1. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-1

2. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-2 Chapter 3 Social, Ethical, and Legal Issues in Selling

3. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-3 Chapter 3 Management’s Social Responsibilities What Influences Ethical Behavior Management’s Ethical Responsibilities Ethics in Dealing with Salespeople Salespeople’s Ethics when Dealing with Their Employers Ethics in Dealing with Customers The International Side of Ethics Managing Sales Ethics

4. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-4 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

5. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-5 Organizational Stakeholders A stakeholder is any group within or outside the organization that has a stake in the organization’s performance Each stakeholder has a different interest in the organization Customers Community Creditors Government Owners Managers Employees Suppliers CCC GOMES

6. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-6 An Organization’s Main Responsibilities Economic--be profitable Legal--obey the law Ethical--do what is right Discretionary--contribute to community & quality of life

7. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-7 What Influences Ethical Behavior? The Individual’s Role The Organization’s Role Level one: Preconventional--acts in own best interest Level two: Conventional--upholds legal laws Level three: Principled--lives by own code A few operate here Most people operate here Less than 20% reach level three At best, most employees in firm operate at level two How will handle situation if no policies and procedures?

8. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-8 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 Ethics sets standards as to what is good or bad in conduct and decision making Ethical behavior refers to treating others fairly

9. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-9 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

10. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-10 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

11. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-11 Salespeople’s Ethics in Dealing with Their Employers Misusing company assets Moonlighting Cheating Affecting other salespeople Technology theft

12. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-12 Ethics in Dealing with Customers Bribes Misrepresentation Price discrimination Tie-in sales Robinson-Patman Act Selling the same quantity of the same product to different buyers at different prices To buy a particular line of merchandise, a buyer may be required to buy other, unwanted products Clayton Act

13. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-13 Ethics in Dealing with Customers Exclusive dealership Reciprocity Sales restrictions Buying a product from someone if the person or organization agrees to buy from you Cooling-off laws Green River ordinances

14. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-14 The International Side of Ethics Guidelines for conducting international business may be different or even nonexistent It is important to keep up to date on the law and be aware of how authorized representatives are conducting business

15. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-15 Managing Sales Ethics Follow the organization’s leader Leader selection is important Establish a code of ethics Create ethical structures Encourage whistle-blowing Create an ethical sales climate Establish control systems

16. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-16 Summary of Major Selling Issues Ethical behavior pertains to values of right and wrong Ethical decisions and behavior 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

17. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3-17 Summary of Major Selling Issues cont… 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 Social responsibility in business means profitably serving employees and customers in an ethical and lawful manner