One way to be prepared for a negotiation is having a strong BATNA. BATNA is an acronym for Best Alternative To a Negotiated Agreement and is a tool that can be used as an alternative in a negotiation when an agreement cannot be reached, also seen as your walkaway point. It is important to be prepared and do your research before a negotiation to determine your BATNA and ensure you are not forced into accepting a bad deal.
BATNA explained
This diagram shows each partyโs BATNA and how each party can best negotiate on an agreement.
ZOPA โ Stands for zone of possible agreement and is the overlap between the buyer and sellers settlement range.
Sellers Settlement Range โ Biddable range acceptable to the seller.
Buyers Settlement Range โ Biddable range acceptable to the buyer.
Buyer/Seller Worse Case โ The reservation point of the respective parties.
For example: If the buyer offers a price that is lower than the sellers worst case scenario, then the seller may have to find another buyer unless compromise is possible.
If the seller offers a price that is higher than the buyers worse case scenario, then the buyer is better off with an alternative solution, unless compromise can be made.
Example:
Jane wants to buy a car and her desired price is ยฃ500 but can go as high as ยฃ750 for the right car.
Tony wants to sell his car for ยฃ1000 but Is willing to take ยฃ650 as the lowest offer if the buyer pays in cash.
This means the ZOPA range is between ยฃ650 and ยฃ750 which is the point where Jane and Tony could come to an agreement if they negotiate well.
Benefits of Using BATNA
- It provides an alternative if negotiations fall through
- It provides negotiating power
- It determines your reservation point (the worst price you are willing to pay or accept)
- Gives you confidence in negotiations
- Other partyโs more likely to accept if you have a strong BATNA
How to Find Your BATNA
To find your BATNA you must first list all the possible actions you could take if the negotiation fails and evaluate each alternative to ascertain which you would find the most successful outcome and also the lowest deal you would willingly accept. Deciding your BATNA is an important step in your negotiating preparation and process, as it is used if you cannot come to an agreement. Knowing your best alternative option gives you an acceptable resolution so you donโt end up walking away with nothing. It also gives you confidence when negotiating, knowing you have a plan B.
Even after using all your available options, it is still possible for either partyโs to not come to an agreement. This is why is it also important to know when to walk away and find an alternative buyer/seller.
If you are interested in Negotiation Skillsย training please contact Sales Training International onย +44 (0) 1704 889325ย or emailย info@salestrainingint.comย for more information.
