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Chapter two
Ethical Problems in Providing Services to the
Customer
Ethical problems in business ethics occur in
four major areas. The first while providing service
to customers; the second in how members of a
business organization fulfil their duties and
responsibilities; the third in how competitors treat
each other; and the fourth in providing a price fair
to the manufacturer, seller and buyer. It is in the
process of providing services to the customer and
over persuasion are the most common of such
practices.
Problems in Providing Services
To understand why businessmen are
tempted to engage in unethical practices while
providing service to the customer, we must know
the business processes involved and how such
processes create the environment under which
undesirable practices thrive. These business
processes are production and marketing.
Production includes obtaining raw
materials and transforming them into products
useful to man, transporting the products to places
where they are needed, and storing them until they
are sold. Production also includes rendering
personal, technical or professional services to
people. While production provides service to
mankind by transforming raw materials into useful
forms, the production process itself provides
opportunities for unscrupulous persons to commit
undesirable practices such as using sub-standard
raw materials into useful forms, the production
process itself provides opportunities for
unscrupulous person to commit undesirable
practices such as using sub-standard raw materials,
substituting quality ingredients with inferior ones,
manufacturing items that do not meet the test of
quality, making production shortcuts and passing on
inferior products to customers as quality goods.
Marketing is making people aware that
goods with specific characteristics and uses exist
and the awakening in them the desire to possess the
goods for their esteem or functional value. While
marketing provides information on products that
will improve the quality of mans life, the
marketing process provides many ways by which
the service becomes a disservice. Some people with
no moral scruples commit unethical business
practices in selling to uninterested and reluctant
customers. Such practices include making false
statements about the quality, content and usefulness
of the product, fanning the customers desire to
possess the product even if he does not need it or
cannot afford to pay for it, and directly persuading
him to buy the product by using emotionalism
rather than logic and actual need for the product.
HOW PROVIDING SERVICE BECOMES A
DISSERVICE
Service orientation of manufacturing.
Providing service by manufacturing merchandise
useful to man (production) and selling these to those
who need them (marketing) are service-oriented
process. People who need a particular product and
can afford to buy it are informed of the existence of
reliability and quality. They are also informed of
how and where they could be purchased and how
much they cost. This creates demand for it which
makes mass production possible, and provides the
means to make comparisons between competing
products so that the consumer can make the most
advantageous choice.
How service becomes a disservice. Through
unethical practices, the process of serving the public
by giving useful information may be changed to
misinforming them. The transformation of
information into misinformation occurs through
misrepresentation.
MISREPRESENTATION
Misrepresentation may be classified into two
types, depending on whether a person is not aware
that he is misrepresenting things. These are
intentional and unintentional misrepresentation.
Intentional misrepresentation is deliberate
and wilful. It is commonly called lying.
Unintentional misrepresentation is not deliberate;
the one making it may not be aware that he is
engaging in misrepresentation or, if he does, his
intention is to mislead somebody in order to save a
life or to prevent trouble and unhappiness.
Unintentional misrepresentation is commonly called
a white lie.
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LYING
What Constitutes Lying
Lying is making someone believe what you
yourself do not believe. For example, you promised
to take your girl friend to a Movie Sunday Night.
However, during the week, you met another girl
who interests you and who seems to be interested in
you. She invites you to her birthday party also on
Sunday Night. You accept the invitation. Before
you go to the party of the new girl, you phone your
girl friend asking to be excused because you are not
feeling well. You simulate coughing and sound
weary and tired to make your act appear more
convincing. You have lied; you made your girl
friend that you are suck when you know too well
that you are not.
Types of Lying
Lying may be classified into four types: (1)
lying through the use of an ambiguous term, (2)
lying by making a statement from which a false
inference may be drawn, (3) lying through action,
and (4) lying through suppression of correct
information.
Lying through the use of an ambiguous
term is deliberately using vague terms that can have
many meaning to mislead people into thinking that
one is telling the truth. For example, you are
permitted to go to a dance by your parents on
condition that be home before 12:00 midnight.
