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Best Alternative to a Negotiated Agreement (BATNA)

        posted by , January 31, 2013

If negotiations fail to produce an agreement, what will you do?

Never go into negotiations without a firm understanding of your alternatives. Prioritize your alternatives to find your Best Alternative to a Negotiated Agreement (BATNA).

Definition of Best Alternative to a Negotiated Agreement (BATNA)

A Best Alternative to a Negotiated Agreement (BATNA) is what you will do if negotiations fail to reach an agreement. Understanding your own BATNA and those of your opponents is key to an effective negotiation strategy.

Understanding Your BATNA

The better your BATNA the more power you'll have in negotiations.

Think of a popular actor that has 50 movie producers interested in signing him for their films. This gives the actor plenty of negotiating power (a strong BATNA).

He can ask each producer for their highest offer. He can then prioritize the offers and ask the producers if they can beat the best offer. He can continue this process until no producers are willing to beat his best offer.

Determining Your Opponent's BATNA

In negotiations, the more you understand about the other side's BATNA, the better.

For example, if you're a manager who is negotiating salary with a candidate — you have more negotiating power if you know the best offer the candidate has received from other employers.

Examples of BATNA

Salary Negotiations (Candidate's BATNA)
Stay at your current position (salary $100,000, you dislike your job, long commute, good benefits)

Salary Negotiations (Employer's BATNA)
Hire another candidate (rare skill, market salary around $140,000, urgent business need to fill role)

Car Sales (Buyer's BATNA)
Choose a cheaper model (budget $40,000, wants a safe family car)

Car Sales (Salesperson's BATNA)
Costs + minimum commission (costs $39,000, minimum commission $500)

Learn how to negotiate with a BATNA strategy.

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