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Copyright © 2001 by Harcourt, Inc. All rights reserved.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
CHAPTER 2
SOCIAL, ETHICAL, AND LEGAL
RESPONSIBILITIES OF SALES
PERSONNEL
Copyright © 2001 by Harcourt, Inc. All rights reserved.
 Management’s social responsibilities.
 What influences ethical behavior.
 Management’s ethical responsibilities.
 Ethical dealings among salespeople, employers and customers.
 The international side of ethics.
 Managing sales ethics.
LEARNING OBJECTIVES
This chapter is one of the most important in this textbook.
Understanding social, ethical and legal issues helps build a solid
foundation on which to base future decisions and to manage sales
personnel. After studying this chapter, you should be able to
explain the following:
Copyright © 2001 by Harcourt, Inc. All rights reserved.
MANAGEMENT’S SOCIAL
RESPONSIBILITIES
Social responsibility is management’s
obligation to make choices and take actions
that will contribute to the welfare and
interests of society as well as to those of
the organization.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Stakeholder
Any group within or outside the
organization that has a stake in the
organization’s performance.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
G o v e r n m e n t
O w n e r s
M a n a g e r s
E m p lo y e e s
S u p p lie r s
C u s t o m e r s
C o m m u n it y
C r e d it o r sO r g a n iz a t io n
FIGURE 2.1 MAJOR STAKEHOLDERS IN THE ORGANIZATION’S
PERFORMANCE
Copyright © 2001 by Harcourt, Inc. All rights reserved.
CCC GOMES
This acronym is an effective way to
remember an organizations stakeholders:
Customers, Community, Creditors,
Government, Owners, Managers,
Employees, and Suppliers.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
AN ORGANIZATION’S MAIN
RESPONSIBILITIES
• ECONOMIC RESPONSIBILITIES
• LEGAL RESPONSIBILITIES
• ETHICAL RESPONSIBILITIES
• DISCRETIONARY RESPONSIBILITIES
Copyright © 2001 by Harcourt, Inc. All rights reserved.
HOW TO DEMONSTRATE SOCIAL
RESPONSIBILITY
1. Taking corrective action before it is required.
2. Working with affected constituents to resolve mutual
problems.
3. Working to establish industry-wide standards and self-
regulation.
4. Publicly admitting mistakes.
5. Getting involved in appropriate social programs.
6. Helping correct environmental problems.
7. Monitoring the changing social environment.
8. Establishing and enforcing a corporate code of conduct.
9. Taking needed public stands on social issues.
10. Striving to make profits on an ongoing basis.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
WHAT INFLUENCES ETHICAL
BEHAVIOR?
THE INDIVIDUAL’S ROLE
• Level one: preconventional
• Level two: conventional
• Level three: principled
THE ORGANIZATION’S ROLE
Copyright © 2001 by Harcourt, Inc. All rights reserved.
MANAGEMENT’S ETHICAL
RESPONSIBILITIES
WHAT IS ETHICAL BEHAVIOR?
Ethical behavior refers to treating others fairly.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
• Being honest.
• Maintaining confidence and trust.
• Following the rules.
• Conducting yourself in the proper manner.
• Treating others fairly.
• Demonstrating loyalty to company and
associates.
• Carrying your share of the work and
responsibility with 100% effort.
WHAT IS ETHICAL BEHAVIOR?
Copyright © 2001 by Harcourt, Inc. All rights reserved.
WHAT IS AN ETHICAL DILEMMA?
An ethical dilemma arises in a situation when
each alternative choice or behavior has some
undesirable elements due to potentially negative
ethical or personal consequences.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Three main ethical areas most
frequently faced by sales personnel:
• Salespeople
• Employers
• Customers
Copyright © 2001 by Harcourt, Inc. All rights reserved.
ETHICS IN DEALING WITH
SALESPEOPLE
• LEVEL OF SALES PRESSURE
• DECISIONS AFFECTING TERRITORY
• TO TELL THE TRUTH?
