1 Ethical and Legal Issues in Selling Learning Objectives  Develop principles upon which to base ethical behavior.  Identify the sources of influence on ethics and ethical behavior.  Understand your role in maintaining the ethical position of the organization.  Discover what loyalty to the company requires in the event that your employees may be involved in questionable ethical behavior.  Recognize the implications of federal and local laws regarding ethical standards. Chapter 3

2  The basic message of their book is simple: You don’t have to cheat to win!  “Nice guys may appear to finish last, but usually they are running in a different race.”  Cheating, lying, and short-changing the customer on service may bring a satisfactory profit today, but it is a sure way to court failure for the future. Dr. Ken Blanchard and Dr. Norman Vincent Peale Authors of The Power of Ethical Management

3 Do Honest Salespeople Finish Last? The Origin of Ethics:  Legal standards are enforced by laws and statutes  Ethical standards come from society The Ethical Dilemma

4 Two Systems to Describe Ethical Thinking: 1.Deontological uses specific rules 2.Teleological defines right and wrong in terms of end results  Utilitarian: The greatest good for the greatest number Bases for Ethical Systems  Ethical ambivalence results from learning that everything is relative  Are there any moral absolutes?

5  Universal Nature  The Golden Rule  Everybody plays by the same rules  Truth Telling  Trust facilitates cooperation  Responsibility for one’s actions  Don’t blame others for your problems  The “victim” mentality Guidelines for Ethical Behavior

6  Company Code of Ethics  Government action and fear of retribution have convinced more companies to adopt a code  Typical issues covered: Expense accounts, gift giving, or unethical demands by a buyer  Examples Set by Colleagues and Competitors  The Bottom Line  Survival and Profit  Groupthink  Peer pressure  Gamesmanship  Winning for the sake of winning Influences on a Salesperson’s Ethics

7  Responsibility to Self  Responsibility to the Company  Accuracy in expense accounts  Honesty in using time and resources  Accuracy in filling out order forms  Responsibility to Competitors  Responsibility to Customers  Misrepresenting products and services  Keeping confidences  Giving Gifts and Entertaining Clients Developing A Personal Code of Ethics 7

8  Some cultures have different expectations  Global Rule of Thumb:  Salespeople should follow the laws of their country and the rules of their company Operating in a Global Environment

9 Whistle-Blowing  You may be held legally accountable for inaction  Recent rulings encourage whistle-blowing Ethics and Job Tenure

10  Some incentives encourage fudging  Management may not be accessible to help with ethical issues  Do control mechanisms exist for:  Customer complaints?  Salesperson dissatisfaction?  Expense accounts?  Are sales goals impossible?  Manage the distribution of sales territories fairly How the Company Treats the Salesperson

11  Sexual harassment cases filed with the EEOC have gone up 230 percent over the past decade Nearly 16,000 complaints per year  Look for a harassment policy including:  Company leadership  Immediate complaint investigation  Privacy rights protected  Thorough follow-up  Sensitivity training  Review training for comprehension  Periodic refresher courses Sexual Harassment

12 Five checkpoints in ethical decision making: 1.Is it legal? 2.Is it fair to all concerned? 3.Would I want someone else to act this way towards me? 4.How would I explain my actions to someone else? 5.How will it make me feel about myself? Ethics as Good Business

13 Remember…

14  Some legal traps  Quality below standard specified  Violation of delivery date  Pricing concessions  Incomplete or incorrect instructions  Misrepresentation of product usage  Slandering competitor  Kickbacks to buyers  Charges after the sale  Laws fall into broad categories  Monopolistic actions  Deceptive actions Legal Issues Facing the Salesperson

15  The Sherman Antitrust Act of 1890  The Federal Trade Commission Act of 1914  Unfair methods of competition in commerce  Unfair or deceptive acts or practices  The Robinson Patman Act of 1936  Defines price discrimination  Gives FTC the right to limit quantity discounts  Prohibits unfair promotional allowances  Brokerage allowances only go to independent brokers Specific Antitrust Laws and Their Sales Implications

16 Guidelines For Selling  Written or verbal offers to sell may be binding  Financing must be explained clearly and completely  Salesperson must know legal responsibilities of both parties  Warranties and guarantees  Express warranties are made by salesperson or in writing  Implied warranties  Are a result of state law  Unless a disclaimer is made Uniform Commercial Code (UCC)

17 Cooling-Off Law