October 02, 2019

A Complete Guide to BATNA

Negotiating is a very tricky task, especially when you have something crucial at stake. You can find yourself struggling when the negotiation starts to favor the other side...

Negotiating is a very tricky task, especially when you have something crucial at stake. You can find yourself struggling when the negotiation starts to favor the other side. In such cases, you have three options: accept the deal without further negotiations, walk away from the deal, or present a better alternative to the negotiation. While the first two options are self-explanatory, the third is key to turning a negotiation in your favor. BATNA—Best Alternative To a Negotiated Agreement—is your trump card when the negotiation starts to turn unfavorable.


What is BATNA?


In negotiation theory, the best alternative to a negotiated agreement, or BATNA, refers to the most advantageous alternative course of action a party can take if an agreement cannot be reached. Negotiation researchers Roger Fischer and William Ury, of the Harvard Program on Negotiation (PON), are the pioneers of BATNA. They introduced it in their best-selling 1981 book, Getting to Yes: Negotiating Agreement Without Giving In. BATNA, one of the five principles of negotiation according to Fischer and Ury, focuses on the psychology of negotiators. BATNA does not necessarily guarantee an agreement in your favor, but it prevents the agreement from going against your terms. Having a BATNA before you start negotiating allows you to make greater demands of the other side, as you have a viable alternative available. As a result, you will have an easier time walking away if the negotiations are favoring the other side. BATNA is a valuable tool to have when negotiating for the best deal possible. This guide will help you understand the steps and principles of BATNA.


Process of BATNA


BATNA is a great technique for strengthening your negotiation position. It saves you from accepting unfavorable terms and allows you to push for the best terms possible. Finding alternatives to any deal is not a straightforward task. Fisher and Ury gave a simple outline for developing your BATNA: Coming up with possible actions as alternatives when no agreement is reached Improving the promising options to make them more practical Carefully selecting the best option Using this outline, we have developed a step-by-step guide to the process of BATNA. This will help you develop a strong BATNA from scratch.


Clearly Define your Purpose


You need to understand what you are trying to get from the negotiation. For example, someone trying to sell a business will have a different negotiating purpose than someone trying to find better pricing on products. So before you set out to negotiate, gather all your stakeholders. Negotiating as a tream can help clarify what the the stakes are. If you are going to negotiate for a higher salary, make sure you know the terms you are demanding. You must know how credible your demands are for this agreement.


Brainstorming


You cannot begin without brainstorming all the possible alternatives you can use during the negotiation. Write down all the alternatives; you will come up with more than you initially thought. Once you make a list of all the alternatives, identify the top ones. One mistake people make at this step is having assumptions about the other party. Developing a good BATNA does not involve making theories about the other party.


Evaluation


Next comes the evaluation of each alternative. This step can help you check possible mistakes you’ve made in identifying the best options. Do some research about the options you have. The more options you have, the better your understanding of the market will be. Assess each of the options very carefully.


Setting the Reservation Point


A reservation point is the breaking point of the negotiation. At this point the deal will no longer be profitable for you. Great negotiators never reveal their reservation point. Having a viable alternative will let you figure out your where your reservation point should be.


BATNA and ZOPA


Now that you know what a BATNA is, you should be aware of another term that is frequently used along with it. ZOPA, or Zone of Possible Agreement, is the range or area of a negotiation that is satisfactory to both parties. While each party has their BATNA in a negotiation, it is not very likely that every negotiation has ZOPA. ZOPA occurs when the reservation point of both parties is equal or very close. In simple terms, ZOPA is the area where both parties’ reservation points overlap. For example, if an employee’s demand for a pay raise is equal to or almost the same as what the employer has in mind to offer, that is the ZOPA.


When to Walk Away


At times it is better to turn down the negotiation and look for another one. It can be nerve-wracking to walk away from the table if you only have one option. Having a strong alternative to the current negotiation will help you walk away from a bad deal. Additionally, when the other side sees that you are ready to walk away, it can lead to them agreeing to your terms. Knowing when to walk away is one of the most powerful negotiating tools you have.


Revealing your BATNA


Sometimes it can be advantageous for you to reveal your BATNA. If the other party understands that you have a better option, they may be forced to match it or do better to win your business. Remember, the initial terms that a party puts forth in a negotiation is rarely the best they can do. In negotiations, everyone is trying to keep as much of the profit margin as possible for themselves. Your BATNA can be the leverage that you use to show the other side that their deal needs to improve.


Wrapping Up


BATNA, or Best Alternative To a Negotiated Agreement, is crucial to get your way when any agreement is going against your interest. It involves using advantageous alternatives to avoid the failure of negotiation. Determining your BATNA before any negotiation is very important. You must brainstorm, evaluate, and select the best alternatives.

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