Defining Your BATNA
Figuring out your BATNA requires a bit of introspection and planning. Get started by making a list of all of the alternatives you have if the negotiation fails. Be sure to keep in mind any costs that might be involved in exercising these alternatives. Through this process you can identify your reservation value, or the lowest value of the deal that is better than your available alternatives. You can then evaluate the Options to see if any of them are superior to your alternatives. Before entering into any negotiations you should know your BATNA so you know what kind of deal would beat it.
For example: if Lisa is negotiating a price on a new apartment, she could start by listing out alternatives to finding a new apartment:
- Moving in with her parents,
- Staying at a friend’s house, or
- Extending the lease on her current apartment for another year.
Some additional costs she might consider could be the time and expense of moving her belongings several times or storing them somewhere. Through this process, she can determine the maximum amount she would be willing to pay for her new apartment, assess her Options, and negotiate.
Improving Your BATNA
Before going into any negotiation you should evaluate your own BATNA and see if there are any ways you can strengthen it. This might come in the form of:
- Looking for new alternatives,
- Mitigating the costs associated with one of your alternatives, or
- Finding a way to separate certain interests into other deals.
Lisa could improve her BATNA by asking her current landlord if she can have a month-to-month lease; that would improve her ability to continue living in her existing apartment while she searches for new one. She could look into the cost of storage units to reduce the number of times she needs to move her furniture. If the need for a parking spot is holding up the negotiations or putting her in a weak position, she could consider looking elsewhere for parking so she doesn’t need to involve it in her housing deal.
Lowering Their BATNA
It is also helpful to consider ways to lower the value of the other party’s BATNA. You can do this by emphasizing the value that you bring to a deal that they would be unlikely to get from a similar deal with someone else. Identifying and pointing out weaknesses in their alternatives also makes you more powerful in a negotiation.
In Lisa’s apartment negotiation an important aspect of the landlord’s BATNA will be how easily they can rent the same apartment out to other people; it would be hard to significantly lower their BATNA if they have another offer or number of people scheduled to see the apartment. Lisa could demonstrate additional value that she brings to the deal with something as simple as providing a reference letter from a previous landlord; this will show the landlord that Lisa is a good tenant and thus make other apartment candidates seem like riskier alternatives.
No matter the size or type of negotiation, it is important to spend time preparing for it. Establishing your BATNA is the one of the most critical parts of negotiation preparation so before you enter make sure you can answer following question:
- What will I do if we don’t reach an agreement in this negotiation?
In just one week you will learn how to understand each party’s interests, generate options to maximize value, leverage standards and alternatives as power, maintain productive relationships, and effectively communicate your intended messages.
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