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CHAPTER 3
Ethics First… Then Customer Relationships
LECTURE OUTLINE
I. WHAT INFLUENCES ETHICAL BEHAVIOR?
A. The individual’s role:
1. People behave differently because of their:
a. Worldviews - people's different beliefs about the world around
b. Morals - people's adherence to right or wrong behavior and right or
2. Individuals usually can be placed into one of three levels of moral
development:
a. Pre-conventional — an individual acts in one’s own best interests,
b. Conventional — individual conforms to expectations of others.
c. Principled — an individual lives by an internal set of morals,
B. The organization’s role is often characterized by pre-conventional or
II. ARE THERE ANY ETHICAL GUIDELINES?
A. What does the research say?
1. American adults said by a 3-to-1 margin that truth is always relative to a
2. People are most likely to make their moral and ethical decisions on the
B. What does one do?
1. What would you do if you found a bank bag with $125,000? Would you
2. What would you do if you found a wallet? Why might you be more
3. Out of class, is it alright to copy someone’s homework assignment even
when the course syllabus states that you have to do your own work?
4. Is it okay to offer a customer a $10,000 trip if they place a $3 million
C. Is your conscience reliable?
1. We all have an internal ultimate moral standard that we use to measure
3. If a person’s value system is at the level 2 stage of development, this
person makes decisions based upon the “situation” and what others say
and do.
a. Usually people rationalize their actions, such as, “I will only copy
4. Many people are so accustomed to doing things unethically that they
D. Sources of significant influence.
1. Do your decision factors include your friends, family or things you see
2. Basic research by Barna has found that the leading influencers in
3. Wouldn’t it be nice to be able to base your decisions on something that
4. The situations businesspeople face are frequently the same, yet many
E. Three guidelines for making ethical decisions.
1. You need a fixed point of reference that is separate from you so that you
and no one else may influence it.
a. Fixed point of reference — refers to something that provides the
b. Separate from you — refers to something outside yourself that may
F. Will the Golden Rule Help?
1. One similarity in virtually all faith-based principles is the presence of a
2. The Golden Rule does not involve reciprocity—“if you do for me, I will
3. “Could the Golden Rule serve as a universal, practical, helpful standard
4. President Bush thinks so. He said, “A call to love your neighbor just
like you’d like to be loved yourself. It’s a universal call, and it’s a call
5. Would you consider your faith a fixed point of reference that never
changes and is separate from you?
III. MANAGEMENT’S ETHICAL RESPONSIBILITIES
A. Ethics — Code of moral principles and values that govern the behaviors of a
B. Ethical Behavior — treating others fairly.
1. Being Honest.
2. Maintaining confidence and trust.
3. Following the rules.
4. Conducting yourself in the proper manner.
C. An Ethical Dilemma is a situation when each alternative choice or behavior
IV. ETHICS IN DEALING WITH SALESPEOPLE
A. Sales Managers have both social and ethical responsibilities to their sales
personnel.
B. Five ethical considerations by sales managers are:
1. Level of sales pressure to place on a salesperson.
2. Decisions affecting territory.
5. What rights do employees have?
a. Termination-at-will — must now have accurate records which led
b. Privacy — non-job related information is being taken out of
c. Cooperative acceptance — employees are protected by law from
C. Company benefits of respecting employee rights:
1. Employees are more productive.
2. It attracts good sales personnel.
V. SALESPEOPLE’S ETHICS IN DEALING WITH THEIR EMPLOYERS -
salespeople, as well as managers, may occasionally:
A. Misuse company assets – for personal gain or as bribes to customers.
D. Affect other salespeople – the unethical practices of one salesperson can affect
E. Attempt technology theft – take customer records, after quitting or being fired for
VI. ETHICS IN DEALING WITH OTHER CUSTOMERS
A. Common problems faced in dealing with customers:
1. Bribes - There is a thin line between good business and the misuse of a
2. Misrepresentation — of the product, company, company policies, prices,
or delivery time in attempt to make a sale.
a. Salespeople must understand the difference between opinions and
statements of fact.
(1) Opinions do not have legal consequences.
b. Suggestions for staying legal:
(1) Understand the difference between statements of praise and
statements of fact.
(2) Educate customers.
(3) Be accurate.
3. Price discrimination - Some customers may be given price reductions,
4. Tie-in-sales - When the buyer is required to buy other products that are
5. Exclusive Dealership - also prohibited under the Clayton Act.
6. Reciprocity - buying a product from someone if the person or
7. Sales restrictions.
a. FTC “cooling off” laws.
(1) Within three days, buyer can:
(a) Cancel contract.
(2) Law covers sales of $25 or over made door-to-door.
(3) Buyer must have written, dated contract and be told of the
three-day period.
b. Green River Ordinance — required a license for selling direct to
consumers.
VII. THE INTERNATIONAL SIDE OF ETHICS - Despite different laws in other
countries, U.S. firms are subject to U.S. laws internationally.
VIII. MANAGING SALES ETHICS
A. Follow the leader - chief executives may set the example.
B. Leader selection - carefully choose managers with high levels of moral
C. Establish a Code of Ethics - a formal statement of the company’s views
concerning ethics and social values which includes:
1. Principle-based statements.
D. Create Ethical Structures such as an:
1. Ethical Committee - group of executives appointed to oversee
2. Ethical ombudsman - official given the responsibility of corporate
E. Encourage whistle-blowing.
IX. HELPFUL HINTS TO MAKING CAREER DECISIONS
A. Be involved in businesses/organizations that make worthwhile products.
B. Do what is right according to your beliefs no matter what the costs.
X. DO YOUR RESEARCH - In a potential employer look for:
A. Integrity - The business should be honest without compromise or corruption.
B. Trust - You have to know you can trust your employer.
C. Character - What is the company like when no one is looking, and what do they
D. Values - The company should follow a moral code of conduct toward others-like
F. Love - The company should display a strong affection, desire, or devotion toward
XI. GOLDEN RULE OF SELLING
A. What is truth?
1. Facts needed to make ethical and moral decisions
XII. SUMMARY OF MAJOR ISSUES
A. Ethical behavior pertains to values of right and wrong.
B. Values depend on individual and organizational characteristics.
1. An important individual characteristic is one's moral development.
C. Corporate social responsibility is based on four criteria:
1. Economic responsibility.
2. Legal responsibility.
D. Social responsibility in business means profitably serving employees and
E. Could the Golden Rule serve as a universal, practical, helpful standard for
F. In the future, ethical standards for salespeople must be developed, supported,
and policed. Current techniques include:
1. Leadership
2. Codes of Ethics
5. Establishing Control Systems