However, you got carried away with the thrill of
dancing and get home at 1:30 a.m. when during
breakfast you parents ask what time you got home,
you tell them that you arrived after twelve midnight,
using general term pasado a las doce to tell the
time of your arrival. You convince yourself that you
are telling the truth, for after all, 1:30 a.m. is after
13:00 midnight.
Lying by making a statement from which
a false inference may be drawn is making a false
statement that can mislead the other party and other
parties to making the wrong conclusions. For
example, two cars are involved in a head-on
collision at night. The driver of one car says that he
was blinded by the headlight of the other car. The
other driver (the guilty party and the one who
makes a statement from which a false conclusion is
drawn) vehemently states that he switched on his
dim lights as the two cars approached each other.
However, the guilty driver fails to reveal that the
switch of his dim lights was not functioning during
the accident. Another example is the term used in
advertising where a product is described as the
fastest selling brand. This make the public
conclude that the brand is also No.1 in sales when
actually another brand has the biggest sales even if
in certain supermarkets it is not fastest selling.
Lying through action is used by people
who are almost caught in the act of wrongdoing. For
example, you notice a pickpocket stealing your
goldplated parker pen. However, before you accost
him, he passes on your pen to his accomplices.
When you demand that he gives back your pen, he
appears insulted and belligerently dare you to
search his pockets. He knows that you cannot find it
in his possessions.
Lying through suppression of correct
information is often deliberate but in some
instances, it may be unintentional. For example,
Chismosa tells Osyosa an uncomplimentary and
unsavoury tale about their mutual acquaintance,
Inocencia. Chismosa thinks that the story is true
though she tells it with some malice because she
does not like Inocencia. Later, Chismosa learns that
the story is not true but she conceals this from
Osyosa. In this case, Chismosa committed a lie
through suppression of information.
Why People Lie
People lie for various reasons. Some people
lie deliberately but they think that their lie is
harmless or even beneficial such as making a joke
at somebodys expense in the spirit of fun. For
example, one may make the often repeated joke of
innocently making a friend whether his current girl
companion is the same one he brought along in last
months party. Another example would be a doctor
lying about patients condition thinking that what
the patient does not know will not hurt him. In these
situation, people lie because they ape other people.
They consider that it is accepted practice and
therefore right. However, it is possible that the lie
could have disastrous consequences. In the example
just given, the innocent joke may be believed and
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strain the relationship between friends; the
reluctance to tell a patient about his condition could
make him unprepared when death nears.
Other people lie because they think that
since others lie anyway, they might as well have a
headstart. This is the if I do not lie my competitor
will lie fallacy. If one follow this thinking, he may
just as well hang a sign outside his door inviting
people to come in and be cheated and save
themselves the trouble of going to another store as
they will be cheated in the same manner anyway.
The error in this justification is assuming that all
businessmen are crooks and liars: one cannot find
an unethical businessman anymore. Although many
businessman commit unethical practices in their
business dealings, it would be quite unfair and
incorrect to brand all of them as crooks and liars.
Still other people lie because they believed
they are entitled to make money out of their
cleverness. To them, not being dumb gives the
opportunity to deceive other persons through
misrepresentation and, if they succeed in their
deception, it is not their fault but the fault of people
who allow themselves to be deceived. However, if
this justification is accepted, it would mean that all
types of deception and misrepresentation would be
acceptable. Theft, estafa, falsification of documents,
forgery, short-changing, passing of counterfeit
money and crimes where cunning and deceit play
and important role would all be justifiable. Even the
most dishonest businessman would find it hard to
accept such conduct as the normal way of doing
business.
Partnership in Lying
Some unethical practices can only be
perpetrated with the agreement and concerted action
of several people. Such a practice is called
partnership in lying, which is cooperation among
individuals to deceive a particular person or group
of persons. An example of counterfeiting which
requires the orchestrated activities of a number of
persons the paper maker, the ink maker, the
engraver, the printer, and the man who passes on
the counterfeit money to unsuspecting persons. A
similar example is false advertising. A newspaper
which suspects an advertisement as false but
publishes it anyway, guilty of partnership in lying.
