Best alternative to a negotiated agreement definition
/What is the Best Alternative to a Negotiated Agreement?
The best alternative to a negotiated agreement (BATNA) is the preferred course of action if an agreement cannot be reached. Knowing your BATNA means that the best alternative course of action and its cost have been fully considered as part of a negotiation. With this information in hand, the negotiator will know when to walk away from a proposed deal and pursue the BATNA instead. In short, the BATNA is the alternative to be pursued if negotiations fail.
When the BATNA is quite strong, it is possible to negotiate for very good terms, since the alternative to walking away from the negotiations is still quite a good outcome. Conversely, if the BATNA is weak, the bargaining position is weak, since there is no good alternative to fall back on. Given the importance of BATNA, you should take certain steps in order to arrive at a better negotiating position. These steps are:
Enhance your BATNA. Scout for alternatives to the current BATNA to see if it can be improved. If there is no BATNA at all, then create one.
Uncover the other party’s BATNA. If you can discern the other party’s BATNA, you will see if they are operating from a position of weakness or strength. In the former case, this may result in a more aggressive bargaining stance. This information can be difficult to obtain; possible sources are annual reports, industry publications, and industry insiders.
Weaken the other party’s BATNA. It may be possible to weaken the alternatives available to the other party. For example, a prospective acquiree may think that it can play the company off against another buyer in order to drive up the purchase price. The company could acquire the other buyer, leaving the acquiree with few alternatives.
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It is not always easy to develop a BATNA that corresponds closely to the outcome of a negotiation. The BATNA may differ from the company’s ideal outcome in several ways, resulting in an “apples to oranges” comparison to the deal being negotiated. To reduce these differences, it may be possible to assign a value to those BATNA points that differ from the negotiated outcome.