1. B2B Ethics, Crisis Management & Legal Considerations

2. A Poem by R.W. Grant
You’re gouging on your prices if you charge more than the rest.
But it’s unfair competition if you think you can charge less.
A second point that we would make to help avoid confusion:
Don’t try to charge the same amount:
That would be collusion!

3. Ethical Clashes Ethical standards among stakeholders
Ethical standards at different levels of an organization
Individual ethical standards vs. organization’s performance standards
Facts vs. viewpoints
Knowledge of consequences

4. The Societal Marketing Concept
Generating customer satisfaction based on:
Being market sensitive (sensitive to target customers’ needs), and
Being considerate of societal well being
Goal: Improve life quality
Includes company’s social responsibility

5. Ethics vs. Social Responsibility
BUSINESS
ETHICS
Moral principles and standards that guide behavior in the world of business
SOCIAL
RESPONSIBILITY
Obligations a business assumes to have for society, including economic, legal, ethical, and philanthropic

6. Corporate Social Responsibilities
Legal
Play by the rules of the game
Economic
Be profitable
Ethical
Do what is right, just, and fair; avoid harm
Philanthropic
Contribute resources to community; improve quality of life

7. The Role of Leadership
To encourage subordinates’ ethical behavior, good leaders:
Ensure that the firm’s mission statement encourages ethical behavior & societal good as part of the mission
Create reward structures that allow & reinforce ethical behavior
Behave ethically themselves (Do as I do; not Do as I say)

8. Differing Moral Philosophies
Deontology
The action itself matters. No “gray” areas.
Teleology
The outcome matters. Level of harm caused.
Egoism
The outcome related to “ME” matters.
Relativism
Everything is relative. All actions are moral or immoral within their own context.

9. Potential Ethical Problem Areas
Usually grow out of a need to:
do what is seen as necessary to compete, or
to achieve value for stockholders
May include:
Paying brides
Charging exorbitant prices (price gouging)
Taking unearned marketing allowances
Posing as a prospective customer to obtain competitive information
Creating an unfair advantage for one distributor over another
Padding orders & shipments
Promising more than can be delivered

10. Myths about Business Ethics
Ethics is a personal, individual affair.
We do not operate in a vacuum.
Business and ethics do not mix.
Business is a human activity.
Ethics in business is relative.
Contradicts everyday experience.
I.e., just because this society practiced slavery, did that make it right?
Good business means good ethics.
Basically says that ethics do not provide solutions to business problems.

11. Quick Ethical Tests Is it right / fair? Who gets hurt?
What would you tell your child to do?
Do unto others as you would have them do unto you.
Use your intuition (gut-feel).
Are the ends really worthwhile?

12. Crisis Management
Ethical behavior intertwined with the occurrence & the management of crises
Problems arise from less than stellar ethical choices or ethical conflicts
A strong ethical theme in the company’s culture
Inoculates against crises
Resolves issues regardless of cause

13. Crisis Preparation
Some crises can be avoided through careful preparation
Some will still occur, but can be contained with foresight & good coping systems
Some inevitably become crises, no matter how much preparation occurs

14. A Crisis Management Model
Layers of Pauchant and Mitroff’s Crisis Management Model
Character of the people in the organization
– willingness to take responsibility & take corrective action
Culture existing in the organization
– supports appropriate preparation & response actions
Organizational structure
– crisis management structure in which all stakeholders are represented
Plans and mechanisms for dealing with crises
– crisis management team has fully prepared plans, disseminated them, & trained people in key roles
Source: Thierry C. Pauchant and Ian I. Mitroff, Transforming the Crisis-Prone Organization: Preventing Individual, Organizational, and Environmental Tragedies, (San Francisco: Jossey-Bass, 1992).

15. Crisis Preparation
Establish effective structures for planning & handling crises
Assess the elements of company’s operations that produce risks & reduce these risks
Plan procedures to follow as events occur
Inoculate (include or plan for) negative public attention that will occur during a crisis

16. Plan for Stages of a Crisis
Organization goes through a preparation period if early signals are perceived
If signals have not been picked up, crisis will be triggered by some event
A period of intense activity & public scrutiny will ensue following the crisis
The organization may take follow-up actions & may go through a period of serious learning

17. Media Relations During a Crisis
Avoid wild speculation (by yourself & others)
Give the media access
Tell the truth
Be proactive
Stay calm
Respond quickly, backed by effective action
Limit points of contact for consistent, focused message
Company may have to accept blame, make apologies, and “fix” things

18. Crisis Aftermath
Begin repair of the company’s image (time consuming process)
Thoroughly debrief & learn from experience
Maintain ethical approach (image can be sustained/repaired if so)
Reinforce management &/or employees that have done the right thing(s)

19. Federal Legislation to Protect Competition
Sherman Act 1890
no monopolies
Clayton Act 1914
no price discrimination
FTC Act 1914
no unfair competition
Wheeler-Lea 1938
no false advertising
Robinson-Patman Act 1936
no price discrimination to resellers

20. To Protect the Consumer
Meat Inspection Act 1906
Wool Products Labeling (1940): % of wool
Cigarette Labeling (1965)
Truth in Lending (1968)
Consumer Product Safety (1972)
Nutrition Labeling and Education Act (1990)

21. Regulatory Agencies FTC: no false/deceptive advertising
FDA: no harmful drugs/products
ICC: rates of interstate RR, trucking – dissolved
STB: regulates motor carriers, railroad
EPA: pollution
FCC: regulates wire, radio, TV broadcasts