Consequences of Lying
Some people are born liars. They often lie
and are not bothered by self-guilt.
Few people fit the description of a born liar.
Most of us try to tell the truth most of the time.
However, we sometimes ask ourselves whether
certain circumstances or situations would justify our
telling a lie. It is therefore important that we fully
understand the consequences of discovered lie.
1. A discovered lie results to distrust of the
liar. It is natural to assume that one who has
lie in the past will lie again if faced with the
same circumstances. Distrust of the liar will
continue unless there is preponderance of
evidence that he is not telling the truth. This
is the message of the well-known fable the
boy who cried wolf. A shepherd boy tending
sheep on top of a plateau was told to shout
wolf when he sees one approaching.
People working down on plateau could then
rush to his help. The boy, in the spirit of fun,
shouted wolf even though there was no
wolf to see if the people would come
running to him. The people did come but
they were angry at the deception. After
several weeks, the boy tried to relieve
tediousness of his job by again crying
wolf even if there was no wolf. Again, the
people came running and was even more
angry. One day, a real wolf came and the
boy shouted with all his might wolf, wolf.
But the people, thinking of the boys
previous deception, did not heed him
anymore.
2. When we discovered that someone we trust,
perhaps a very close friend, has told us a lie,
we tend to doubt the honesty of other
persons and we may consider all persons as
liars until the contrary is proven.
3. A person discovered to have lied, tends to
lie again to cover up his original lie.
4. The victim of a lie usually becomes bitter.
He takes revenge by deceiving and hurting
others also, especially the one who
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victimized him. This eye for an eye
approach will make business ethics far
worse than it is now.
5. When the acts of people who lied and were
able to get away with it with profit become
known, other tend to follow their example.
This is the problem in the government tax
collecting and regulatory agencies where an
initially honest employee may soon become
dishonest because of what he sees around
him. Also, when an employee knows that his
supervisor padded his expense report, he
will also do the same, thinking that if his
supervisor can get away with being
dishonest, he too can get away with it.

PRACTICESINVOLVING
MISREPRESENTATION
Misrepresentation may further be classified
into other types: direct misrepresentation and
indirect misrepresentation. Direct misrepresentation
is characterized by actively misrepresenting
something about the product or service. These
include the deceptive packaging, adulteration,
misbranding or mislabelling, shortweighing,
shortmeasuring, shortnumbering, short-changing
and false or misleading advertising. Indirect
misrepresentation is characterized by omitting
adverse information about the product or service. It
includes caveat emptor and business ignorance.

Direct Misrepresentation
Described below are the more common practices
involving direct misrepresentation:

Deceptive Packing
Deceptive Packaging takes many forms and is of
many types. One type is the practice of placing the
product in containers or exaggerated sizes and
misleading shapes to give a false impressions of its
actual contents. An example of this type of
deceptive packaging is slack-fill packaging where
containers like cartons, tin cans and certain plastic
are filled only up to eighty-five to ninety-five per
cent of their capacity. If the slack-fill packaging is
not really needed to protect the product or to give
the package a more pleasing appearance, it is
deceptive. Other type of packaging similar to slack-
fill is excess package cushioning where a larger
container is used than what is needed to protect the
contents. Placing an unbreakable product in a large
package to create the impression that it is big or that
it contains more product is, of course, misleading
but placing chinaware in a big box to cushion it is
all right because the product must be protected from
getting broken. However, some cosmetics container
have a thicker bottom side forming a tapering hole
that would contain less product. Since the extra
thickness at the bottom is unnecessary, this may be
considered as deceptive packaging.
