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MGT601 SME Management Assignment No 01 Solution & Discussion Due Date:12-11-2013







Topic: Role of moral reasoning in business promotion
Learning Objectives: This case study was designed for following objectives;
1. To enable the students for learning practical application of theoretical concepts.
2. To enable the students for learning practical importance of moral reasoning in business decisions.
Learning Outcomes: This case study will aim at following learning outcomes;
1. Students would be able to learn the importance of business ethics in the different decisions of business including business promotion.
2. Students would be able to understand the application of moral reasoning for ethical decision making.
Professional ethics for doctors require thoroughly examining the medicine of each company and then prescribing the best one to their patients. Similarly, professional ethics of sales persons in pharmaceutical companies should require to thoroughly explaining the features of their medicine to the doctors. This product knowledge helps doctors to prescribe the best medicine for patients. But it is an unfortunate reality that medicine companies give heavy incentives including sales commission to the doctors. This unethical practice enhances sale of company’s medicines even if it offers lower quality medicines. This is a practice that is neither supported by utilitarian view nor by justice

view of ethics. It also violates the consumer rights who are innocent patients and believe that their doctor has recommended the best medicine based on its features. This unethical practice of business promotion in this sector has emerged like a trend in the recent few years.

Mr. Ahmad is a newly appointed sales manager in Himalaya Pharmaceutical Company. Top management of the company has set a relatively bigger sales target for this year. This company normally targets a niche market of ENT specialist doctors in public hospitals and private clinics. This niche marketing strategy of the company normally gets implemented through direct selling method. In direct selling method, sales person has to directly approach the potential purchaser or sales booster (like doctors in this case). So, in this sector, it is best to directly approach the relevant doctors who have the authority to prescribe medicine of a particular company.
Sales team of Mr. Ahmad suggested a sales incentive strategy for doctors as the best way to boost sales in shortest possible time. Most of the sales team members were of the view that this has been a successful practice in the past not only for this company but also for the competitors. Team members also thought that this combination of incentive and direct selling strategy will save advertising budget as well. Now, Mr. Ahmad is in a cognitive dilemma as he is to quickly decide a sales strategy. He knows that incentive based sales strategy may be a useful strategy as a short term measure for boosting the sales. But his moral reasoning finds that this may damage the company’s reputation and competitive advantage in the long run. There is no such corporate law or regulatory policy by the ministry of health for prohibiting this type of business promotion practices. That’s why; many companies only follow this profit oriented business model.

Answer the following questions based on your acquired knowledge about business ethics.
1. Identify pro and cons if the sales manager of this company rejects incentive based direct selling strategy on ethical grounds. (5 marks)
2. How can Mr. Ahmad solve this situation of prisoner’s dilemma with logical arguments of moral reasoning? (10 marks)

Note: Answer should be to the point.
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