What are “ethics?” “standards of moral behavior or professional conduct” To act in an ethical fashion is to conform to some standard of moral or professional behavior.

Unethical vs. Illegal There is a difference between something that is illegal vs. unethical. For some people, the law is their code of ethics— if it’s legal, then it’s ethical. Many laws governing business practices are never enforced—one can violate these laws rather safely, often to great personal advantage. Would you do something illegal that is to your advantage if you thought it was safe to do so?

Ethical Trends Most business schools now have one or more courses in business or professional ethics. Many practices that were once legal are now illegal because government standards have tightened. The actions of executives and government officials are scrutinized more closely than ever before (“open press” environment). A recent survey showed 84% of U.S. companies have a written code of ethics.

Why are salespeople under more ethical pressure? They work largely unsupervised (many actions made be hidden from or ambiguous to the manager). They are under increased pressure because they generate the firm’s revenues. They are evaluated on short-term objectives. The job requires quick-thinking and unique solutions.

The Pressure to Compromise It is easy to be ethical when no hardship is involved—a person’s true ethical code emerges when under difficulties or pressure. Many people believe that in order to advance in an organization they must occasionally do something unethical. Survey says…89% of reps have given gifts in excess of $100 to gain favor with a potential client; 50% of reps admit to taking part in some kind of unethical activity while on the job

House Accounts “a large or important account that contributes a significant portion of a company’s sales volume or profit Is it fair or professional for managers to “take over” large profitable accounts that sales reps work hard to build up?

Gift Giving Do generous gifts to clients put them under increased pressure to do or continue to do business with your company? Guidelines—(1) Never give a gift before an order is placed; (2) Do not give gifts to a client’s spouse or family members; (3) Keep the value of gifts low (the company may set a limit on the maximum dollar amount of a gift) to avoid the appearance of undue influence.

Entertainment Try to determine how the customer feels about being entertained. Keep the entertainment appropriate to the customer. Do not use entertainment solely as the means of closing the sale or keeping the account.

Questions to Evaluate Ethical Dilemmas: Is this a “quick fix” or will it also be sound behavior over the long run? Would I do this to a friend? Would I like to have this done to me? Would I want this action publicized in the media? Would I voluntarily tell others about it? What parties will be damaged by this action?

Legal Issues— Price Discrimination Firms normally cannot make price discounts available to one customer without making them available to all customers. Governed by the Robinson-Patman Act (1936)—price differences must be based on cost differences; otherwise price discrimination is illegal

Bribery “the payment of money or gifts to get or retain a customer” Illegal under U.S. law Foreign Corrupt Practices Act of 1977—it is illegal for U.S. business people to offer bribes to foreign officials Amended in 1988 by the Omnibus Trade and Competitiveness Act—facilitation payments (small sums of money) to low-ranking officials to expedite processes are allowed

Green River Ordinances Passed by towns or local communities Require all firms doing business in an area to have a local business license. Protect residents from unethical or high pressure selling tactics.

Cooling Off Laws Proved a short period (usually three days) when buyers of goods from door-to-door or in-home sales reps can: (1) cancel the contract; (2) return the merchandise; and/or (3) obtain a full refund.