For example, as Sam`s home insurance policy renewal period approached, he decided to do a “market check” to compare prices. Sam`s existing insurer – let`s call it Acme – had been raising prices by 7% and 10% per year for the past three years, and Sam wasn`t sure if he was getting the best deal. He then found a carrier that offered a policy 30% less than Acme`s renewal rate. Adapted from “Negotiating with Sole Suppliers” by David Lax (Managing Director, Lax Sebenius LLC), first published in the Negotiation Newsletter. Negotiators often wonder how to deal with individual suppliers who know they don`t really have an alternative from the outside and who benefit from it. Without the power of a realistic alternative to a . BATNA was developed by negotiation scholars Roger Fisher and William Ury of the Harvard Program on Negotiation (PON) in their book series on principle-based negotiation, which began with Getting to YES and unintentionally duplicated the theoretical concept of one-point games of negotiation problems developed by Nobel laureate John Forbes Nash decades earlier. T92 [12] A Nash equilibrium is achieved within a group of players when no player can benefit from a change in strategy if each other player sticks to his current strategy. [13] For example, Amy and Phil are in balance with Nash when Amy makes the best decision she can make, taking into account Phil`s decision, and Phil makes the best decision he can make taking into account Amy`s decision. Similarly, a group of players is in Nash equilibrium when everyone makes the best possible decision, taking into account the choices of others. Third parties can help litigants accurately assess their BATNAs through reality testing and cost calculations. In reality, the third party helps to clarify and justify each party`s alternatives to the agreement. He can do this by asking tough questions about the so-called BATNA: “How could you do that? What would be the result? What would the other party do? How do you know? Or the third party simply adds new information to the discussion.
This shows that the assessment of part of its BATNA is probably wrong. Costing is a broader approach to the same process. It is a systematic attempt to determine the costs and benefits of all options. In doing so, the parties will understand all their alternatives. If this is done together and the parties agree on the assessment, it provides a solid basis for a negotiated solution that is better than the alternatives of both parties. But if the parties fail to reach such an agreement, negotiations will fail and both sides will continue their BATNA instead of a negotiating outcome. In trade negotiations, our actions and reactions often go against our best interests. Self-examination can help, writes William Ury, author of Getting to Yes, in his new book. As the famous story “The Gift of the Magi” shows, sometimes the best outcome in negotiated deals is a lose-lose situation for both sides. Read more If BATNA is strong enough, it is possible to negotiate under very good conditions, since the alternative to the exit of the negotiations is always a fairly good result. Conversely, when BATNA is weak, the negotiating position is weak because there is no good alternative to rely on.
Given the importance of BATNA, some steps should be taken to achieve a better negotiating position. These steps are as follows: It is not always easy to develop a BATNA very close to the result of a negotiation. The BATNA can deviate from the company`s ideal outcome in several respects, leading to an apple-to-orange comparison with the agreement being negotiated. In order to reduce these differences, it may be possible to assign a value to BATTA points that deviate from the negotiated outcome. In the preparation phase, you plan what you will do if no agreement is reached. You can also guess your counterpart`s BATNA. The lesson: Instead of assuming that the deal on the table matches your BATNA point by point, translate your BATNA to fully understand what this means for the ongoing negotiation. To learn more, read Know Your BATNA – The Power of Information in Negotiation.
At the same time as you determine your BATNA, you should also consider the alternatives available to the other party. Sometimes they may be overly optimistic about their options. The more you learn about their options, the better prepared you will be for negotiations. You will be able to develop a more realistic view of what the results can be and which offers are reasonable. Excellent explanations Tactics and strategies surrounding the concept of BATNA and its strategic plans The following diagram illustrates each party`s best alternative to a negotiated agreement (seller and buyer): BATNA and EATNAs also influence what William Zartman and others have called “maturity,” when a dispute is ready or “ripe” for resolution. [3] If the parties have similar ideas or “congruent images” on which there are BATNA, then negotiations are ripe for an agreement. The congruent images of BATNA mean that both sides have similar views on how a dispute will end if they disagree, but pursue their other rights- or power-based options. In this situation, it is often wiser for them to negotiate an agreement without pursuing the dispute process, thereby saving transaction costs.
This happens when the disputing parties involved in a dispute settle amicably (which happens about 90% of the time in the US). The reason the parties reach an agreement is because their lawyers have understood the strength of both parties` case and the likelihood that they will both prevail in court. They can then “go hunting” and achieve the same result much more easily, faster and cheaply through negotiations. The best alternative to a negotiated agreement (BATNA) is the preferred course of action when no agreement can be reached. Knowing your own BATNA means that the best alternative and its costs have been fully considered in a negotiation. With this information in hand, the negotiator will know when to abandon a proposed deal and pursue BATNA instead. In short, BATNA is the alternative to continue in case of failure of the negotiations. Negotiators are often advised to seek out a lot of information about their counterpart, including information about the power of the other side.
One of the most important measures of power is the BATNA of a negotiator or the best alternative to a negotiated deal – the ability to walk away, surely knowing that you can get what you want somewhere. Experienced negotiators understand that they must reject any agreement that is inferior to their best alternative to a negotiated agreement or a BATNA. At a dealership, for example, you shouldn`t buy a used car if you`re pretty sure you can get a better deal on a comparable car elsewhere. But in . Read more Tags: trading table, BATNA, definition of Batna, Batna negotiation, best alternative to a negotiated agreement, Bruce Patton, dealmaking, come to yes, yes negotiation agreement, Guhan Subramanian, meaning of batna, in negotiation, negotiation agreement, negotiation agreement without yielding, negotiation, trading bulletin, negotiation skills, negotiation strategies, negotiation table, negotiation theory, negotiator, Roger Fisher, Ury, What is Batna, What is Batna negotiation, William Ury You may choose to allude to your own powerful BATNA under these circumstances.
