BATNA is a term coined by Roger Fisher and William Ury in their 1981 bestseller, Getting to Yes: Negotiating Without Giving In. It stands for “Best Alternative To a Negotiated Agreement,” and is in essence a well thought out plan “B” in the event your negotiation is unsuccessful. It truly is the measure you should use to prevent you from accepting terms that are too unfavorable and from rejecting terms that are in your best interest to accept.

Having a BATNA as part of the negotiation is imperative and increases your negotiating power. No one should come to the negotiation table without a well thought out and prepared BATNA. In addition to having a BATNA, parties should have a predetermined bottom line. The bottom line is meant to act as the final barrier where a negotiation will not proceed further. It is a means to defend oneself against the pressure and temptation that is often exerted on a negotiator to conclude an agreement that is self defeating. Although bottom lines definitely serve a purpose, they also regrettably foster inflexibility, stifle creativity and innovation, and lessen the incentive to seek tailor-made solutions that resolve differences. In stark contrast to a bottom line, a BATNA is not interested in the objectives of a negotiation, but rather to determine the course of action if an agreement is not reached within a certain time frame.

When creating a BATNA, you should:
Develop a list of possible actions that you may take if there is a failure in agreement.
Improve the more promising of the alternative ideas and tweak them a bit to get more of a realistic understanding of the agreement.
Select the best option, after carefully reviewing the consequences of each alternative option.
When you fail to explore your BATNA, you will find yourself in a very shaky situation:

Strong internal pressure to make an agreement, as they will be unaware of what would happen should the negotiation fail.
They will be overly optimistic about proposed agreements which can then result in the associated costs not being fully appreciated.
They will face the peril of becoming committed to reach an agreement, as they will be unaware of alternatives outside the negotiation. This will foster pessimism about their prospects if the negotiation fails.
They will become beholden to the whims of the law of agreement, which holds that when persons agree to something this is entirely dependent on the attractiveness of the available alternatives.
Parties should not disclose their BATNA unless the alternative is better. In other words, if your best alternative to a negotiated agreement is better than what the other party is offering, then disclosing it is to your advantage. On the other hand, if it is worse, do not disclose it.

It is prudent to attempt to identify your opponent’s BATNA as well. A negotiator who knows more about the alternatives available to the other party will be more able to prepare for a negotiation. If a negotiator learns that the other party is overestimating its BATNA before the start of a negotiation, then he or she will be able to effectively use this information to lower the negotiation expectations of the other party.

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