A Hypothetical Case

[jw5]

As a goodwill, looking forward to potential future business dealings, is usually also eligible under entertainment.

Ok clarify my hypothetical case further.
B owns a hardware store business.
There is no way he can sell canned abalone in a hardware store.
(Just trying to emphasize that there are no business dealings or no prospect of future dealings between them.)

 

[Ramseth]

Ok clarify my hypothetical case further.
B owns a hardware store business.
There is no way he can sell canned abalone in a hardware store.
(Just trying to emphasize that there are no business dealings or no prospect of future dealings between them.)

But there's a prospect of B liking it and buy more abalones from A's company later. Not a biz-to-biz dealing, nevertheless prospect of future sales. Even if A's company is wholesaling and don't do retail, the particular brand of abalone bought from any retailer would still be part of the business to the wholesaler.

 

[jw5]

If B owns 100% of his business, it's no longer a company. It's a sole proprietorship. In law and tax issues, he personally owns every asset and account to every liability. What he wants to take is up to him. Close down and fire sale or give away everything is also up to him.

It's just like a man saying, he has tens of thousands stashed away in a bank account separate from his daily usage bank account. He won't touch it as it's for rainy days and retirement. However, he decides when's raining and when's retirement. He still have full legal rights to touch it anytime even when it's not raining and he's not retiring.

Bro ramseth

Thanks for your comments about B's case. He seems like a conservative prude doesn't he? Owns 100% of the shares in his company, yet refuses to take the things home from his hardware store.
But what if his company or sole proprietorship is highly leveraged and he has outstanding loans to banks or even individuals or directors of his company? Of course none of these lenders has any shares in the company.

 

[Ramseth]

But what if his company or sole proprietorship is highly leveraged and he has outstanding loans to banks or even individuals or directors of his company? Of course none of these lenders has any shares in the company.

That's simple. It's simply he means he can't afford to take things to give away. It's financially imprudent and irresponsible to give others treats while one's owing some others money, yes?

 

[scroobal]

You don't need to have business dealings with anyone to hand over a sample. The quota given by companies is not restricted. I have never heard of a company doing sales that does not have a quota to provide samples no matter how small unless its a one man show or small time trader.

Its akin to asking sales staff to carry time stamps and monitor their every movement. Samples are already costed in the equation. The sales director performance is measured on his sales and they can't be bothered if he gave his entire quota of samples to his grandmother. He can't meet the target, he will have to go.

Since this country became a sovereign nation, I have yet to hear of a sale director charged for pilfering or misappropriation of samples. If you are in business, you will know how pedantic it can be to monitor what Sales people will do with their samples. On the other hand I have heard people sending anonymous letters to companies to fix up people for handing over samples.

As I said, its a different proposition if other staff not in sales or related function are involved. It then comes under misappropriation.

Bro, I am not trying to entrap anyone, in or out of this forum.
This case is purely hypothetical.
But what you said in the first para is incorrect. A and B have no business dealings at all. A cannot claim that he gave the product to B for promotional and marketing reasons, unless he has been expressly given the freedom to give out free samples.

 

[scroobal]

It might be appropriate to highlight a case where people not conversant in business are involved.

This is a singapore lady that bought over a floral wholesale business in a state in Oz which had a good track of sales and was certainly established. One of the first things that she did was to terminate the business development manager as she could not account for her movement as well as manager's expense account ( or least she did know how to account for it business wise). Within 6 months, the business was on its knees and the main supplier flew in from Singapore, scolded her and bought over her business at a fraction of the course.

The lady owner gave up on her business migration plan and is now back in Singapore her old job as secretary for a local bank.

When you hire a sales or business development manager, you work in the sample quotas, the business and entertainment expenses, the salary and you set the sales target after costing everything else. You then worry about the incoming sales. You don't lose sleep over what the guy does with his sample or his goes home and sleep for 7 hrs during the work day. He does not meet the target, he gets the sack. Within a week, you know if things are working well.

That's simple. It's simply he means he can't afford to take things to give away. It's financially imprudent and irresponsible to give others treats while one's owing some others money, yes?

 

[scroobal]

It might be appropriate to highlight a case where people not conversant in business are involved.

This is a singapore lady that bought over a floral wholesale business in a state in Oz which had a good track of sales and was certainly established. One of the first things that she did was to terminate the business development manager as she could not account for her movement as well as manager's expense account ( or least she did know how to account for it business wise). Within 6 months, the business was on its knees and the main supplier flew in from Singapore, scolded her and bought over her business at a fraction of the course.

The lady owner gave up on her business migration plan and is now back in Singapore her old job as secretary for a local bank.

When you hire a sales or business development manager, you work in the sample quotas, the business and entertainment expenses, the salary and you set the sales target after costing everything else. You then worry about the incoming sales. You don't lose sleep over what the guy does with his sample or his goes home and sleep for 7 hrs during the work day. He does not meet the target, he gets the sack. Within a week, you know if things are working well.

