Chapter 3 Ethical & Legal Issues

MKTG. 377 January 31 and February 7, 2013

For Thursday, January 31st

Chapter 3

Please make sure that you have read Chapter 3 - ETHICAL & LEGAL ISSUES IN SELLING in your textbook prior to coming to class In your professional or academic career, have you ever

Homework

been caught in the middle of an issue that required you to make some ethical decisions? - How did you handle it? Were you pleased with the outcome of your efforts? What did you learn from this experience?

Ethical and Legal Issues in Selling What youll learn about today:
1. 2.

3.

4.

5.

6.

Study recent ethical issues within the US. 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 employers may be involved in questionable ethical behavior. Recognize the implications of federal and local laws regarding ethical standards.

Why Is Ethical Behavior More Important Then Ever?

In Todays YouTube World, Everyone is a Paparazzi

Author, Futurist & NY TIMES Columnist

If you are a Public Figure, its really scary out there.

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Lets set the stage with a brief Musical Interlude

What has been a repetitive ethical scandal within the professional sports industry in recent years?

IMPORTANT NOTE: Steroid use can be very harmful to your health The average age of the men on the left is just 24. This is what steroids can do to your body JK :)

A-ROD is one of Baseballs greatest athletes ever, but talking Ethics, what does it take to get there?

No, I Never Took Steroids

Well, actually Yes. But just for a short time

Well, maybe longer...

More recently, Lance Armstrong has confessed to using illegal substances in professional bike racing

7 Tour de France Victories

Years of Denial Everywhere

Forgive & Forget?

And What About Us? Regardless of Consequence

US Debt: 1-30-13

Since the start of the Millennium, theres been more than enough unethical behavior in the Business World.

Lets Start a HALL OF SHAME

BERNIE EBBERS, former CEO of WorldCom

KEN LAY, former CEO of ENRON

Chapter 3 Ethical & Legal Issues

(Continued)
MKTG. 377 February 7, 2013

Ethical and Legal Issues in Selling What youll learn about today:
1.

2.

3.

4.

5.

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 employers may be involved in questionable ethical behavior. Recognize the implications of federal and local laws regarding ethical standards.

Ethics Defined

Ethos

Ethical standards derive from society and its behavior Legal standards are enforced

Business Ethics Hall of Shame

...The Winner: Bernie Madoff

$50 Billion PONZI Scheme

Madoff got what he deserved, but very little monies have been recovered

150 Year Jail Sentence & Personal Assets Sold

& His Son Committed Suicide on the 2 Year Anniversary of the Crime
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When It Comes To Ethics Do Nice Guys Finish Last?

BUT DO THEY REALLY??? What do YOU think?

Drs. Ken Blanchard & Norman Vincent Peale

Authors of the Power of Ethical Management

You dont have to cheat to win! Nice guys may appear to finish last, but usually they are running in a different race. Cheating, lying, & short-changing the customer are shortterm views

They may bring a satisfactory profit today, but it is a sure way to court failure for the future.

The Basis for Ethical Systems

Two Systems to Describe Ethical Thinking:
1. 2.

Deontological uses specific rules Teleological defines right and wrong in terms of end results
The greatest good for the greatest number

3 Guidelines for Ethical Behavior

1 - Universal Nature

The Golden Rule Everybody plays by the same rules Trust facilitates cooperation

2 - Truth Telling

3 - Take Responsibility for ones actions

Dont blame others for your problems Avoid the victim mentality

6 Influences on a Salespersons Ethics

1 - 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, unethical demands by a buyer & false promises on product performance or delivery

2 - Role Models - Executives and Sales Managers 3 -Examples Set by Colleagues and Competitors 4 - The Bottom Line
Survival is a higher priority than profit

5 - Group-think Peer pressure

6 - Gamesmanship
Winning for the sake of winning

United Professional Sales Associations Code of Conduct

Developing A Personal Code of Ethics

Responsibility to your Self Responsibility to your Company

Accuracy in expense accounts Honesty in using time and resources Accuracy in filling out order forms

Responsibility to your Competitors Responsibility to your Customers

Misrepresenting products and services Keeping confidences Giving Gifts and Entertaining Clients

MARK HURD - PART 1 Have You Heard of Hurd?

Former Hewlett Packard CEO Fudging Expense Reports & Forced To Resign

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What about Operating in a Global Environment?

Some cultures have different expectations

Global Rule of Thumb:

Salespeople should follow the laws of their HOME country AND company, as well as adhere to the rules of the country where they are working if they are in synch with each other.

WALMART accused of paying over $24 Million in bribes to the Mexican government to obtain permits for retail stores

How the Company Treats the Salesperson Sets the Stage for Proper or Improper Ethical Behavior
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? Be sure managers fairly manage the distribution of sales territories

Ethics and Job Tenure

Whistle-Blowing

You may be held legally accountable for inaction Recent rulings encourage whistle-blowing
Sometimes the best policy may be to keep quiet until solid evidence can be accumulated against a wrongdoer. A word of caution your inaction can sometimes be grounds for legal action against you.

A Recent Whistle-Blower

HEALTHCARE Wendall Potter formerly with CIGNA

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For Others, Whistle Blowing Can Be Highly Lucrative

Brad Birkenfeld, former UBS Trader

Last September, the IRS Awarded Him $104 Million, the Highest Award Ever Given to a Whistleblower
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MARK HURD - PART 2 Now Youve Heard of Hurd?

It wasnt JUST fudged Expense Reports after all It was Sexual Harassment Now a SENIOR EXECUTIVE with ORACLE Go Figure?
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Sexual Harassment
Sexual harassment cases filed with the EEOC have gone up 230% over the past decade Nearly 13,000 complaints per year

Look for a harassment policy including:

1. 2. 3. 4. 5. 6. 7.

Company leadership Immediate complaint investigation Privacy rights protected Thorough follow-up Sensitivity training Review training for comprehension Periodic refresher courses

SouthPark presents Petey, the Sexual Harassment Panda

Sexual Harassment
It Encompasses a Full Range of Situations

Regardless of Gender

Sexual Harassment
Can Be A Legal Minefield

Sexual Harassment

Companies are investing significantly to educate their employees on proper & ethical behavior.

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Sexual Harassment

Companies are investing significantly to educate their employees on proper & ethical behavior.

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What are some Questions or Checkpoints about an issue that you might ask yourself regarding whether something is ETHICAL?
(1) (2)

Is it fair to all concerned? Would I want someone else to act this way towards me? How would I explain my actions to someone else? How will this make me feel about myself?

(3) (4)

Remember...
There is no pillow as soft as a clear conscience.

Potential Legal Issues Facing Salespeople

10 Legal Traps
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Quality below standard specified Violation of promised delivery date Inconsistent pricing concessions Incomplete or incorrect instructions Delivering a different product or brand than what was sold Misrepresentation of product usage Slandering a competitor Paying kickbacks to buyers Undisclosed charges after the sale Misuse of proprietary data

Violations Usually Fall Within 2 Broad Categories

1 - Deceptive Actions

False claims Disparaging remarks

Asking passengers to fasten their seatbelts for safety would be deceptive if Airline knew there were snakes on the plane

Violations Usually Fall Within 2 Broad Categories

2 - Monopolistic Actions

Price fixing Acquiring all competitors

Cooling-Off Law

Provides buyers of certain products or goods with a limited time escape path to back away or cancel their purchase

Glengarry Glen Ross

Next Tuesday, February 12 In-class Movie Be here PROMPTLY at 10:00