Ethical Challenges of

Direct Sales Agents

Mazi Offia Enyichukwu Omeaku

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Critical Issues

 “Ethics today in Business is absolutely fundamental

to the wellbeing of any business. If you want a
business that is long time sustainable you cannot
compromise your ethics”
James Caan, CEO, Hamilton Bradshaw

 “Ethical Businesses are successful businesses”

Robin Vaughan- Director of Professional Standards-
CIMA

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 Critical Issues
 “ To educate a man in mind and not in moral is to educate
a menace to the society’.
Theodore Roosevelt
A ‘menace’ is a possible source of danger or harm, a threat, hazard,
nuisance or pain in the neck

 Enron’s former Chief Financial Officer- Andrew Fastow and

former Chief Executive Officer Jeffrey Skillings received
their trainings at the world’s best business schools as first
class students. Hence it is believed that it is not lack of
business “intelligence” or “brains” but lack of “wisdom”,
“virtue”, responsibility and commitment that caused the
scandals. 3
 Critical Issues

"We are discussing no small

matter, but how we ought to
live.“
 –Socrates, in Plato's Republic

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 Objectives
 Strengthen your ability to anticipate, critically analyze and
appropriately respond to all critical and social challenges
that confront managers (marketers) in business

 Develop your competence in handling ethical dilemmas in

a systematic way.

 To transform you into a moral agent and not a menace

 To make you a success.

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 Structure
1. Conceptual Issues in Ethics and Moral
Reasoning

2. Ethical Challenges in Marketing and Sales

3. Case Study analysis

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The Ethics ‘Nots’
 Ethics is not the same as feelings.
Though feelings could provide an important clue to our
ethical choices.

 Ethics is not merely religion.

Though most religions present ethical standards, not
everyone is religious, yet ethics applies to everyone.
Most religions do advocate high standards but
sometimes may not address all the types of problems
we face

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 The Ethics ‘Nots’ contd.
 Ethics is not merely being legal.
A good system of law may not incorporate ethical
standards, laws can deviate from what is ethical. Law can
be unethical especially in a totalitarian regime. Law can
be an instrument of operation and exploitation, designed
to serve the interest of the few.
 Ethics is not merely adhering to culturally accepted
norms.
While some cultures are quite ethical, others are corrupt
or blind to certain ethical concerns.
It is not a satisfactory ethical standard to say “When in
Rome, do as the Romans” though it is advisable to be
sensitive to cultural norms when entering another 8

environment.
 The Ethics ‘Nots’ contd.
 Ethics is not science.
Though science can provide important information to help
us make better ethical choices. Science alone does not tell
us what we ought to do. It may provide information for what
humans are like. But ethics provides reasons for how
humans ought to act. And just because something is
scientifically or technologically possible does not make it
ethical.
 Ethics is not the same as values.
Values imply the conscious prioritizing of different
behavioural alternatives or standards that are perceived
possible, worthwhile or esteemed for the individual, an
institution or nation value is more personal that factual. 9
The Ethics ‘Nots’ contd.
 Ethics is not the same as morality.
Morality refers to the beliefs and practices about good
and evil by means of which we guide our behaviour.
Morals are one’s personal guiding principles.

 For some people ethics is a code of conduct

 For other it is a form of etiquette or
 Mere rules guiding human beings in their private and
public life.

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 What is Ethics?
 Philosophy of living
 A set of fundamental truths that shape your character
and define who you are.
 They govern your decision-making process and
behavioural choices.
 In the journey of life, ethics serves as the foundation
for living.
 Like a compass, they provide orientation and direction.
 Like a map, they guide you onward.
 This philosophy of living is called ethics.
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 What is Ethics?
 Ethics as a branch of philosophy is a systematic attempt to
understand the nature and foundations of morality and its
effect on our conduct. (An Inquiry)

 It is a systematic study of the principles of good behaviour.

Ethics is the reflective consideration and evaluation of our
moral beliefs and practices.

 This involves considering questions of justification, such as,

what are the foundations of morality?

 The term morality is taken to mean the moral judgments,12

standards and rules of conduct.
Divisions of Ethics
 Tools
Normative Ethics

Teleologism Deontologism Aristotleleanism

Ethical Egoism Utilitarianism Kantianism

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 Normative Ethics

 Normative ethics involves arriving at moral standards that

regulate right and wrong conduct.

