• BATNA: Best Alternative to the Negotiated Agreement .

The
BATNA is what you are going to do when you walk away from
a deal.
• WATNA: Worst Alternative to the Negotiated Agreement.
• ZOPA: Zone of Possible Agreement.
• Reservation Point: Bottom Line (walk away point) - The
reservation price is the least favourable point at which you
will accept a deal. If you are a buyer, it is the maximum you
will pay. If you are a seller, it is the minimum you will accept.
Is ‘no deal’ better than a ‘bad deal’? What does ‘no deal’ look
like?

• ‘No deal’ means walking away without an agreement.

Walking away, however, is only part of the story. Before
walking out, a good negotiator should assess their
alternatives: namely, what other courses of action are open
to them if they do not agree on a settlement.

• A list of alternatives to a negotiated agreement should be

prepared and examined in advance. A negotiator should then
identify the alternative route that is projected to give the best
outcome.
• This ‘best’ option is known as the Best Alternative To a
Negotiated Agreement (BATNA).
 BATNA is a term coined by Roger Fisher and William Ury in their book,
Getting to Yes: Negotiating Without Giving In. It stands for "Best
ALTERNATIVE TO a negotiated agreement.

1. It is the best you can do if the other person refuses to negotiate

with you--if they tell you to "go jump in a lake!" or "Get lost!”
2. BATNAs are critical to negotiation because you cannot make a
wise decision about whether to accept a negotiated agreement
unless you know what your alternatives are.

• Example: If you are offered a used car for Rs7,50,000, but there's
an even better one at another dealer for Rs6,50,000--then
Rs6,50,000 car is your other alternative path.
3. Your BATNA "is the only standard which can protect you both
from accepting terms that are too unfavorable and from
rejecting terms it would be in your interest to accept.

4. Accept? Reopen Negotiation? Withdraw?

a) In the simplest terms, if the proposed agreement is better
than your BATNA, then you should accept it.
b) If the agreement is not better than your BATNA, then you
should reopen negotiations.
c) If you cannot improve the agreement, then you should at
least consider withdrawing from the negotiations and
pursuing your alternative (though the relational costs of
doing that must be considered as well).
The concept of BATNA can be understood with the following scenario wherein
a buyer and seller are negotiating a car deal.
Buyer came across an advertisement wherein seller would like a value of
Rs3Lacs. However, buyer is willing to spend only Rs2Lacs for a car. Since, the
car is well maintained and under warranty, buyer would like to approach
seller for a negotiation.

Before you evaluate your BATNA, ask yourself the following questions?
• Cost: Ask yourself how much it will cost to do this deal relative to the cost
of your best alternative. Cost estimation may include both short-term and
long-term considerations. Figure out which of your options is the most
affordable.
• Feasibility: Which option is the most feasible? Which one can you
realistically put into action in time?
• Impact: Which of your options will have the most immediate positive
influence?
• Consequences: Determine the outcome of each option that could be a
possible solution.
• Stakeholders: Do you need to win over any stakeholders before being able
to move to your BATNA.
Before approaching seller, buyer should Similarly, the seller will also have to assess
look out for his bottom line. What if the his alternatives, once buyer approaches
seller is not willing to sell the car for for a negotiation.
rs 2lacs ? What is the best alternative?

1. Since the car is well maintained and within 1. holding the car for a longer time is
warranty, is buyer willing to pay Rs2.5Lacs? better than selling the car for 2.5 lacs.
2. … 2. Advertise it and make it reach out to
3. So on so forth (identify what works for you)
more people – more customer
3. …
4. …
 How to determine your BATNA?

• 1. Create a list of actions you might take if you don’t reach an

agreement.- What will you do if the deal doesn’t go through? Look for
another car deal? Make changes to your contract? Come up with every
conceivable alternative you can imagine. Get creative with your list of
options.
• 2. Develop the most promising actions into practical alternatives.- Again,
if you’re the car seller, maybe your alternatives are to reach out to more
potential buyers with advertisement portals. Develop these alternatives so
that you can act on them immediately and everything is in place.
• 3. Pick one alternative that seems the most valuable.- Now you’re at the
point when your alternative is most effective. Use your BATNA as leverage
to re-negotiate. If you’re more willing to walk away from a deal than the
other person, you’ve effectively taken control of the outcome.
• The purpose of the analysis is to help parties make informed
decisions about possible options for resolution or a deal.
• It is always helpful to compare possible outcomes along
alternative paths to actual proposals on the table in a
negotiation before making a decision within the negotiation.
• If an alternative looks highly attractive and is highly probable,
a party may choose to reject a proposal that is significantly
less satisfactory.
• On the other hand, if proposed options in the negotiation
look reasonable or better in comparison to probable
alternative outcomes, a party may feel more comfortable
accepting a proposed deal.
• The analysis assists the parties in deciding if a particular
resolution is in their best interests or not.
 Should You Reveal Your BATNA?

Don’t reveal a weak BATNA.