Other types of deceptive packaging include:
(1) introducing a new package of the same size and
price as the old one but containing less quantity
such as the practice of adding NEW to the label
of the product but reducing its contents; (2) the
process of competing manufacturers to use the same
size packages containing varying products weighs
but with different systems of measurements, I.e.,
one product is in pounds while the other products is
in grams, so that customers will find it hard to
compare the contents of the different brands; (3) the
use of misleading designations such as the number
of servings indicate the volume contents of the
package, i.e., serves four or serves six, but not
indicating the net contents of such servings; (4) the
use of bigger size package such as economy,
family, or super-size but which are sold at an
equal or higher price per gram than regular ones. A
number of years before Martial Law, a member of
Congress made a study of the contents of a
toothpaste product. She discovered that the smallest
package was sold at a lower price per gram than the
largest package. This packaging technique take
advantage of peoples expectation that when they
buy in bulk, the price is lower. People buying the
family size assume that they are getting a much
better deal than buying a small one.

Adulteration
Adulteration is the unethical practice of
debasing a pure or genuine commodity by imitating
or counterfeiting it, by adding something to increase
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its bulk or volume, or by substituting an inferior
product for a superior one for the purpose of profit
or gain. It is unethical because an inferior product is
passed off as superior one. This does not meet that
standard for fair service, that is achieving success
by offering better service (in the form of a superior
product and terms of payment) than the competitor.
Adulteration occurs during the process of
manufacturing a product or when it is packed or
repacked for distribution. Cases of adulteration
abound in both large and small scale manufacturing
as well as in repacking the product for resale in
smaller quantities.
In manufacturing, adulteration includes
substituting cereals for nuts in candies, mixing pure
olive oil with cheaper vegetable oil in
manufacturing mayonnaise, mixing fresh cows
milk with reconstituted milk and selling it as a
whole fresh milk, mixing corn with coffee beans
during the process of roasting and grinding, using
heavy cardboard instead of leather in footwear
manufacturing, and manufacturing drugs below the
required strength.
In repacking a product into small container,
some common malpractices include adding water to
vinegar to increase its volume, adding coconut milk
to fresh milk and adding finely ground and polished
corn to rice before selling it by kilo.

Misbranding or Mislabelling
Misbranding is the practice of making false
statements on the label of a product or making its
container similar to a well-known product for the
purpose of deceiving the customer as to the quality
and/or quantity of a product being sold.
Many causes of misbranding or mislabelling
abound in the Philippine business scene. As in
deceptive packaging, misbranding takes many
forms. The following are the most common types
of misbranding:
1. Misrepresenting the quality of the goods by
labelling inferior products as if they are
products of superior quality, i.e., a textile
material is labelled as non-shrinking even if
it shrinks as much as 20 percent after two
washings; inferior shoes made in other parts
of the country, are passed off as made in
Marikina and are sold at higher prices;
inferior shirts made in the Philippines are
passed off as Italian or U.S. made shirts
because of their foreigner sounding labels;
carabao meat labelled as Bakang,
Batangas; passing off reconditioned
repossessed appliances as new ones;
labelling product improved but the only
improvement is in the package; and labelling
a textile product made up of 70 % wool and
30 % cotton as ALL WOOL or PURE
WOOL
2. Placing cosmetics of inferior kind in
containers of well known brands. The
manufacturer of an inferior product buys
empty containers of a well-known brand,
fills them with his own product and sells
them as the well-known product.
3. Changing the quality or quantity of a
product but not changing the label to
conform with the changes made, i.e.,
changing the ingredients of the product but
not reflecting it in the label, or reducing the
contents but not stating the reduction in the
label.
4. The number of pieces appearing in the label
is different from the actual contents of the
containers, i.e., the label shows six pieces
but there are only five pieces inside.
Shortweighing
In shortweighing, the mechanism of the
weighing scale is tampered with or something is
attached to it so that the scale registers more than
the actual weight. An example is a foot pedal with
concealed string tied to the weighing scale. The
modus operandi of sellers is to use two sets of
scales one which gives the correct weight and has
been sealed by the authorities and another which
looks identical but register more weight than the
product. Shortweighing is practiced in selling
products where prices depend on the weight such as
sugar, meat, fish, vegetables, fruits etc.
