What are “ethics?”

1. What are “ethics?” • “standards of moral behavior or professional conduct” • To act in an ethical fashion is to conform to some standard of moral or professional behavior.

2. Unethical vs. Illegal • There is a difference between something that is illegal vs. unethical. • For some people, the law is their code of ethics—if it’s legal, then it’s ethical. • Many laws governing business practices are never enforced—one can violate these laws rather safely, often to great personal advantage. • Would you do something illegal that is to your advantage if you thought it was safe to do so?

3. Ethical Trends • Most business schools now have one or more courses in business or professional ethics. • Many practices that were once legal are now illegal because government standards have tightened. • The actions of executives and government officials are scrutinized more closely than ever before (“open press” environment). • A recent survey showed 84% of U.S. companies have a written code of ethics.

4. Why are salespeople under more ethical pressure? • They work largely unsupervised (many actions made be hidden from or ambiguous to the manager). • They are under increased pressure because they generate the firm’s revenues. • They are evaluated on short-term objectives. • The job requires quick-thinking and unique solutions.

5. The Pressure to Compromise • It is easy to be ethical when no hardship is involved—a person’s true ethical code emerges when under difficulties or pressure. • Many people believe that in order to advance in an organization they must occasionally do something unethical. • Survey says…89% of reps have given gifts in excess of $100 to gain favor with a potential client; 50% of reps admit to taking part in some kind of unethical activity while on the job

6. House Accounts • “a large or important account that contributes a significant portion of a company’s sales volume or profit • Is it fair or professional for managers to “take over” large profitable accounts that sales reps work hard to build up?

7. Gift Giving • Do generous gifts to clients put them under increased pressure to do or continue to do business with your company? • Guidelines—(1) Never give a gift before an order is placed; (2) Do not give gifts to a client’s spouse or family members; (3) Keep the value of gifts low (the company may set a limit on the maximum dollar amount of a gift) to avoid the appearance of undue influence.

8. Entertainment • Try to determine how the customer feels about being entertained. • Keep the entertainment appropriate to the customer. • Do not use entertainment solely as the means of closing the sale or keeping the account.

9. Questions to Evaluate Ethical Dilemmas: • Is this a “quick fix” or will it also be sound behavior over the long run? • Would I do this to a friend? • Would I like to have this done to me? • Would I want this action publicized in the media? • Would I voluntarily tell others about it? • What parties will be damaged by this action?

10. Legal Issues—Price Discrimination • Firms normally cannot make price discounts available to one customer without making them available to all customers. • Governed by the Robinson-Patman Act (1936)—price differences must be based on cost differences; otherwise price discrimination is illegal

11. Bribery • “the payment of money or gifts to get or retain a customer” • Illegal under U.S. law • Foreign Corrupt Practices Act of 1977—it is illegal for U.S. business people to offer bribes to foreign officials • Amended in 1988 by the Omnibus Trade and Competitiveness Act—facilitation payments (small sums of money) to low-ranking officials to expedite processes are allowed

12. Green River Ordinances • Passed by towns or local communities • Require all firms doing business in an area to have a local business license. • Protect residents from unethical or high pressure selling tactics.

13. Cooling Off Laws • Proved a short period (usually three days) when buyers of goods from door-to-door or in-home sales reps can: (1) cancel the contract; (2) return the merchandise; and/or (3) obtain a full refund.