 It is the sub-division of ethics which investigates the

principles upon which certain things and actions are said to
be good or bad, right or wrong.

 It is that aspect of ethical thinking that seeks for principles

or reasons upon which moral positions can be justified. It
deals with norms, standards or principles of human
behaviour. It is the search for an ideal litmus test of proper
behaviour
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 Teleologism

 Teleological theories determine the ethics of an act by looking at

the probable outcome or consequences of the decision (the
ends).
 It judges the rightness or wrongness of an action based on its
consequences.
 Actions have no intrinsic value but merely serve as means to
attain that which has value. Their Moral values are totally based
on the effects that follow upon them.
 In considering the consequences of an action, the good effect
should be weighed against the bad effects on all the people
affected by it. If the good effects outweigh the bad effects, then it
tends to be a good action, but if the bad outweighs the good,
then it tends to be a bad action, hence not morally right.
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Deontologism

 The deontological theories determine the ethics of an

act by looking to the process of the decision (the
means).

 The deontological tradition holds that what makes an

action right is not the sum of its consequences, but the
fact that it conforms to the moral law.

 Deontology involves following a prescribed set of duties

or obligations (for example, religious rules such as ‘Thou
shalt not lie’

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 ARISTOTLELISM (Virtue Ethics)

 The moral values of actions are often times considered on

particular actions, virtue ethics, however starts from a different

perspective. Instead of evaluating every single action based on its
outcomes, or its underlying principles, this approach looks at the
character of the decision maker. Basically the theory holds that
good actions come from good people.

 Virtue ethics contends that morally correct actions are those

undertaken by actors with virtuous characters. Therefore, the
formation of a virtuous character is the first step towards morally
correct behaviour.
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 Ethical Egoism

 This is a teleological ethical theory that expresses ‘the

view that human conduct should be based exclusively on
self-interest’.

 Ethical egoists believe that morality requires nothing more

of us other than we maximize our own good. An action
therefore is right if it maximizes one’s own personal good.

 According to John Hospers, one’s sole duty is to promote

his own interests, exclusively, and for Bernard Williams
“everyone ought exclusively to pursue his own interest.”
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 Utilitarianism

 Utilitarianism was formulated by the British philosopher Jeremy

Bentham toward the end of the 18th century and later expounded by
the British philosopher James Mill and his son, John Stuart Mill.

 Utilitarianism, otherwise known as the ‘greatest happiness principle’,

is a teleological ethical theory that holds that an action is right if it
produces, or if it tends to produce, the greatest amount of good for
the greatest number of people affected by the action. Otherwise the
action is wrong.

 According to Bentham actions are right if they tend to produce the

greatest happiness for the greatest number of people

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Kantianism (Ethics of Duty)

 The German philosopher, Immanuel Kant (1728-1804) is

a major contributor to Ethics of duty.

 Morality is simply a question of certain eternal, abstract

and unchangeable principles that humans should apply
to all ethical problems.

 To be moral, therefore, one must consciously act

according to rules previously calculated by ‘reason’ to be
right or just, and the incentive for observing those rules
must be respect for duty alone.
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 Kant’s Categorical Imperatives
(unconditional command)

 First Formulation

 Act only according to that maxim by which you can

at the same time will that it should become a
universal law.

 For any action to be morally right, it must be capable of

being consistently universalisable.

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 Kant’s Categorical Imperatives
(unconditional command)

 The second formulation (the principle of humanity)

 Act so that you treat humanity, whether is your

own person or in that of another, always as an end
and never as a means only.

 What Kant means by "treating humanity as an end" is

that I should treat each human being as a being whose
existence as a free and rational person should be
promoted.

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 The second formulation of CI contd.

 Respecting each person's freedom, treating people only

as they have freely consented to be treated beforehand

 Developing each person's capacity to freely choose for

him or herself the aims he or she will pursue.

 On the other hand, to treat a person only as a means is

to use the person only as an instrument for advancing
your interests, with no respect for, nor development of,
the person's capacity to choose freely

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 Ethical Decision Making in Marketing

 American Marketing Association (2004) which states that,

“marketing is an organizational function and a set of
processes for creating, communicating, and delivering
value to customers and for managing customer
relationships in ways that benefit the organization and its
stakeholders”.
 In other words, the marketers responsibility goes beyond
providing their customers with products and services at
prices that satisfy the customer.
 He must deliver value and create a meaningful
relationships that provide benefit to all relevant
stakeholders
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 Ethical Decision Making in Marketing contd.

