Best Alternative To Negotiation Agreement

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These types of questions must be answered for each alternative before a BATNA can be identified in a complex environmental conflict such as this. For example, as Sam`s owner`s insurance extension approached, he decided to do a “market check” to compare prices. Sam`s existing insurers — let`s call it Acme — had increased interest rates by 7% and 10% a year over the past three years, and Sam wasn`t sure he had the best deal. He then found a support offering a policy for 30% less than the rate of extension of Acmes. “Don`t put all the eggs in one basket” is an old and proven proverb. For a negotiator, this old intelligent saying shows that at the end of the day, you can have a lazy market if you negotiate with another negotiating team. In fact, you can end up with no deal at all. They must have a strong alternative waiting in the wings to have the power to say “no.” The BATNA illustration clearly shows, as the saying goes: “Don`t put all your eggs in one basket.” Today, many managers use BATNA in negotiations instead of having it as a last resource. The examples presented are on the ground and sufficiently illustrate how problems can be developed with BATNA.

To that end, I would very much appreciate hearing your thoughts on disclosing your own BATNA as a two-part tactic, both to build trust earlier in the round of negotiations and as a method to encourage the other party to disclose its BATNA in an equally disarming and transparent manner. Your BATNA “is the only standard that can protect you both from accepting unfavorable terms and from rejecting conditions that would be in your best interest.” [2] In the simplest sense, if the proposed agreement is better than your BATNA, then you should accept it. If the agreement is no better than your BATNA, then you should resume negotiations. If you are unable to improve the agreement, you should at least consider withdrawing from the negotiations and following your alternative (although the costs are also taken into account). BATNAs are essential to negotiation because you cannot make wise decisions about whether or not to accept a negotiated agreement, unless you know what your alternatives are. If you are offered a used car for 7500 $US, but there is a better one at another dealership for $6,500 – the car is your BATNA. Another term for the same thing is your “walking point.” If the seller does not drop their price below $6500, you will walk AWAY and buy the other car. Contracting parties can adapt BATNAs to any situation that requires negotiations, from discussions on wage increases to resolving more complex situations such as mergers.

BATNas are essential to negotiation because a party cannot make an informed decision on whether to accept an agreement unless it understands its alternatives. While a BATNA is not always easy to identify, Harvard researchers have outlined several steps to clarify the process: a strong BATNA can also help a party understand that it has an attractive alternative to the agreement and that it can move away from a tempting offer.