Shortmeasuring
In shortmeasuring, the measuring stick or
standard is shorter than the real length or smaller in
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volume than the standard. This unethical practice is
found in selling situations where the price of the
product depends on its length such as selling cloth
or textiles, electric cords or wires or on its volume
such as selling rice by sacks.
Shortnumbering
In this unethical practice, the seller gives the
customer less than the number asked for or paid for.
Shortnumbering is often practiced in selling
situations where the product being sold is in such a
shape or is packed in a manner that would make
counting the product difficult or inconvenient. For
example, a customer who is not vigilant may
receive less quantity than what he is entitled to
when buying toilet paper, bond paper, carbon paper
etc. which are sold by boxes or packages.
Shortchanging
The term shortchanging is taken directly
from a situation where the seller gives the customer
less than the change he should get. But now, this
term covers all situations where a party to a
transaction does not receive what he should get in
exchange for his money or product. Thus, when a
customer buys bondpaper with the full assurance of
the seller that it is substance 20 when in fact is is
only substance 16, the customer is being
shortchanged.
False or Misleading Advertising
Advertising serves a useful purpose if it
conveys the right information. It is the principal
means by which people are informed about the
availability, nature, and uses of old and new
products. However, advertising does not always tell
the whole truth and nothing but the truth. If it
greatly exaggerates the virtues of a product and tells
only half of the truth or else sings praises to its non
existent virtues, it is no longer providing a useful
service. It has become the agent of
misrepresentation.
False and misleading advertising include:
1. Advertisements with statements or
pictures that convey exaggerated
impressions of the products reliability or
quality.
A drug claimed as a miracle drug that
banishes all ailments but without scientific
basis is an example. Other examples are: a
television set being dropped from an
airplane to show its durability; a bed
mattress being run over by a road roller to
show the strength of its springs and the
phrase cleans like magic which gives the
impression that laundering is an effortless
job through the use of a certain detergent.
2. Advertisement that are only half-truths
and lead consumers to think that the product
is of good quality. A product claiming to be
the fastest selling brand misleads people
to think that it is a good buy. However, the
product could be the fastest selling brand
only during a certain period or only in a
certain place but in nationwide sales based
on total sales for one year, it only reached
third.
3. Advertisements that are deliberate
misrepresentations such as announcing a
water damage sale or fire sale when there
was no flood or fire; announcing SALE but
the prices of items offered are higher than in
other stores
4. Advertisements using fictitious or obsolete
testimonials such as imaginary letter
testifying to the efficacy of a drug or
cosmetic.
Indirect Misrepresentation
Indirect misrepresentation is deliberately
omitting adverse information about the product or
service to mislead customers into thinking that the
product is reliable and durable and practically
problem-free. Among the most common practices
involving indirect misrepresentation are caveat
emptor, deliberately withholding information and
business ignorance
Caveat Emptor
Caveat Emptor is a practice very common among
salesmen. Translated, caveat emptor means let the
buyer beware. Under this concept, the seller is not
obligated to reveal any defect in the product or
service he is selling. It is the responsibility of the
customer to determine for himself the defects of the
product. He expect the salesman to voluntarily help
him that information. The seller will just decide the
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good qualities of the product and leave the detection
of detects to the customer. Thus, a buyer who does
not know enough of the product to see its
deficiencies will think that he had a good buy.
Why did the seller deliberately withhold
adverse information about the product? The motive
could not have been anything else but to
deliberately lead the customer to buy based on
incomplete information. For if the buyer had correct
information, he may not even buy at all.
Coveat emptor is indirect misrepresentation
and unethical because a seller is a witness for the
good he is selling. He testifies to its nature, features,
uses and qualities. As a witness, it is his obligation
to tell the truth and nothing but the truth about his
product. The buyer also has the right to know the
whole truth about the product or service he is
buying so that he can intelligently determine its
value. What makes coveat emptor unethical is the
willingness of the seller to profit by taking
advantage of the buyers lack of information.