• THE ILL SALESPERSON
Copyright © 2001 by Harcourt, Inc. All rights reserved.
EMPLOYEE RIGHTS
Rights desired by employees regarding the
security of their jobs and the treatment
administered by their employer while on the job,
irrespective of whether such rights are currently
protected by law or collective bargaining
agreements of labor unions.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
EMPLOYEE RIGHTS
• Termination at will
• Privacy
• Free from Sexual Harassment
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Cooperative Acceptance
The right of employees to be treated fairly and
with respect regardless of race, sex, national
origin, physical disability, age, or religion while
on the job as well as when applying and
regarding a job.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Reasons for respecting employee rights
• Providing a high quality of work life.
• Attracting and retaining good sales
personnel; making recruitment and
selection more effective less frequently
needed.
• Avoiding costly back-pay awards and fines.
• Establishing a balance between employee
rights and obligations and employer rights
and obligations.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
SALESPEOPLE’S ETHICS IN
DEALING WITH THEIR
EMPLOYERS
• Misusing Company Assets
• Moonlighting
• Cheating
• Affecting Fellow Salespeople
• Technology Theft
Copyright © 2001 by Harcourt, Inc. All rights reserved.
ETHICS IN DEALING WITH
CUSTOMERS
• Money
• Gifts
• Entertainment
• Travel Opportunities
BRIBES OR GIFTS
Copyright © 2001 by Harcourt, Inc. All rights reserved.
MISREPRESENTATION AND BREACH
OF WARRANTY
• Exaggerated capabilities of products or
services and sometimes making false
statements to close a sale.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Misrepresentation and breach of warranty
are two legal causes of action.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
• Price reductions
• Promotional allowances and support
• Robinson-Patman Act of 1936
PRICE DISCRIMINATION
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Robinson-Patman Act of 1936
Allows sellers to grant what are called quantity
discounts to large buyers based on savings in the
cost of manufacturing, but individual salespeople
or managers may not practice price
discrimination to improve sales.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
• To purchase a particular line of merchandise,
a buyer may be required to buy other
unwanted products.
• Prohibited under the Clayton Act.
TIE-IN SALES
Copyright © 2001 by Harcourt, Inc. All rights reserved.
• Requires a wholesaler or retailer to purchase
from one manufacturer.
• Prohibited under the Clayton Act.
EXCLUSIVE DEALERSHIP
Copyright © 2001 by Harcourt, Inc. All rights reserved.
• Buying a product from someone if the
person or organization agrees to buy from
you.
• Federal Trade Commission and the U.S.
Department of Justice will consider such a
trade agreement illegal.
RECIPROCITY
Copyright © 2001 by Harcourt, Inc. All rights reserved.
• Cooling-off Laws provide for a cooling-off
period in which the buyer may cancel the
contract, return any merchandise, and obtain
a full refund.
• Covers sales of $25 or more made door to
door.
• Green River Ordinances require persons
selling directly to consumers to be licensed
by the city in which they are doing business
if they are not residents. A bond may also be
required.
SALES RESTRICTIONS
Copyright © 2001 by Harcourt, Inc. All rights reserved.
MANAGING SALES ETHICS
• All managers feel they face ethical problems.
• Most managers feel they and their employers
should be more ethical.
• Managers are more ethical with their friends
than with people they do not know.
MANAGERS’ VIEWS
Copyright © 2001 by Harcourt, Inc. All rights reserved.
MANAGERS’ VIEWS continued
• Even though they want to be more ethical,
some managers lower their ethical standards
in order to meet job goals.
• Managers are aware of unethical practices in
their industry and company ranging from
price discrimination to hiring discrimination.
