KNOW YOUR BATNA

Presentation by

Mayur Dvivedi

KNOW YOUR BATNAThe BATNA concept

BATNA in life

Strategic plan and tips to use the BATNA

The BATNA ConceptThe Need for Negotiations

Situation, Parties, Issues Interests, Payoffs & GoalsBargaining Mix, Bids & TacticsLimits & Alternatives

Best Alternative To Negotiated Agreement

The BATNA Concept

The Negotiation Bargaining Zone

Buyer’s Reservation Price (BR) (e.g., $25M)Buyer’s Target Price

Seller’s Reservation Price (SR) (e.g., $17M)

Seller’s Target

The bargaining zone is the space between the buyer’s reservation price (BR) and the seller’s reservation price (SR) – that is, the zone of possible agreement. If BR > SR, then a Positive Bargaining Zone exists. The zone of agreement is from SR to BR (e.g., $8M).

ZOPA

A Negative Bargaining Zone

Seller’s Reservation Price (SR) (e.g., $25M)

Buyer’s Reservation Price (BR)(e.g., $17M)

If BR < SR, then there is no zone of possible agreement.

Car Buying

Your TP Dealer’s RP Your RP Dealer’s TP

150000 180000 200000 220000

Bargaining Zone

190000=probable compromise

Reservation Point – Job Hunting

L&T Offer?

L&T salary offer

18 L

Present job salary

16 L

Bargaining Zone The range of negotiated outcomes that are

acceptable to all parties

Your RP

17 L

Your TP

22 L

L&T TP

18 L

L&T RP

24 L

Your Bargaining Range

L&T Bargaining Range

Your Stretch Goal

28 L

Negative Bargaining Zone

L&T TP

18 L

Your RP

22 L

L&T RP

20 L

Your TP

24 L

L&T Bargaining Range

Your Bargaining Range

Negotiation Strategic PlanBased on situation, identify BATNA clearly• Better BATNA=more negotiation power• Improve your BATNA

Consider other side’s BATNA• Know the deal’s ZOPA• Let other side perceive you have strong BATNA• Consider disclosing own BATNA, if strong

Use Stretch Goals• Make 1st offer to Anchor above your target• Else re-anchor• Prepare objective arguments

NEGOTIATIONS ARE KEY TO SUCCESS

TAKE AWAY

KNOW THE SITUATION KNOW YOUR BATNA KEY FOR SUCCESS

PREPARATION