Question

Suppose you are a salesperson and your company's CRM forecasts that your quarterly sales will be substantially under quota. You call your best customers to increase sales, but no one is willing to buy more.

Your boss says that it has been a bad quarter for all the salespeople. It's so bad, in fact, that the vice president of sales has authorized a 20 percent discount on new orders. The only stipulation is that customers must take delivery prior to the end of the quarter so that accounting can book the order. "Start dialing for dollars," she says, "and get what you can. Be creative!"

Using your CRM information system, you identify your top customers and present the discount offer to them. The first customer balks at increasing her inventory: "I just don't think we can sell that much."

"Well," you respond, "how about if we agree to take back any inventory you don't sell next quarter?" (By doing this, you increase your current sales and commission in this quarter, and you also help your company make its quarterly sales projections . The additional product is likely to be returned next quarter, but you think "Hey, that's then and this is now.")

"OK," she says, "but I want you to stipulate the return option on the purchase order."

You know that you cannot write that on the purchase order because accounting won't book all of the order if you do. So you tell her that you'll send her an email with that stipulation. She increases her order, and accounting books the full amount.

With another customer, you try a second strategy. Instead of offering the discount, you offer the product at full price but agree to pay a 20 percent credit in the next quarter. That way you can book the full price now. You pitch this offer as follows: "Our marketing department analyzed past sales using our new information system, and we know that increasing advertising will cause additional sales. So, if you order more product now, next quarter we'll give you 20 percent of the order back to pay for the advertising."

In truth, you doubt the customer will spend the money on advertising. Instead, it will just take the credit and sit on a bigger inventory . That will kill your sales to the company next quarter, but you'll solve the problem when you get to it next quarter.

Even with these additional orders, you're still under quota. In desperation, you decide to sell product to a fictitious company that you say is owned by your brother-in-law. You set up a new account, and when accounting calls your brother-in-law for a credit check, he cooperates with your scheme. You then sell $40,000 of product to the fictitious company and ship the product to your brother-in-law's garage. Accounting books the revenue in the quarter, and you have finally made quota. A week into the next quarter, your brother-in-law returns the merchandise.

Meanwhile, unknown to you, your company's ERP system is scheduling production. The program that creates the production schedule reads the sales from your activities (and those of other salespeople) and finds a sharp increase in product demand (imagine that!). Accordingly, it generates a schedule that calls for substantial production increases and schedules worker for the production runs. The production system, in turn, schedules the material requirements with the inventory application, which increases raw materials purchases to meet the increased production schedule

QUESTIONS TO ANSWER

Regarding your offer of the "advertising" discount:

1/ Is your action ethical according to the categorical imperative perspective? Explain.

2/ Is your action ethical according to the utilitarian perspective? Explain.

3/ What effect does that discount have on your company's balance sheet?

Answer 1

1. According to categorial imperative it is ethical as categorial imperative tells us that some steps are necessary to be taken inorder t handle that situation and hence as per this perspective the action of giving discount for the advertisement is ethical.

2. Utilitarian theory tells us that the right or wrong of any action depends on the after effects of the action. Here th eafter effects might be the company asking for the promised discount and our company denying it hence proves problematic to both the company and the salesperson might even loose the job. Hnece the action is unethical in this perspective.

3. If we give the discount as promised the sales of the company will drastically drop and hence a huge margin will be visible in the balance sheet and graph of the sales of the company which is not good for the company's overall growth rate as it's market value decreases.