• Business ethics can be influenced by an
employee’s supervisor and by the company
environment.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Management methods to help organizations
be more responsive:
• Follow the Leader
• Leader Selection
• Establish a Code of Ethics
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Establish a Code of Ethics
Code of ethics is a formal statement of the
company’s values concerning ethics and social
issues.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
• Principle-Based Statements
Designed to affect corporate culture, define
fundamental values, and contain general
language about company responsibilities,
quality of products, and treatment of
employees.
• Policy-Based Statements
Outline the procedures to be used in
specific ethical situations.
Two types of codes of ethics:
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Management methods to help organizations
be more responsive:
• Follow the Leader
• Leader Selection
• Establish a Code of Ethics
• Create Ethical Structures
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Ethical Committee
A group of executives appointed to oversee
company ethics.
Ethical Ombudsperson
An official given the responsibility of
corporate conscience who hears and
investigates ethical complaints and informs
top management of potential ethical issues.
Ethical Structures
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Management methods to help
organizations be more responsive:
• Follow the Leader
• Leader Selection
• Establish a Code of Ethics
• Create Ethical Structures
• Encourage Whistle Blowing
• Create an Ethical Sales Climate
• Establish Control Systems
Copyright © 2001 by Harcourt, Inc. All rights reserved.
THE BOTTOM LINE
Ethics and social responsibility are hot topics for managers.
Corporate social responsibility concerns a company’s values
towards society.
Salespeople and managers realize that their business practices,
including international dealings, should be carried out in an
ethical manner.

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5 social ethical issues in sdm

  • 1. Copyright © 2001 by Harcourt, Inc. All rights reserved.
  • 2. Copyright © 2001 by Harcourt, Inc. All rights reserved. CHAPTER 2 SOCIAL, ETHICAL, AND LEGAL RESPONSIBILITIES OF SALES PERSONNEL
  • 3. Copyright © 2001 by Harcourt, Inc. All rights reserved.  Management’s social responsibilities.  What influences ethical behavior.  Management’s ethical responsibilities.  Ethical dealings among salespeople, employers and customers.  The international side of ethics.  Managing sales ethics. LEARNING OBJECTIVES This chapter is one of the most important in this textbook. Understanding social, ethical and legal issues helps build a solid foundation on which to base future decisions and to manage sales personnel. After studying this chapter, you should be able to explain the following:
  • 4. Copyright © 2001 by Harcourt, Inc. All rights reserved. MANAGEMENT’S SOCIAL RESPONSIBILITIES Social responsibility is management’s obligation to make choices and take actions that will contribute to the welfare and interests of society as well as to those of the organization.
  • 5. Copyright © 2001 by Harcourt, Inc. All rights reserved. Stakeholder Any group within or outside the organization that has a stake in the organization’s performance.
  • 6. Copyright © 2001 by Harcourt, Inc. All rights reserved. G o v e r n m e n t O w n e r s M a n a g e r s E m p lo y e e s S u p p lie r s C u s t o m e r s C o m m u n it y C r e d it o r sO r g a n iz a t io n FIGURE 2.1 MAJOR STAKEHOLDERS IN THE ORGANIZATION’S PERFORMANCE
  • 7. Copyright © 2001 by Harcourt, Inc. All rights reserved. CCC GOMES This acronym is an effective way to remember an organizations stakeholders: Customers, Community, Creditors, Government, Owners, Managers, Employees, and Suppliers.
  • 8. Copyright © 2001 by Harcourt, Inc. All rights reserved. AN ORGANIZATION’S MAIN RESPONSIBILITIES • ECONOMIC RESPONSIBILITIES • LEGAL RESPONSIBILITIES • ETHICAL RESPONSIBILITIES • DISCRETIONARY RESPONSIBILITIES
  • 9. Copyright © 2001 by Harcourt, Inc. All rights reserved. HOW TO DEMONSTRATE SOCIAL RESPONSIBILITY 1. Taking corrective action before it is required. 2. Working with affected constituents to resolve mutual problems. 3. Working to establish industry-wide standards and self- regulation. 4. Publicly admitting mistakes. 5. Getting involved in appropriate social programs. 6. Helping correct environmental problems. 7. Monitoring the changing social environment. 8. Establishing and enforcing a corporate code of conduct. 9. Taking needed public stands on social issues. 10. Striving to make profits on an ongoing basis.
