Steel Products

Ethics and Your Business: Bluffing vs. Lying

July 29, 2017

“Business negotiation is similar to poker. Just because I may be bluffing doesn’t mean I am morally defective. Bluffing is a universally recognized part of the game,” responded one reader to Steel Market Update’s new “Ethics and Your Business” column.

Is the steel business like a poker game? Some would say that bluffing is basically another form of lying, distorting the truth to gain an unfair advantage. Others would argue that bluffing is just gamesmanship, and that the bluffer is not acting unethically in any way. It would be naïve to believe that what the other player is telling you is always the truth, the whole truth, and nothing but the truth, free of any calculation or exaggeration. Without bluffing, a company would put itself at a big competitive disadvantage in all its dealings, they say.

Is it merely a bluff to suggest that the opportunity to buy a certain product at a certain price may be short-lived, conveying a sense of urgency to the buyer, even though the warehouse is overstocked with the item? Is it merely a bluff to tell a customer he or she is getting the best price, even though other customers are paying less? Is it merely a bluff to assure the buyer of the quality of the product you wish to sell, knowing there is a better option for the customer’s application?

By its nature, negotiating a steel transaction is a competitive scenario, but must it be an adversarial one? British statesman Henry Taylor once said, “Falsehood ceases to be falsehood when it is understood on all sides that the truth is not expected to be spoken.” In other words, the players in a poker game expect their opponents to attempt to bluff. Therefore, every statement made by either side is subject to question and doubt. Should trading partners negotiating a steel deal go into the transaction with the same expectation and skepticism? If so, perhaps they are doing business with the wrong people.

In Texas Hold’em, it’s winner take all. In the best business transactions, both sides walk away feeling like winners.

SMU Note: Knowledge is the best defense (or offense) as many times the side with the advantage in a negotiation is the one who understands market fundamentals (market pricing, price momentum, competitive factors, supply/demand, lead times, etc.) and knows how to use information to their advantage.

Editor’s note: Steel Market Update wants to do all it can to promote and support ethical business practices and social responsibility in the steel industry. For that reason, we launched “Ethics and Your Business,” a new segment in our newsletter and coming soon to our website. Periodically, we will provide commentary and interviews with industry thought-leaders on the subject of ethics from various points of view—corporate, educational, governmental and others. We welcome your comments, as well. Just send an email to Tim@SteelMarketUpdate.com. We hope you find it interesting and inspiring.