need a moral compass!

2-29 Will The Golden Rule Help?  The “Golden Rule” concept is present in virtually all faith-based principles.  The Golden Rule does not involve reciprocity.  “Could the Golden Rule serve as a universal, practical, helpful standard for the businessperson’s conduct?”  Would you consider your faith a fixed point that is separate from you and never changes?

2-30 Exhibit 2-7: World Religions Embrace the Golden Rule  Hindu Mahabharata, “Do naught unto others what you would not have them do to you.”  Confucius, “Do not do to others what you would not like yourself.”  Buddhist UdanaVarga, - “Hurt not others in ways that you yourself would find hurtful.”  Rabbi Hillel, “That which is hateful to you do not do unto your neighbor.”  Jesus Christ, “Do to others as you would have them do to you.”

2-31 Exhibit 2–8: What Is Your Moral Compass in Life?

2-32 Management’s Ethical Responsibilities  Ethics is the code of moral principles and values that govern the behaviors of a person or a group with respect to what is right or wrong.  Ethical behavior refers to treating others fairly.

2-33 Management’s Ethical Responsibilities  Ethical behavior refers to treating others fairly.  Being honest  Maintaining confidence and trust  Following the rules  Conducting yourself in the proper manner  Demonstrating loyalty and responsibility  Carrying your share of work

2-34 What Is an Ethical Dilemma?  A situation in which each alternative choice or behavior has some undesirable elements due to potentially negative ethical or personal consequences

2-35 Ethics in Dealing with Salespeople  Five ethical considerations faced by sales managers:  Level of sales pressure  Decisions affecting territory  To tell the truth?  The ill salesperson  Employee rights  Termination-at-will  Privacy  Sexual harassment

2-36 What Rights Do Employees Have?  Termination-at-will  Must now have accurate records which lead to employee’s termination  Privacy  Non-job-related information is being taken out of personal files by employers  Cooperative acceptance  Employees are protected by law from acts of discrimination and sexual harassment

2-37 Benefits of Respecting Employees Rights  More productive employees  Attracting good sales personnel  Reducing legal costs  Reducing wage increase demands

2-38 Salespeople’s Ethics in Dealing with Their Employers  Misusing company assets  Moonlighting  Cheating  Affecting other salespeople  Technology theft

2-39 Ethics in Dealing with Customers  Bribes  Misrepresentation  Price discrimination  Robinson-Patman Act  Selling the same quantity of the same product to different buyers at different prices  Tie-in sales  To buy a particular line of merchandise, a buyer maybe required to buy other, unwanted products  Clayton Act

2-40 Ethics in Dealing with Customers, cont…  Exclusive dealership  Reciprocity  Buying a product from someone if the person or organization agrees to buy from you  Sales restrictions  Cooling-off laws  Green River ordinances

2-41 The International Side of Ethics  Guidelines for conducting international business may be different or even nonexistent.  Despite laws in other countries, U.S. firms are subject to U.S. laws.  It is important to keep up-to-date on the law and be aware of how authorized representatives are conducting business.

2-42 Managing Sales Ethics  All managers feel they face ethical problems  Most managers feel their employees need to be more ethical  Managers are more ethical with their friends than with people they know  Even though they want to be more ethical, some managers lower their ethical standards to meet their goals

2-43 Managing Sales Ethics, cont.  Managers are aware of unethical practices in their industry and company ranging from pricing discrimination to hiring discrimination  Business ethics can be influenced by an employee’s superior and the company’s environment

2-44 Managing Sales Ethics, Exhibit 2-12: Top-Level Management Sets the Climate for Ethical Behavior  Follow the leader  Leader selection is important  Establish a code of ethics  Create ethical structures  Encourage whistle-blowing  Create an ethical sales climate  Establish control systems

2-45 Ethics in Business and Sales  Personal project for you this week:  Using the three levels of moral development, score each ethical or moral decision you make this week.  Do you have a pattern of using different moral development levels for different decisions?  What is a moral or ethical issue for you?

2-46 Helpful Hints to Making Career Decisions  Your employer should provide worthwhile products.  You should be able to do what is right.  You do not have to compromise your beliefs.  People go before anything else.  Good people are desperately needed in all types of businesses/organizations.  Look for a calling, not a job.*

2-47 Do Your Research to Find an Ethical/Moral Employer: Is the Employer’s...  Mission to serve?  Vision based upon the Golden Rule?  Values based upon integrity, trust, and character?  Foundation based upon service?  Cornerstone love of people?

2-48 FUTRELL CORPORATION Preparing People for the 21 st Century Exhibit 2-13: What Do You Look for in an Employer?

2-49 Exhibit 2-14: The Tree of Business Life I T C T TT TTTT TTTT Ethical Service Builds T r u e Relationships The Tree is rooted in:  Integrity: being honest and without compromise or corruption  From integrity flows confidence that one can trust the other  Integrity and trust form the attributes often referred to as character Framed by:  Ethical Service that Builds True Relationships Shown with T’s standing for:  Truth: facts needed to make ethical and moral decisions

2-50 Tree of Life + Golden Rule  Measure the growth of your Business Tree of Life with your Golden Rule of Personal Selling I T C T TT TTTT TTTT Ethical Service Builds T r u e Relationships

2-51 Ethics Rule Business Customer

2-52 Summary of Major Selling Issues  Ethical behavior pertains to values of right and wrong.  Ethical decisions and behaviors are typically guided by a value system  An important individual characteristic is one’s level of moral development.  Corporate culture is an organizational characteristic that influences ethical behavior.

2-53 Summary of Major Selling Issues, cont…  Social responsibility in business means profitably serving employees and customers in an ethical and lawful manner.  Ethical standards and guidelines for sales personnel must be developed, supported, and policed.  Research suggests that socially responsible organizations perform as well as – and often better than – organizations that are not socially responsible.

End of Chapter 2 Chapter 2 McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.