This is passive deception which is also lying.

Deliberately Withholding Information
Following the argument that coveat emptor
is unethical, the deliberate withholding of
significant information in a business transaction, is
also unethical. No business transaction is fair where
one of the parties does not exactly know what he is
giving away or receiving in return. If a man sells a
10-hectare farm (at ten thousand pesos per hectare)
for Php110,000 because the buyer believes farm to
be 11 hectares, he is dishonest. This is similar to
accepting more change than what you are entitled to
and not bothering to tell the cashier of his error. A
buyer who know the farm contains 11 hectares but
pays for only 10 because the owner believes the
farm is only 10 hectares, is also dishonest.
It is clear that an agreement for purchase and
sale is fair only if both parties are aware of all facts
relating to what they are offering and/or receiving in
return.
There are exception, however. Among these
are: 1) One does not have to reveal his plans about
the product or item being bought; I.e., a person who
wants to buy an undeveloped place of land does not
have to tell the owner that he plans converting it
into a parking lot, and 2) there is no obligation to
disclose speculative plans, i.e., one who buy stocks
in Atlas Consolidated mining does not have to
disclose that he is buying because he thinks the
price of copper will go up in immediate future. It is
different, however, when the buyer of the land
know it contains a valuable mineral ore but fails to
tell the owner. Tis action is outright unethical.

Business Ignorance
Direct misrepresentation gives business a bad name.
While indirect misrepresentation or passive
deception is not as obvious, it nonetheless
contribute to the impression that businessman are
liars and are out to make a fast buck. Business
ignorance is passive deception because the
businessman is unable to provide the customer with
the complete information he needs to make a fair
decision.
It is the duty of the businessman to know the
nature of the product he is selling, the goods in the
market and what goods are really the best at what
price. For example, the quality of share of stock
depends upon the stability of the company, the yield
and its marketability. It is the duty of the
stockbroker to know all about the stock he is selling
so he can properly advice his customers of the risk
and probable gains in buying it.
Another form of business ignorance which is
just as harmful and inexcusable as ignorance of the
product one is selling, is ignorance of costs the
cost of manufacture, the cost to sell, and the
attendant administrative costs. A company which
does not know its costs may sell at a price lower
than the costs of manufacturing the product and
bringing it to the market. The company may then
become a menace to other similar companies in that
it may force them to sell at below cost, making the
whole industry unprofitable. At the other extreme, a
company which does not know its real cost may
charge such a high price and further burden the
customer who is already reeling from the continuing
blows of inflation. It may even price itself out of the
market and not sell at all.
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An example of business ignorance that
became detrimental to both seller and customer is
the selling of proprietary shares of a beach club in
Luzon. Some of the agents selling the proprietary
shares did not bother to look at the progress on
developing the resorts facilities. They just sold on
the basis of brochures and photographs prepared by
the projects proponents. One of the sales managers
discovered much later, after he has already sold
many proprietary shares to his friends, association
and acquaintances, that the resort is just a piece of
undeveloped property with very few improvements.
This case of business ignorance was regettable in
that it could have been avoided. The sales manager
would not have lost his clients who bought
primarily on the basis of their trust in him.
Recently, this same sales manager was employed in
another resort offering proprietary shares to the
public. While latter resort is a much better buy and
is almost fully developed, the sales manager is
already ashamed to approach the moneyed people
who bought the shares of the resort in Luzon as they
have already lost their trust in him.
OVERPERSUASION
Persuading a customer to buy something he needs is
a service provided by the seller. Persuasion is the
process of appealing to the emotions of a
prospective customer and moving him into buying
an item of merchandise he needs. Persuasion is
legitimate and necessary in the selling of goods if it
is done in the interest of a buyer such as persuading
him to get a hospitalization insurance policy.
However, persuasion used for the sole benefit of
selling a product without considering the
prospective customers need for it is unethical. The
more common instances for over-persuasion include
the following:
1. Urging a customer to satisfy a low
priority need for a merchandise. An
example is an appliance salesman who
learns that a family which has been
living a hand-to-hand existence received
lump sum retirement benefits.
