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!
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 Ethics vs. Social Responsibility
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