BATNA in negotiations - what does it mean and how to prepare?

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Preparation for negotiation should include the setting of BATNs (BATNs). Best alternative to a negotiated agrement). This is the best solution found outside the negotiating table. In a situation where an agreement with the contractor is not concluded, your interest can be achieved through the most advantageous alternative. BATNA is also useful during conversations. It should be the point of reference - the offers submitted should be compared with it and checked whether the terms of the contract are really that attractive. It may turn out that the negotiations should be stopped, because their result will be less favorable for us than using the best solution that we can get right away, without having to participate in a tiring and costly meeting with a contractor. What are the BATNA arrangements in the negotiations?

BATNA in negotiations - how to prepare for it

Before starting negotiations, consider how we could achieve our goal if we failed to reach an agreement with the contractor. You need to review the options available - by using creative thinking, several possibilities are created that would contribute to the satisfaction of our need. The best alternative available is BATNA.

Example 1.

A toy company has received an order for electronic teddy bears. The company did not have the appropriate technology to produce 100 pieces of processors in two months. The president decided to look for a contractor who would supply the required number of electronic parts. Before negotiating, he created a list of alternative solutions that would allow the contract to be completed:

  1. ordering the production of toys,
  2. acquisition of modern technology for the production of electronic components from a foreign contractor,
  3. purchase of processors from an importer of Chinese electronics,
  4. entering into cooperation with a regional technology cluster,
  5. using the help of a nearby university in adapting the production line to the production of processors.

The President assessed that if the negotiations do not end with an agreement, the best solution will be to establish cooperation with a technology cluster. An entrepreneur has heard that similar projects have already been implemented in local research centers, and that research funds can be obtained from European Funds. Cooperation with the cluster would take about two weeks and would cost about 10 thousand. zloty. The invested funds would allow to obtain a processor production technology that could be implemented in the company and would be used in the production of a new type of toys. The order would be completed within 6 weeks.

BATNA in negotiations as a benchmark

BATNA also serves as a benchmark in negotiations. The entrepreneur from example 1 will try to negotiate more favorable terms of the contract than cooperation with a technology cluster. If his partner proposes to make processors for the price of 15 thousand. PLN, the toy manufacturer will not agree to it - investing 10 thousand. PLN in research and development works is a more attractive solution. The president will be interested in the short delivery time (less than 6 weeks) and the price below PLN 10,000. zloty. If the conditions provided by the contractor do not match BATN, the toy manufacturer should not agree to them.

The better the BATNA, the greater the negotiator's power and less willingness to make concessions.

BATNA in negotiations sets the minimum that we can agree to in the talks. It also becomes a reference point for setting the limit of concessions. You should never sign a contract that is not as attractive as the best alternative available outside the negotiating table.