 Marketing is a key functional area in the business

organization that provides a visible interface with not only
customers, but other stakeholders such as the media,
investors, regulatory agencies, channel members, trade
associations, others.

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 Ethical Decision Making (1st case)

Making good ethical decisions requires a trained

sensitivity to ethical issues and a practiced method for
exploring the ethical aspects of a decision and weighing
the considerations that should impact our choice of a
course of action

 Marketing ethics not only requires an attempt to make

ethical decisions, but also to avoid the unintended

consequences of marketing activities.
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 Ethical Decision Making Framework

Recognize an Ethical Issue (moral importance)

 Conflict between two or more values or ideals. Is there

something wrong personally, interpersonally, or socially?
Could the conflict, the situation, or the decision be
damaging to people or to the community?

 Does the issue go beyond legal or institutional concerns?

What does it do to people, who have dignity, rights, and
hopes for a better life together?

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 Ethical Decision Making Framework contd.

Get the Facts

 What are the relevant facts of the case? What facts are
unknown?

 What individuals and groups have an important stake in the

outcome? Do some have a greater stake because they
have a special need or because we have special
obligations to them?

 What are the options for acting? Have all the relevant
persons and groups been consulted? If you showed your
list of options to someone you respect, what would that
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person say?
 Ethical Decision Making Framework contd.

Evaluate Alternative Actions from Various Ethical

Perspectives
 Utilitarian Approach: The ethical action is the one that will
produce the greatest balance of benefits over harms
 Which option will produce the most good and do the least
harm?

 Rights Approach: The ethical action is the one that

most dutifully respects the rights of all affected.
 Even if not everyone gets all they want, will everyone's
rights and dignity still be respected?
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 Ethical Decision Making Framework contd.

Fairness or Justice Approach: The ethical action is the

one that treats people equally, or if unequally, that
treats people proportionately and fairly.
 Which option is fair to all stakeholders?

 A transaction between a buyer and a seller is fair if both

parties have available, adequate, appropriate information
about the product.
 If they go into the transaction willingly and without coercion

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 Ethical Decision Making Framework contd.

 Common Good Approach: The ethical action is the one

that contributes most to the achievement of a quality
common life together.
 Which option would help all participate more fully in the life
we share as a family, community, society?

 Virtue Approach: The ethical action is the one that

embodies the habits and values of humans at their
best.
 Would you want to become the sort of person who acts this
way (e.g., a person of courage or compassion)?
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 Ethical Decision Making Framework contd.

 Make a Decision and Test It

 Considering all these perspectives, which of the options is the
right or best thing to do?
 Discuss with relevant others:
 If you told someone you respect why you chose this option,
what would that person say? If you had to explain your decision
on television, would you be comfortable doing so?
 If I carry out this decision, would I be comfortable telling my
family about it? My clergyman? My mentors?
 Would I want children to take my behaviour as an example?
 Is this decision one which a wise, informed, virtuous person
would make?
 Can I live with this decision? 32
 Ethical Decision Making Framework contd.

 Act, and then Reflect on the Decision Later

 Implement your decision.

 How did it turn out for all concerned?
 Am I comfortable with this decision?
 If you had to do it over again, what would you do
differently?

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 Ethical Challenges in Marketing and Sales
(Ethical marketing)

 Ethical marketing from a normative perspective approach is

defined as “practices that emphasize transparent, trustworthy,
and responsible personal and organizational marketing
policies and actions that exhibit integrity as well as fairness to
consumers and other stakeholders (Murphy, Laczniak, Bowie
and Klein, 2005).

Marketing ethics focuses on principles and standards that

define acceptable marketing conduct, as determined by
various stakeholders and the organization responsible for
marketing activities. 34
 Ethical Challenges in Marketing and Sales
contd. TRUTH

 The relationship between a customer and an organization

exists because of mutual expectations built on trust, good faith,
and fair dealing in their interaction. In fact, there is an implied
covenant of good faith and fair dealing, and performance
cannot simply be a matter of the firm’s own discretion (Ferrell,
2004).