  • 10. Copyright © 2001 by Harcourt, Inc. All rights reserved. WHAT INFLUENCES ETHICAL BEHAVIOR? THE INDIVIDUAL’S ROLE • Level one: preconventional • Level two: conventional • Level three: principled THE ORGANIZATION’S ROLE
  • 11. Copyright © 2001 by Harcourt, Inc. All rights reserved. MANAGEMENT’S ETHICAL RESPONSIBILITIES WHAT IS ETHICAL BEHAVIOR? Ethical behavior refers to treating others fairly.
  • 12. Copyright © 2001 by Harcourt, Inc. All rights reserved. • Being honest. • Maintaining confidence and trust. • Following the rules. • Conducting yourself in the proper manner. • Treating others fairly. • Demonstrating loyalty to company and associates. • Carrying your share of the work and responsibility with 100% effort. WHAT IS ETHICAL BEHAVIOR?
  • 13. Copyright © 2001 by Harcourt, Inc. All rights reserved. WHAT IS AN ETHICAL DILEMMA? An ethical dilemma arises in a situation when each alternative choice or behavior has some undesirable elements due to potentially negative ethical or personal consequences.
  • 14. Copyright © 2001 by Harcourt, Inc. All rights reserved. Three main ethical areas most frequently faced by sales personnel: • Salespeople • Employers • Customers
  • 15. Copyright © 2001 by Harcourt, Inc. All rights reserved. ETHICS IN DEALING WITH SALESPEOPLE • LEVEL OF SALES PRESSURE • DECISIONS AFFECTING TERRITORY • TO TELL THE TRUTH? • THE ILL SALESPERSON
  • 16. Copyright © 2001 by Harcourt, Inc. All rights reserved. EMPLOYEE RIGHTS Rights desired by employees regarding the security of their jobs and the treatment administered by their employer while on the job, irrespective of whether such rights are currently protected by law or collective bargaining agreements of labor unions.
  • 17. Copyright © 2001 by Harcourt, Inc. All rights reserved. EMPLOYEE RIGHTS • Termination at will • Privacy • Free from Sexual Harassment
  • 18. Copyright © 2001 by Harcourt, Inc. All rights reserved. Cooperative Acceptance The right of employees to be treated fairly and with respect regardless of race, sex, national origin, physical disability, age, or religion while on the job as well as when applying and regarding a job.
  • 19. Copyright © 2001 by Harcourt, Inc. All rights reserved. Reasons for respecting employee rights • Providing a high quality of work life. • Attracting and retaining good sales personnel; making recruitment and selection more effective less frequently needed. • Avoiding costly back-pay awards and fines. • Establishing a balance between employee rights and obligations and employer rights and obligations.
  • 20. Copyright © 2001 by Harcourt, Inc. All rights reserved. SALESPEOPLE’S ETHICS IN DEALING WITH THEIR EMPLOYERS • Misusing Company Assets • Moonlighting • Cheating • Affecting Fellow Salespeople • Technology Theft
  • 21. Copyright © 2001 by Harcourt, Inc. All rights reserved. ETHICS IN DEALING WITH CUSTOMERS • Money • Gifts • Entertainment • Travel Opportunities BRIBES OR GIFTS
  • 22. Copyright © 2001 by Harcourt, Inc. All rights reserved. MISREPRESENTATION AND BREACH OF WARRANTY • Exaggerated capabilities of products or services and sometimes making false statements to close a sale.
  • 23. Copyright © 2001 by Harcourt, Inc. All rights reserved. Misrepresentation and breach of warranty are two legal causes of action.
