Download Regulatory Environment & Ethics

Dr. Dawne Martin
MKTG 550 – Business
Marketing
September 13, 2012
Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall
1
For Next Time: Meet in Calvin 102– John
Deere
 Exam: Tuesday, September 25
 Learning Objectives

› Understand the primary goals & objectives of
business regulation and implications in a
market economy
› Understand the basic US antitrust and
business regulatory legislative acts
Apply to a business and marketing situation
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Legislation provides a level playing
field for all companies
 Well-developed, effective marketing
plans avoid most legal issues
 Business Legislation

› Protect companies from each other
› Protect consumers
› Protect the interests of society
3
Who is responsible for enforcing
business regulations?
 How do politics affect enforcement of
regulations?

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1890
1914
1936
1950
Sherman Antitrust Act
Clayton Act
Federal Trade Commission Act
Robinson-Patman Act
Celler-Kefauver Act
1975
Consumer Goods Pricing Act
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Designed to protect the investing
public, rather than business
competitors and customers
 From a marketer’s perspective, an
important provision is the silent period
relating to Initial Public Offerings
(IPOs)

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Standard set of laws that govern
contracts and associated case law
 Most portions of the UCC adopted by 49 of
50 states (excluding Louisiana)
 Consistency in the UCC between states
helps with the administration and
enforcement of contracts across state
lines

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Public Company Accounting Reform and
Investor Protection Act of 2002
 Commonly called “SOX”
 Est. Public Company Accounting Oversight
Board
 SOX inspired:

o “Canadian Sarbanes-Oxley Act,” Bill 198 (C-
SOX)
o Australian Corporate Law Economic Reform
Program, (CLERP)
o Japanese Financial Instruments and Exchange
Law, (J-SOX)
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I
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Exhibit 4-5: United Memories aggressive price at NBM Computers
UNITED MEMORIES
UniMem Model 300
5000 units/month
$32 per unit
PACIFIC DRIVES
Pacific Model 1000
5000 units/month
$38 per unit
NBM
Computers
Pacific Model 1000
5000 units/month
$38 per unit
Palo Alto
Computer
Desktop Computer Market
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Exhibit 4-6: Spartan Computers Enters the Market
UNITED MEMORIES
UniMem 300
5000 units/mo.
$32 per unit
PACIFIC DRIVES
Pacific1000
5000
units/mo.
$38/unit
Pacific Model 1000
500 units/mo.
$55 per unit
Pacific1000
5000
units/mo.
$38/unit
NBM
Computers
Palo Alto
Computer
Spartan
Computers
Desktop Computer Market
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
Offerings sold:
o for different uses
o to separate markets
o at different times
o that are not identical
o to government agencies
o at prices that meet a competitive threat

are generally not a violation of price
regulations.
Offerings created through supplier-customer
collaboration, partnering, and customizations
are not identical and therefore are not
subject to price regulations
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
This test has three considerations:
o SIZE: of organization involved
o VOLUME: of business involved
o SIGNIFICANCE: of market preemption
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1. Patents
2. Copyrights
3. Trade
Secrets
4. License
5. Cross-License
6. Joint Venture
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




Ethics deal with personal moral principles and
values
Laws are society’s values and standards that are
enforceable in courts
There are numerous situations where judgment
plays a large role in defining ethical and legal
boundaries
Actions that are technically legal could be viewed
as unethical
Actions are considered to be ethical may not be
seen as legal
58 of US adults rate ethical standards of
business executives as “fair” or “poor”
 90% think white-collar crime is “very
common” or “somewhat common”
 76% say the lack of ethics in business
contributes to tumbling societal moral
standards
 41% of 1,694 corporate employees in a
recent survey were aware of ethical
problems in their company

 Marketing
Ethics: Moral judgments,
standards and rules of conduct relating to
marketing decisions.
 Factors influencing ethical decision-making:
› Individual factors - attitudes and values.
› Opportunity presenting itself - likelihood of
punishment, no professional codes of ethics, no
corporate policies to discourage unethical
decision making.
› Values, attitudes, and behaviors of others peers, supervisors, top management.
• Invisible hand: True and only social responsibilities of business
organizations are to make profits and obey laws. Morality,
responsibility, and conscience reside in invisible hand of freemarket system, not with managers or organizations.
•
Hand of government: Corporation has no moral responsibility
beyond legal obedience. Regulatory hand of law and political
process turn these objectives into common good.
•
Hand of management: Encourages corporations to exercise
independent, non-economic judgment over matters of morals
and ethics that face them.
Utilitarian Approach – produces the
greatest good and least harm for all
affected
 Rights Approach – protects and respects
moral rights of those affected
 Fairness or Justice Approach – all equals
should be treated equally, or on a
standard that is defensible.

Common Good Approach -- Respect
and compassion for all others –
specifically the vulnerable
 Virtue Approach – Actions consistent
with our virtues – Is this consistent with my
acting my best.
