This document discusses the concept of a Best Alternative To a Negotiated Agreement (BATNA) and its importance in negotiations. It defines a BATNA as the best option if an agreement cannot be reached through negotiation. It explains that having a strong BATNA gives a negotiator more power. The document provides tips for negotiators such as identifying your BATNA based on your situation, improving your BATNA, considering the other side's BATNA, knowing the zone of possible agreement, and using stretch goals and anchoring techniques to get the best possible deal.
6. 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
7. 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.
8. Your TP Dealer’s RP Your RP Dealer’s TP
150000 180000 200000 220000
Bargaining Zone
190000=probable compromise
10. 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
11. 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
12.
13. Based 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
