Ethical Considerations Ethical Considerations in Business-to-Business in Business-to-Business

MarketingMarketing

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!

Ethics vs. Social ResponsibilityEthics vs. Social ResponsibilityBUSINESS

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

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

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 im/moral

within their own context.

Typical Actions that are Considered Unethical in B-t-B Marketing

• Collusive bidding

• Restrictive conditions in specifications

• Artificial stimulation of demand

• Verbal/actual sabotage of competitive products

• Padding orders and shipments

• Obscure contract clauses buried in small type

Typical Actions that are Considered Unethical in B-t-B Marketing

• Overselling

• Promising more than can be delivered

• Lying

• Failing to keep confidences

• Bribes

• Gifts

• Entertainment

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.

Why Ethics are Necessary in Business Decisions

• Rarely are facts & viewpoints in perfect correlation.

• Good and evil exist simultaneously

• Knowledge of consequences are limited

• Existence of multiple stakeholders exposes us to competing & conflicting claims.

• Multiple stakeholders use conflicting ethical arguments

• Human reasoning is imperfect

Quick Ethical Tests

• Is it right?

• Is it fair?

• Who gets hurt?

• Would you be comfortable if your decision was reported on the front page of your hometown newspaper?

• What would you tell your child to do?

Other Quick Ethical Tests• Do unto others as you would have them do

unto you.

• Use your intuition (gut-feel).

• Are the ends really worthwhile?

• Does the action you are planning to take really make good common sense?

• Is the decision compatible with your self-concept at its best?

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

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)

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