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Chapter 3Ethical & Legal Issues
MKTG. 377January 31 and February 7, 2013
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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
• Homework • In your professional or academic career, have you ever
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?
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1. Study recent ethical issues within the US.2. Develop principles upon which to base ethical
behavior.3. Identify the sources of influence on ethics and ethical
behavior. 4. Understand your role in maintaining the ethical position
of the organization.5. Discover what loyalty to the company requires in the
event that your employers may be involved in questionable ethical behavior.
6. Recognize the implications of federal and local laws regarding ethical standards.
What you’ll learn about today:Ethical and Legal Issues in Selling
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Why Is Ethical Behavior More Important Then Ever?
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“If you are a Public Figure, it’s really scary out there.”
In Today’s “YouTube World,” Everyone is a Paparazzi
Author, Futurist & NY TIMES Columnist
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Let’s set the stage with a brief Musical Interlude
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IMPORTANT NOTE: Steroid use can be very harmful to your healthThe average age of the men on the left is just 24. This is what steroids can do to your bodyJK :)
What has been a repetitive ethical scandal within the professional sports industry in recent years?
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A-ROD is one of Baseball’s greatest athletes ever, but talking “Ethics,”
what does it take to get there?
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No, I Never Took Steroids
Well, actually Yes. But just for a short time
Well, maybe longer...
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More recently, Lance Armstrong has confessed to using illegal substances
in professional bike racing
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7 Tour de France Victories
Years of Denial… Everywhere
Forgive & Forget?
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And What About Us?Regardless of Consequence
US Debt: 1-30-13
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Since the start of the Millennium, there’s been more than enough unethical behavior in the Business World.
Let’s Start a “HALL OF SHAME”
BERNIE EBBERS, former CEO of WorldCom
KEN LAY, former CEO of ENRON
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Chapter 3Ethical & Legal Issues(Continued)
MKTG. 377February 7, 2013
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1. Develop principles upon which to base ethical behavior.
2. Identify the sources of influence on ethics and ethical behavior.
3. Understand your role in maintaining the ethical position of the organization.
4. Discover what loyalty to the company requires in the event that your employers may be involved in questionable ethical behavior.
5. Recognize the implications of federal and local laws regarding ethical standards.
What you’ll learn about today:Ethical and Legal Issues in Selling
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Ethics Defined
”Ethos”• Ethical standards derive from
society and its behavior• Legal standards are enforced
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Business Ethics “Hall of Shame”...The Winner: Bernie Madoff
$50 Billion PONZI Scheme
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Madoff got what he deserved, but very little monies have been recovered
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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?
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Drs. Ken Blanchard & Norman Vincent Peale
• You don’t 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 short-term views
• They may bring a satisfactory profit today, but it is a sure way to court failure for the future.
Authors of the“Power of Ethical Management”
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The Basis for Ethical Systems
1. Deontological uses specific rules
2. Teleological defines right and wrong in terms of end results
“The greatest good for the greatest number”
Two Systems to Describe Ethical Thinking:
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3 Guidelines for Ethical Behavior
• 1 - Universal Nature• The Golden Rule• Everybody plays by the same rules
• 2 - Truth Telling• Trust facilitates cooperation
• 3 - Take Responsibility for one’s actions
• Don’t blame others for your problems• Avoid the “victim” mentality
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6 Influences on a Salesperson’s 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 Competitors4 - The Bottom Line Survival is a higher priority than profit
5 - Group-think Peer pressure
6 - Gamesmanship Winning for the sake of winning
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United Professional Sales Association’s Code of Conduct
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Developing A Personal Code ofEthics
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
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MARK HURD - PART 1Have You Heard of Hurd?
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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
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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
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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.
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A Recent “Whistle-Blower”
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HEALTHCAREWendall Potter formerly with CIGNA
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For Others, Whistle Blowing Can Be Highly Lucrative
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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 2Now You’ve Heard of Hurd?
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It wasn’t JUST “fudged” Expense Reports after all… It was Sexual HarassmentNow a SENIOR EXECUTIVE with ORACLE… Go Figure?
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• Look for a harassment policy including:
1. Company leadership2. Immediate complaint investigation3. Privacy rights protected4. Thorough follow-up5. Sensitivity training6. Review training for comprehension7. Periodic refresher courses
• Sexual harassment cases filed with the EEOC have gone up 230% over the past decade
• Nearly 13,000 complaints per year
Sexual Harassment
SouthPark presents Petey, the Sexual Harassment Panda
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It Encompasses a Full Range of Situations
Sexual Harassment
Regardless of Gender
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Can Be A “Legal Minefield”
Sexual Harassment
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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) Is it fair to all concerned?(2) Would I want someone else to act this way
towards me?(3) How would I explain my actions to someone else?(4) How will this make me feel about myself?
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There is no pillow as soft as a
clear conscience.
Remember...
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Potential Legal Issues Facing Salespeople
10 Legal Traps1. Quality below standard specified2. Violation of promised delivery date3. Inconsistent pricing concessions4. Incomplete or incorrect instructions5. Delivering a different product or brand than what
was sold6. Misrepresentation of product usage7. Slandering a competitor8. Paying kickbacks to buyers9. Undisclosed charges after the sale10. Misuse of proprietary data
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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
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Violations Usually Fall Within 2 Broad Categories
2 - Monopolistic Actions Price fixing Acquiring all competitors
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Cooling-Off Law
Provides buyers of certain products or goods with a limited time “escape path” to back away or cancel their purchase
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Glengarry Glen Ross
Next Tuesday, February 12 In-class Movie Be here PROMPTLY at 10:00