It’s Negotiation 101: Never share your BATNA with the other party if
it is hopelessly weak. A bad BATNA is also known as a WATNA, or
worst alternative to a negotiated agreement.
For example: Telling a supplier that you dumped your last partner and
are desperate to do a new deal is a surefire way to ensure the
supplier will highball you on price and resist compromising.
You will also want to be careful to avoid appearing to be in a hurry,
seeming stressed, or revealing that you have a wide-open
schedule—all potential “tells” that you don’t have much else going on
and may be ready to close a deal on your counterpart’s terms.
 Don’t reveal your BATNA too early.
• When you open up about a great BATNA to your counterpart
early in the game, the information could come across as a
threat: “If you can’t give me an even better deal than the one
I just outlined, I’m out of here.”
• Threats in negotiation foster a competitive atmosphere and
hinder your ability to explore tradeoffs that could create
value.
• The other party might even try to worsen your BATNA. For
example, if you tell a potential employer about a great offer
you have that’s due to expire in 24 hours, the employer might
try to drag out talks to allow the deadline to pass.
 Do work to actively improve your BATNA.
• It’s not enough to simply talk about your BATNA. Rather, you need to do
everything you can to try to improve it.
• For a job seeker, that might mean continuing to seek leads in your
network or thinking about other paths, such as going back to school.

Don’t let them talk you out of your BATNA.

• Suppose you’re thrilled with your BATNA strategy and are eager to play
it up: “I’ve got a great deal waiting for me at the ABC dealership down
the street, but I wanted to see what Honda had to offer first.” Don’t be
surprised if your counterpart starts telling you about the unreliable ABC
he had 10 years ago and how he’d never buy one again.

• When a counterpart disparages your BATNA, he is obviously hoping to

taint it in your eyes. Don’t fall for this tired, old ploy.
 • Reservation Point
Once you identify your BATNA, you are in a position to calculate your
reservation price, which is your walk-away point in the upcoming
negotiation

Therefore, the reservation price is known as the “walkaway price” or “the

bottom line.” The reservation price operates in two ways:

• It prevents you accepting a deal that you should not accept, and
• It gives you a yardstick to measure how much the better the current
deal is than your least favorable position

Reservation prices, like BATNAs, are two fold: there is a seller’s

reservation price and a buyer’s:

• The supplier might go into a negotiation knowing that it will sell at a

minimum of Rs. 5 a unit.
• The buyer might go into a negotiation knowing that it will buy at a
maximum of Rs. 6 a unit.
 Zone of Possible Agreement(ZOPA)

• A zone of possible agreement (ZOPA) is a bargaining range in

an area where two or more negotiating parties may find
common ground.
• A ZOPA can only exist when there is some overlap between
each party's expectations regarding an agreement.
• In order to reach an agreement successfully, negotiating
parties must understand one another’s needs, values and
interests.
• If negotiating parties cannot reach a ZOPA, they are in a
negative bargaining zone.
 ZONE OF POSSIBLE AGREEMENT

A. For example, if a job candidate would accept an offer between

Rs70,000-Rs80,000 per year, and an organization is willing to pay between
Rs65,000-Rs75,000, then a ZOPA of Rs70,000-Rs75,000 exists. (Issues other
than price can and should be incorporated into the ZOPA as well, such as
vacation time and work assignments.
Rs. 70,000 Candidate Rs80,000
ZOPA
65,000 Employer 75,000
B. If, by contrast, there is no overlap between the two (or more) parties’
reservation points—for example, if the job candidate will accept no less than
$70,000, and the organization will pay no more than $65,000, then no ZOPA exists,
and both sides would be better off pursuing their BATNAs.
Reservation point for the employer: Rs. 65,000
Reservation point for the candidate: Rs. 70,000

However, negative bargaining zones can be overcome if negotiating parties are

willing to learn about one another’s desires and needs.
(*will learn during the simulation exercise)
 Worst Alternative to a Negotiated Agreement:
In a negotiation, your WATNA represents one of several paths that you
can follow if a resolution cannot be reached..
• Like its BATNA counterpart, understanding your WATNA is one alternative you can use to
compare against your other options along alternative paths in order to make more
informed decisions at the bargaining table.

• If you walk away, what is the worst that could happen?

• What are the consequences likely to be?
• WATNA can help each party understand the worst alternative to reaching a
negotiated agreement
• Going to the worst case scenario in your negotiation preparation has a particular
benefit: you might reconsider your bottom line

• In negotiation skills, it is good to know what you would reconsider and the rationale. In
this example of selling a home, you may need to sell your home by a certain deadline to
relocate for a new job. Well, that limits your options in the particular negotiation. In this
case, you might restructure your bottom line (or even lower) to sell faster.
• WATNA is a very helpful tool to consider prior to entering into any negotiation as it helps
you have more clarity and negotiation success.
• Most Likely Alternative To a Negotiated Agreement
(MLATNA).
Some negotiators refer to the MLATNA as a ‘reality check’ tool.
Where the BATNA projects the best possible outcome, the
MLATNA looks at what is most likely to happen if negotiations
break down.
 • Structured Negotiation Process
• Rapport Building
1. At least start with a ☺
2. Acknowledge each other’s presence, enquire about everything else
besides conflicting issue.
3. Create an atmosphere of trust and sense of confidence.

• Opening statement
1. Ideal if the counsel talks about the conflict and client focuses on the
consequences of the conflict and how it affected them.
2. Listen to the other side of story without interruptions
3. Separate the person from the issue : in your interest to understand the
interests of the other people. Else, you don’t get what you want.

DON’T DO
Bullshit, that’s the worst accusation I Now I have heard you, I don’t agree to
have ever heard! this part.
 • Gather facts- knowledge is power.
1. Ask questions/ affirm
2. Clarify the facts of the case- don’t be afraid to disagree

• Develop Criteria – how to choose a restaurant ?

• Generate Options – Pumpkin story
• Propose/Repose/Dispose
• Move towards resolution – settlement is not always
necessary. If you cannot resolve, dissolve.