BATNA: Should you Accept or Reject a Deal?

Negotiating and Bargaining
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Chloe Xu
Director, Australia

BATNA: Should you Accept or Reject a Deal?

Life is an endless series of negotiations. You may negotiate a salary with a potential employer, negotiate a deal with your buyer, or even negotiate clothing choices with your teenage daughter. Accept or reject could be the hardest part of negotiation. Having an established BATNA helps you to determine when you should walk away from a negotiation.

BATNA refers to Best Alternative To a Negotiated Agreement. It is the best outcome you can expect if you fail to reach an agreement at the bargaining table with your counterpart. A well-evaluated BATNA sets the threshold at which you will reject an offer. Effective negotiators should have a walkaway point that is firmly grounded in reality before talks begin.

There are four steps to develop your BATNA:
  • List all alternatives
  • Assess these alternatives
  • Establish your BATNA based on these alternatives
  • Calculate your reservation value (aka Bottom Line), which is the lowest-valued deal you are willing to accept.
In my opinion, exploring and accessing all alternatives before a negotiation can be quite time-consuming. This can lead to a feeling of entitlement in negotiation, which may cause the negotiator to expect too much from the bargaining process.
Do you know any further disadvantage/drawback of developing a BATNA?

Sources: Fisher, R, Ury, W. 2014, Getting Past No: Negotiating with Difficult People, Random House.

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