“When you fail to plan , you plan to fail.” The most important stage of a negotiation takes place before you meet your counterpart. Whatever happens subsequently depends on it. Yet, because it’s prior to what we casually call “negotiations,” most people fail to give it enough thought.
An Offer You Should Refuse. When should you reject an offer? When it’s not as good as what you can achieve on your own. For example, if I offer you my used car for $ 10,000 but you can buy an equally valuable car for $ 9,000, you should reject my offer.
The course of action you would take if we don’t arrive at a mutually beneficial solution is known as your BATNA: “Best Alternative To a Negotiated Agreement.” In the above example, buying the less expensive vehicle would be your BATNA.
Any offer below the value of your BATNA is one you would reject. That is why your BATNA is also your “walkaway point.” Either your counterpart proposes something better, or you walk away.
You should never enter a negotiation without first knowing your BATNA. Otherwise you don’t have an alternative against which to evaluate possible deals. Hence, you run the risk of accepting an offer that is worse for you than your BATNA.
Improve Your BATNA. Knowing your BATNA is a first step, but you can do better. You should never enter a negotiation without first improving your BATNA as much as you can.
A BATNA is not something that arises spontaneously in nature. It is a contingency plan you develop in your mind. To define your BATNA, ask yourself this: “What would be my best course of action if I can’t reach an agreement?” And to improve it, ask: “Is there anything I can do to create an alternative that I would prefer to my previous plan?” This is a question you must repeat until you cannot answer in the affirmative.
In the previous example, as you and I go back and forth over the price of my car, you could be actively looking for a better option than the other $ 9,000 vehicle. You will improve your BATNA, and thus your bargaining power, by finding another comparable vehicle for $ 8,500, or a higher quality one for $ 9,000.
Many people think that the goal of a negotiation is to make a deal. Consequently, they say that a negotiation “fails” when the parties don’t reach an agreement. I beg to differ.
The goal of a negotiation is to make a “good” deal, meaning a deal that is better than each party’s respective BATNA. If each person has another option that is better for her, then the best outcome of the negotiation is “no deal.”
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