That's simple. It's simply he means he can't afford to take things to give away. It's financially imprudent and irresponsible to give others treats while one's owing some others money, yes?

 

[jw5]

You don't need to have business dealings with anyone to hand over a sample. The quota given by companies is not restricted. I have never heard of a company doing sales that does not have a quota to provide samples no matter how small unless its a one man show or small time trader.

Its akin to asking sales staff to carry time stamps and monitor their every movement. Samples are already costed in the equation. The sales director performance is measured on his sales and they can't be bothered if he gave his entire quota of samples to his grandmother. He can't meet the target, he will have to go.

Since this country became a sovereign nation, I have yet to hear of a sale director charged for pilfering or misappropriation of samples. If you are in business, you will know how pedantic it can be to monitor what Sales people will do with their samples. On the other hand I have heard people sending anonymous letters to companies to fix up people for handing over samples.

As I said, its a different proposition if other staff not in sales or related function are involved. It then comes under misappropriation.

Good points.
"Strictly speaking", giving samples to people whom he has no prospects of business dealings with, should not be allowed.
But if you were the guy's boss or the company's main shareholder, you would not propose to take any action against him because of that. You would only take action against him if the sales were really poor. If he sold one million cans a month but gave away 100 cans of samples, that would probably be better than if another guy sold 100,000 cans a month and did not give a single can as sample.
Then again, you would probably also want to understand this guy's mentality and his ethical value system. If he gave samples to his grandmother, he might one day also give your whole business plan to your competitor.

 

[jw5]

That's simple. It's simply he means he can't afford to take things to give away. It's financially imprudent and irresponsible to give others treats while one's owing some others money, yes?

There are other factors besides lack of financial prudence, which is a good point.
The loan agreements may have covenants.
The business owner may not want to make a habit of giving things to people randomly and seperate his business dealings from his personal life. He would also be setting a bad example for his employees, who might start doing the same.

 

[Ramseth]

The business owner may not want to make a habit of giving things to people randomly and seperate his business dealings from his personal life. He would also be setting a bad example for his employees, who might start doing the same.

Owner is owner and employee is employee. If someone comes to your home and see you smoking, he'll probably light up his cigarette without asking if you mind. But where got people kiss your wife just because they see you doing that and follow "example"?

 

[Wang Ye]

Some people would argue that B is trying to help A. By accepting the can of abalone, he may be getting A into trouble.
A can only give free samples if he has been expressly given the right to. But don't forget that B has no business dealings with A or his company.

The issue is not about B not accepting the freebie but about how he chose to decline it. B chose to decline and implied that A is giving away what does not belongs to him and to rub it in with his high moral ground.

If we were to be so picky about it. My question is "Is A authorised to give away any samples?". The answer to that will answer everything.

So long as B eat abalone, he can be given a sample. Why? Because if he finds it good and likes the brand ... the brand has won another customer!

 

[scroobal]

Agree bro, but its a futile exercise to monitor. The key is the sales performance and the quota is set by the boss or the executive committee.

Good points.
"Strictly speaking", giving samples to people whom he has no prospects of business dealings with, should not be allowed.

 

[jw5]

Owner is owner and employee is employee. If someone comes to your home and see you smoking, he'll probably light up his cigarette without asking if you mind. But where got people kiss your wife just because they see you doing that and follow "example"?

They may not kiss your wife because they see you kissing her, but they may kiss your wife because she is pretty.
That's the horrid nature of human beings.

 

[jw5]

The issue is not about B not accepting the freebie but about how he chose to decline it. B chose to decline and implied that A is giving away what does not belongs to him and to rub it in with his high moral ground.

If we were to be so picky about it. My question is "Is A authorised to give away any samples?". The answer to that will answer everything.

So long as B eat abalone, he can be given a sample. Why? Because if he finds it good and likes the brand ... the brand has won another customer!

Oh, of course agree that B could have given a better reply.
But it's a reality in life that many people give high handed answers or take the moral high ground in certain situations.
To think that people are mostly tactful and compassionate, would be fooling ourselves.

 

[Ramseth]

They may not kiss your wife because they see you kissing her, but they may kiss your wife because she is pretty.
That's the horrid nature of human beings.

In that case, that someone will attempt it whether an "example" is set or not.

 

[jw5]

Thanks for all your responses to this hypothetical case.
Lke I said earlier, I don't think there's a right or wrong answer. And I wasn't trying to get a "right" answer, or to find out how to handle certain matters.
I was merely trying to get views of such a case does happen in real life in different forms, and to also understand better those who replied.

Glad to see that nobody said things like "A is sales director what, he can give to whoever he wants". Or "Why is B such a stupid prude?"
Everybody who replied had some good ideas or suggestions.

To summarize, I would say that what A did is probably not "strictly speaking right". But then again, if you were his boss or the owner of the company A works for, you would not do anything to him if he delivers superb sales, despite giving away free goods to people whom he probably shouldn't.
And in B's case, what he does with his own company is probably right, although he might be less sticky with his own company and less prudish with his friend.