Ethics First…Then Customer
Relationships
McGraw-Hill/Irwin
Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter
2
2-3
Chapter
2
Main Topics
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2-4
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
Chapter
2
Main Topics
 Salespeople’s Ethics when Dealing with Their
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2-5
Employers
Ethics in Dealing with Customers
The International Side of Ethics
Managing Sales Ethics
Ethics in Business and Sales
The Tree of Business Life
Chapter
2
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?”
2-6
Exhibit 2-1
on an
have
a
Social,
ethical,
and
organization’s
marketing
effect
legal powerful
(SEL)
influences
program!
2-7
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.
2-8
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
Owners
 Community
Managers
 Creditors
Employees
 Government
Suppliers
 CCC GOMES
2-9
Exhibit 2-2: Major Stakeholders in the
Organization’s Performance (CCC GOMES)
Customers
S uppliers
Employees
C ommunity
Organization
Managers
G overnment
O wners
2-10
Creditors
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
2-11
Exhibit 2-3: An Organization’s Main
Responsibilities
2-12
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?
2-13
Exhibit 2-4: What Is Your Level of
Moral Development?
 Principled - “What is the right
thing to do?”
 Conventional - “What am I
legally required to do?”
 Preconventional - “What can I
get away with?”
2-14
Exhibit 2-5: Moral Development Bell Curve
2-15
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
2-16
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
2-17
What Does One Do?
 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?
2-18
What Does One Do?, cont…
 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?
2-19
Is Your Conscience Reliable?
 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?
2-20
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.
2-21
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.
2-22
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
2-23
Sources of Significant Influence
 Factors influencing decisions include friends,
family, or things seen on television or in the
movies.
 Barna has found that the leading influences on
American ethics are movies, TV, the Internet,
books, music, public policy, law, and family.
2-24
Three Guidelines for Making Ethical
Decisions
 A standard that:
1. Never changes
2. Offers a fixed point of reference
3. Is separate from you
2-25
A Fixed Point of Reference
need a
point of because they
 Stars can You
be used
forfixed
navigation
reference separate from you
are a fixed point of reference separate from
that no one can influence.
you that no one can influence
2-26
The Fixed Point of Reference Must Be:
 Right whether people:
 Believe it or not
 Like it or not
 Know about it or not
2-27
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!
2-28
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?
2-29
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.”
2-30
Exhibit 2–8: What Is Your Moral Compass in
Life?
2-31
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.
2-32
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
2-33
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
2-34
Benefits of Respecting Employees Rights
 More productive employees
 Attracting good sales personnel
 Reducing legal costs
 Reducing wage increase demands
2-35
Salespeople’s Ethics in Dealing with Their
Employers
 Misusing company assets
 Moonlighting
 Cheating
 Affecting other salespeople
 Technology theft
2-36
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 may
 Clayton Act
2-37
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
2-38
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.
2-39
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
2-40
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?
2-41
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.*
2-42
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?
2-43
Exhibit 2-13: What Do You Look for in an
Employer?
FUTRELL CORPORATION
Preparing People for the 21st Century
2-44
Exhibit 2-14: The Tree of Business Life
T
T T
T T TT
T T T T
Builds
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
Relationships
Shown with T’s standing for:
 Truth: facts needed to make
ethical and moral decisions
2-45
Tree of Life + Golden Rule
T
T T
T T TT
T T T T
Builds
Relationships
2-46
 Measure the
growth of your
Business Tree of
Life with your
Golden Rule of
Personal Selling
Ethics Rule Business
Customer
2-47
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.
2-48
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.
2-49
End of Chapter 2
McGraw-Hill/Irwin
Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter
2