BATNA

BATNA

Introduction

BATNA refers to the best alternative to a negotiated agreement. It is the most favorable option in case of failure during negotiation where an understanding cannot be met. The party involved should not agree to anything less than BATNA (Brett, 2016). Factors to be taken into consideration include relationship, accuracy, worth of the money and commitment to fulfill part of the agreement. BATNA is often used in bargaining where it can be utilized as a root of gaining an advantage during the bargaining. It’s also used where mediation has failed to bring out the satisfaction of either party and hence the mediator can use BATNA to resolve such a conflict.

Example of BATNA

 In sales for example sale of a vehicle

At an instance where a buyer of a vehicle wants to purchase a lorry for $1500 from XYZ dealers, XYZ BATNA will be to sell for $1500 to all the customers intending to buy that lorry since it would want maximum returns. During the sale, the buyer may not be willing to spend $1500 on a lorry and thus his/her BATNA will be to look for another dealer that can offer that same lorry at a lower price or convince the seller to lower the price of the lorry.

Some cases create difficulty to BATNA. These are;

Offers from close relatives, Offers by other dealers and installment offers from the dealer

Communicating BATNA to Competitor

One should always pay critical attention to BATNA. One should work to show the competitor what a strong BATNA he or she has and would make a choice to follow that path in case the negotiations have no direction. In the case of Greece and the Euro, the Greece leaders chose to shut out the averagely strong BATNA perceptions from their competitors but the one presented was false (Tsebelis, 2016)

How not having BATNA affect the ability to negotiate

Result in poor decision making: The competitor can take advantage of the inability of the other party to use BATNA and convince him/her to adopt a particular thing (intimidation). Thus, the other side may not be able to make clear decisions on a particular issue.

False BATNA

A BATNA that does not exist can be created to gain a competitive advantage where the other party has all the power. For example, in the sale of a house, the buyer can create a false BATNA such as, “There is another house down the lane with all such amenities but cheaper than this one” which is not the case. This can help the buyer gain an advantage of the seller lowering the price.

References

Tsebelis, G. (2016). Lessons from the Greek crisis. Journal of European Public Policy, 23(1), 25-41.

Brett, J., & Thompson, L. (2016). Negotiation. Organizational Behavior and Human Decision Processes, 136, 68-79.

 

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