  • 24. Copyright © 2001 by Harcourt, Inc. All rights reserved. • Price reductions • Promotional allowances and support • Robinson-Patman Act of 1936 PRICE DISCRIMINATION
  • 25. Copyright © 2001 by Harcourt, Inc. All rights reserved. Robinson-Patman Act of 1936 Allows sellers to grant what are called quantity discounts to large buyers based on savings in the cost of manufacturing, but individual salespeople or managers may not practice price discrimination to improve sales.
  • 26. Copyright © 2001 by Harcourt, Inc. All rights reserved. • To purchase a particular line of merchandise, a buyer may be required to buy other unwanted products. • Prohibited under the Clayton Act. TIE-IN SALES
  • 27. Copyright © 2001 by Harcourt, Inc. All rights reserved. • Requires a wholesaler or retailer to purchase from one manufacturer. • Prohibited under the Clayton Act. EXCLUSIVE DEALERSHIP
  • 28. Copyright © 2001 by Harcourt, Inc. All rights reserved. • Buying a product from someone if the person or organization agrees to buy from you. • Federal Trade Commission and the U.S. Department of Justice will consider such a trade agreement illegal. RECIPROCITY
  • 29. Copyright © 2001 by Harcourt, Inc. All rights reserved. • Cooling-off Laws provide for a cooling-off period in which the buyer may cancel the contract, return any merchandise, and obtain a full refund. • Covers sales of $25 or more made door to door. • Green River Ordinances require persons selling directly to consumers to be licensed by the city in which they are doing business if they are not residents. A bond may also be required. SALES RESTRICTIONS
  • 30. Copyright © 2001 by Harcourt, Inc. All rights reserved. MANAGING SALES ETHICS • All managers feel they face ethical problems. • Most managers feel they and their employers should be more ethical. • Managers are more ethical with their friends than with people they do not know. MANAGERS’ VIEWS
  • 31. Copyright © 2001 by Harcourt, Inc. All rights reserved. MANAGERS’ VIEWS continued • Even though they want to be more ethical, some managers lower their ethical standards in order to meet job goals. • Managers are aware of unethical practices in their industry and company ranging from price discrimination to hiring discrimination. • Business ethics can be influenced by an employee’s supervisor and by the company environment.
  • 32. Copyright © 2001 by Harcourt, Inc. All rights reserved. Management methods to help organizations be more responsive: • Follow the Leader • Leader Selection • Establish a Code of Ethics
  • 33. Copyright © 2001 by Harcourt, Inc. All rights reserved. Establish a Code of Ethics Code of ethics is a formal statement of the company’s values concerning ethics and social issues.
  • 34. Copyright © 2001 by Harcourt, Inc. All rights reserved. • Principle-Based Statements Designed to affect corporate culture, define fundamental values, and contain general language about company responsibilities, quality of products, and treatment of employees. • Policy-Based Statements Outline the procedures to be used in specific ethical situations. Two types of codes of ethics:
  • 35. Copyright © 2001 by Harcourt, Inc. All rights reserved. Management methods to help organizations be more responsive: • Follow the Leader • Leader Selection • Establish a Code of Ethics • Create Ethical Structures
  • 36. Copyright © 2001 by Harcourt, Inc. All rights reserved. Ethical Committee A group of executives appointed to oversee company ethics. Ethical Ombudsperson An official given the responsibility of corporate conscience who hears and investigates ethical complaints and informs top management of potential ethical issues. Ethical Structures
  • 37. Copyright © 2001 by Harcourt, Inc. All rights reserved. Management methods to help organizations be more responsive: • Follow the Leader • Leader Selection • Establish a Code of Ethics • Create Ethical Structures • Encourage Whistle Blowing • Create an Ethical Sales Climate • Establish Control Systems
  • 38. Copyright © 2001 by Harcourt, Inc. All rights reserved. THE BOTTOM LINE Ethics and social responsibility are hot topics for managers. Corporate social responsibility concerns a company’s values towards society. Salespeople and managers realize that their business practices, including international dealings, should be carried out in an ethical manner.