Chapter 3Ethical & Legal Issues

MKTG. 377January 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

• 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?

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

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

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?

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...

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?

And What About Us?Regardless of Consequence

US Debt: 1-30-13

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

Chapter 3Ethical & Legal Issues(Continued)

MKTG. 377February 7, 2013

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

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

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150 Year Jail Sentence & Personal Assets Sold& His Son Committed Suicide on the 2 Year Anniversary of the Crime

When It Comes To Ethics…Do Nice Guys Finish Last?

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

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”

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:

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

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

United Professional Sales Association’s Code of Conduct

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

MARK HURD - PART 1Have You Heard of Hurd?

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Former Hewlett Packard CEO… Fudging Expense Reports & Forced To Resign

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”

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HEALTHCAREWendall Potter formerly with CIGNA

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

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?

• 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

It Encompasses a Full Range of Situations

Sexual Harassment

Regardless of Gender

Can Be A “Legal Minefield”

Sexual Harassment

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?

There is no pillow as soft as a

clear conscience.

Remember...

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

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