The graph below illustrates the best alternative for each party to a negotiated agreement (seller and buyer): BATNAs are essential to negotiation because you cannot make a smart decision about accepting a negotiated agreement, unless you know what your alternatives are. If you are offered a used car for 7500 $US, but there is a better one at another dealership for $6,500 – the car is your BATNA. Another term for the same thing is your “walking point.” If the seller does not drop their price below $6500, you will walk AWAY and buy the other car. “Don`t put all the eggs in one basket” is an old and proven proverb. For a negotiator, this old intelligent saying shows that at the end of the day, you can have a lazy market if you negotiate with another negotiating team. In fact, you can end up with no deal at all. They must have a strong alternative waiting in the wings to have the power to say “no.” The best alternative to a negotiated agreement (BATNA) is the approach that a party to the negotiations will take if the talks fail and no agreement can be reached. Negotiators Roger Fisher and William Ury used the term BATNA in their 1981 bestseller “Getting to Yes: Negotiating Agreement Without Giving In.” A party`s BATNA refers to what a party can rely on if a negotiation proves unsuccessful. You should try to increase your flexibility. It is important to keep in mind that your approach and alternatives should be able to bend in the wind and weather an unexpected storm. A negotiator can start discussions with a preconceived idea of the best alternatives available to both parties. However, negotiators should not be bound by these prejudices. For example, as Sam`s owner`s insurance extension approached, he decided to do a “market check” to compare prices.
Sam`s existing insurers — let`s call it Acme — had increased interest rates by 7% and 10% a year over the past three years, and Sam wasn`t sure he had the best deal. He then found a support offering a policy for 30% less than the rate of extension of Acmes. A BATNA is not pre-packaged. A BATNA is the result of a two-step planning and preparation process.