 Only propositions can be said to be true or false. Exclamations

or interjections and questions cannot be adjudged true or false

 A statement or proposition is true if it corresponds to a reality in

the world, or what is referred to by the statement.
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 Ethical Challenges in Marketing and Sales
contd.
 Lying
 It is not simply making a false statement, it is an activity

 It consists of making a statement which one believes is

false to another person, with the intention of making the
other person believe it to be true.
 It is intended to deceive and mislead.

 Falsehood
 It is a mistake, and it is not usually intentional and
intended to mislead.
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 Ethical Challenges in Marketing and Sales
contd.
 Advertising

 Advertisements contain sentences, express propositions

that can be evaluated in terms of truth and falsity.

 If an ad contains false claims, which the advertiser knows

to be false, for the purpose of misleading, misinforming, or
deceiving potential customers, then the ad is immoral.

 A deceptive ad is one that either makes a false statement

and therefore lies, or misrepresents a product without
making any statement 37
 Drivers of Unethical Business Behaviours.

 The large numbers of immoral and amoral business

people

 Overzealous pursuit of personal gain,

wealth, and other selfish interests

 Heavy pressures on company managers

to meet or beat earnings targets

 A company culture that places profits and

good performance ahead of ethical behavior

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 Overzealous Pursuit of Personal Gain,
Wealth, and Selfish Interests.
 People obsessed with wealth accumulation,
greed, power, and status often:
 Push ethical principles aside in their quest for self gain

 Exhibit few qualms in doing whatever

is necessary to achieve their goals
 Look out for their own best interests

 Have few scruples and ignore welfare of others

 Engage in all kinds of unethical strategic maneuvers and

behaviors
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 Heavy Pressures on Company Managers to
Meet or Beat Earnings Targets
 Managers often feel enormous pressure to do whatever it takes
to deliver good financial performance
 Actions often taken by managers
 Cut costs wherever savings show up immediately
 Squeeze extra sales out of early deliveries
 Engage in short-term maneuvers to make the numbers
 Stretch the rules further and further, until
limits of ethical conduct are overlooked
 Executives feel pressure to hit performance targets since their
compensation depends heavily on company performance

 Fundamental problem with a “make the numbers” syndrome –

Company does not serve its customers or shareholders well by
placing top priority on the bottom line 40
 Company Culture Places Profits and Good
Performance Ahead of Ethical Behavior
 In an ethically corrupt or amoral work climate,
people have a company-approved license to:
 Ignore “what’s right”
 Engage in behaviours or employ strategies they think
they can get away with
 Play down the relevance of ethical strategic
actions and business conduct
 Pressures to conform to the norms of the corporate
culture can prompt otherwise honourable people to
 Make ethical mistakes
 Succumb to the many opportunities around them to
engage in unethical practices
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 Company Culture and Industry Practices

 Business cultures

1. Ethics of Competition

2. Ethics of Exchange

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 Company Culture and Industry Practices

 Ethics of Competition
 Most common unethical competitive behavior
 Economic espionage‐the clandestine collection of trade
secrets or proprietary information about a company’s
competitors.
 Bribery ‐often disguised as gifts, consulting fees, and
favors. This practice is more common in
business‐to‐business and government marketing than in
consumer marketing.

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 Company Culture and Industry Practices

 Ethics of Exchange

 Ethical exchanges between buyer and seller should

result in both parties being better off after a transaction.

 Before the 1960s, the legal concept of caveat emptor–let

the buyer beware–was pervasive in the American
business culture.

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 Company Culture Places Profits and Good
Performance Ahead of Ethical Behavior

 Kennedy's Consumer Bill of Rights (1962):

 Right to safety.

 Right to be informed.

 Right to choose.

 Right to be heard.

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 Does it Pay to be Ethical?

 Clients, strategic partners, and investors are

prepared to pay a premium for or to a
company they have good reason to trust
 Acting ethically communicates trustworthiness
 “Trust” = “the residue of promises fulfilled”

 Consider acting unethically: the risks and

losses of unethical practices (“crime does not pay”)
 Enron, Andersen, Worldcom

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Questions/Comments?

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 THANK U!
Offia Enyichukwu Omeaku
Research Consultant
Ethoscope, Lekki Lagos
08034161282, enoffia@yahoo.com
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