Know that the money is more than
sufficient to pay for a color television
Betamax system, the salesman persuades
the family to buy the appliance from him
even if he knows that the money should
be placed in safe money-earning
investments that will be a source of
income for the family in the coming
years.
2. Playing upon intense emotional agitation
to convince a person to buy. An example
is when the salesman for a funeral parlor
upon learning from the poor widow that
she is due to receive Php50,000 from her
husbands insurance policy, persuades
her to have an expensive funeral even if
he knows that the husband died a poor
man and the widow will be depending
upon the proceeds of the insurance
policy as her main source of income in
the coming years.
3. Convincing a person to buy what he
does not need even if he has the money
to do so. An example is an office
equipment salesman persuading the
manager of a company to buy an
expensive calculator with a data storage
feature and a capability to solve
scientific and mathematical problems
when all that the company needs is an
adding machine. Even if the company
can afford it, it does not really need such
sophisticated equipment.

GIFT-GIVING
Giving gifts to customers is a common practice in
the business community, especially during
Christmas. Some companies even give gifts during
birthdays of their customers.
Reasons for Giving Gift
The reason usually given for gift-giving are
the following:
1. It is an effective way of establishing
goodwill with a customer.
2. It is used as a token of appreciation for
business received from the customer.
3. It is a good form of advertising.
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4. It is commonly practiced by competitors
one must move with the tide to
complete effectively.
Gift-Giving: Ethical or Unethical?
Is gift-giving unethical? Some people say that it is
not as long as it is practiced with moderation.
Others say that regardless of the gifts value, it is
unethical. . Actually, the appropriateness of gift-
giving depends on four factors: 1) its value, 2) the
time when it is given, 3) the circumstances under
which it is given and 4) the personal relationship
between the giver and receiver of the gift. If the gift
is valuable, it is definitely unethical because the
goodwill motives of the giver are open to doubt.
If the gift is given shortly before or after the
completion of a business transaction, it can be seen
that the purpose of the gift transcends the normal
goodwill intention of gift-giving. If the gift is
given under circumstances that may make a gift a
form of bribery, it is, of course, unethical. Likewise,
if the relationship between the giver and receiver
does not extend beyond the relationship of seller
and buyer, the gift could be considered unethical.

Gift Giving: an Added Business Expense
The cost of gifts to customers and influence-
peddlers is shouldered eventually by the customer
in the form of higher prices. It is doubtful whether I
can be considered service to the customer because
in the end, the customer will have to pay for it, a
service that he really does not need.
Approaches to Gift-Giving
Some companies recognize that gift-giving
is an added business expense which they can ill
afford in a period of escalation business costs.
Accordingly, they prohibit their employees from
accepting business gift no matter how nominal their
value. Executives, supervisors and senior staff are
especially enjoined to monitor the activities of their
subordinates so that gifts are not accept in secret.
Likewise, they are urged to set an example by not
accepting gifts and favors from their suppliers.
STUDY GUIDES TO CHAPTER TWO
1. What are the major areas in providing
service to the customer where the ethical
problems arise? Could you think of other
problems not covered by the major areas?
2. In what way do production and marketing
provide a service to the customer? When
they become a disservice?
3. How does marketing and sales information
become misinformation? Differentiate
unintentional misrepresentation from
intentional misrepresentation.
4. Describe the process and the types of lying,
including partnership in lying, and give
examples of each type.
5. Can any type of lying be really justified?
Explain you answer.
6. Do you think the consequences of lying will
prevent people from lying? Justify your
answer.
7. Describe some practices involving
misrepresentation. Identifying ways to
combat them.
8. Identify and differentiate the more common
practices involving indirect
misrepresentation. Give examples of each
and state why they are considered unethical.
9. Give illustrations of unethical persuasion in
business. Why are they unethical?
10. What are the reasons for gift-giving? Is
giving business gift ethical or unethical?
Explain your answer.