What is BATNA?

What is BATNA?

July 28, 2021 Off By Paul Petersen

Have you ever come across a situation when your idea or proposal got rejected? Most of us, in such cases, see a dead end with no clue or hopes to progress. Some people, however, with the help of strategically thinking come up with the best alternative to the negotiated agreement also known as BATNA.

What is BATNA?

Best Alternative to Negotiated Agreement (BATNA) is an advantageous alternative that a negotiating party can bring to the table if negotiation fails. The term was first coined in 1981 by authors Roger Fisher and William Ury in their book “Getting to Yes: Negotiating without Giving in”

BATNA can be used in any agreement situation, whether it is professional or personal. But why and how BATNA is important?

Importance of BATNA

BATNA is an often-used negotiation tactic and should be set before the negotiation starts. It’s your plan B for the worst-case scenario when plan A doesn’t work.

And knowing your best alternative to your set negotiations will help you:

  1. Come up with the best alternative to take the deal forward.
  2. Provide negotiation power even after the primary negotiation fails.
  3. Determine your worst-case scenario or reservation point you are willing to accept.

How to identify your BATNA

Now that you know what the term is and its importance in business agreements let’s see the tips to identify your best alternative to the negotiation.

  1. List all your alternatives to the current negotiation. Determine what would you do if the negotiation falls through.
  2. How much is every alternative worth to you? Does it cost you less or more loss than a profit? Determine the value of every alternative.
  3. Now among the list of alternatives, compare and find the alternative with the highest value for you. That is your best alternative to negotiation.
  4. After determining your best alternative, also calculate the lowest settlement you are willing to accept.

Examples of BATNA in real life

If you remember we have mentioned that the best alternative to negotiation not only works in professional but also in personal scenarios. Let’s see how with an example.

Professional scenario

Amrita reached the office for an HR interview. She knew it was the last step and she was sure to be offered the position of marketing manager at one of the reputed companies in Pune. Once called in she went to the HR’s cabin.

Once the salary negotiation started the HR declined to pay what Amrita’s expecting, which was Rs 56,000/m. “We can’t offer more than Rs 47,000/m,” said HR.

Here the negotiation failed. But Amrita had already determined her best alternative to the negotiation as well as the least salary she would be willing to settle with. After the negotiation failed Amrita put forth her best alternative, Rs 51,000 which the HR of the company agreed to. Here, the agreement was completed even after a failed negotiation due to BATNA from Amrita.

Personal Scenario

Rakesh was in negotiation with Param to buy his second-hand car. Param put the selling price Rs 6 lakhs. However, Rakesh was only willing to pay Rs 4.5 lakhs. To take forward the negotiation Rakesh put his best alternative as Rs 5.3 lakhs. After a little convincing Param agreed and the agreement was completed.

In both examples, you must have noticed one thing that the negotiating parties came up with BATNA that was suitable for both the parties. In both cases, if negotiating parties, Priya and Rakesh had proposed their BATNA that was unreasonable for the sellers, in this case, the HR and Param, the agreement would have failed.

Thus, it is important to find the right BATNA before you enter any serious negotiation. Want to learn more about BATNA and hone your negotiation tactics? You can enroll in online courses and learn more on the topic from industry experts.