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WHAT IS BATNA?

BATNA is about having an alternative that can be turned to when negotiation takes a halt. It is more about improving the bargaining position and to measure how good a deal is. The power of BATNA affords the leverage to ask for more. If the negotiated deal doesn’t work out as per the expected outcome, BATNA concept can be followed.

BATNA can make the deal happen to the party’s advantage or make the part walk away from the deal.

If the value of the deal proposed is lower than the reservation value, the party should reject the offer and pursue BATNA. A strong BATNA helps the party to reject tempting offers.

BATNA comes with planning and preparation. When the deal doesn’t work out as per the negotiators requirement, the following steps as outlined by Harvard should be followed.

  1. Develop a list of alternatives – The negotiator should consider the situation and develop a list of alternatives possible to make the deal happen to the negotiators advantage.
  2. Evaluate all the alternatives – The negotiator after developing the list of alternatives should then evaluate all the alternatives. The negotiator should realistically estimate counterpart’s alternatives as well in order to have figure out whose alternative is stronger.
  3. Select the best alternative – The negotiator should select the best possible alternative to settle down the agreement and to have a win-win situation. The key phrase here is not just the best alternative but alternate to a negotiated agreement. It is important to make sure that the negotiator should not pre-conceive the idea of the best alternatives and would be flexible in his alternatives and should not be bound by them.
  4. Calculate the lowest value deal: After selecting the best alternative, the negotiator should calculate the reservation value or the lowest valued deal willing to accept. The negotiator should consider what they would get it if they walk out of the deal if the lowest deal is not agreed upon.

What is BATNA usually used for?

  1. To achieve a better negotiated deal
  2. Batna is used to achieve a better negotiated deal. When the startup is in the initial phase, buyers usually lack trust in the company and the product. In order to boost up sales, BATNA can be used by the startup company in terms of selling products as per customer preferences and giving the buyers a better deal by giving discounts.

  3. To achieve better sales target by using BATNA
  4. During the end of the financial year, most of the fashion clothing brands have the stock on sale. The brands BATNA strategy of having a better sales target is opted by putting the stock on sale which indirectly helps the brand to engage more crowd by offering good deals and discounts and thus achieving better sales target using BATNA.

  5. Job Interview process
  6. During the job interview process, if the candidate has the talent and the potential and is capable enough to join the firm and has other job offers to consider, in that case the employer needs to offer better alternatives using BATNA . The employer needs to close the deal and needs to accommodate the employee’s interest and make him join the firm at the best negotiated alternative package.

  7. Suppliers while selling the raw materials
  8. If the raw materials sold by the supplier is in high demand, the manufacturer needs to apply the BATNA strategy in order to buy the raw material at the best negotiated price so that the manufacturer can enjoy a better profit margin and also pass it to the customer in order to boost the sales. The manufacturer should be very careful while applying the BATNA concept as failure in getting the agreement at the best possible price can make the manufacturer loose the supplier.

  9. Customer preference
  10. When a customer strongly prefers a company’s product to the alternatives available in the market, the customers BATNA strategy is to purchase the second preference whereas the company’s BATNA Strategy is to offer better discounts, better after sales service in order to close the deal with the customer.

WHEN, WHERE AND BY WHOM WAS BATNA CONCEPTUALISED?

DOES COMPUTING ONES BATNA LIMITS AFFECT ONE’s COMMUNICATION SKILLS? HOW AND WHY?

  1. DIE – HARD BARGAINING :
  2. DIE – HARD bargaining is one of the BATNA limitations. Continuous and a rigorous bargaining during the meeting would make the other party uncomfortable and would make the party loose interest in the company due to continuous bargaining. Die hard bargaining would make the negotiator talk more and speak fast and make him nervous thus affecting his communication skills.

  3. STRONG INNER PRESSURE
  4. Even while the negotiator is speaking, there is usually a strong pressure in the communicators mind to reach the argument. The negotiator would continuously think about what would happen if the negotiation doesn’t work out. This limitation would affect the negotiators communication skills by making him fumble or be absent minded.

  5. MENTAL ERRORS
  6. Mental errors such as staying poised during the discussions is a limitation in BATNA. As negotiation is a process which requires the communicator and the party to remain calm and focused, yet mental errors disrupt the negotiation flow. It creates a negative impression about the communicator.

  7. OVER-CONFIDENCE
  8. Over confidence can set negotiators up for failure. It encourages people to overestimate the strengths and underestimate its rivals/ Overconfidence is indeed a limitation to BATNA. While communicating, the negotiator might not have a correct audio tone due to over confidence which might lead in misunderstanding.

  9. HEATED ARGUMENT
  10. When the negotiator is aggressive and doesn’t depict a calm behavior during the discussion, it leads to a heated argument. Heated argument would worsen the communication as the negotiator in that case might end up speaking wrong things in aggression.

  11. UNREASONABLE EPECTATIONS
  12. Few negotiators enter into negotiators with unreasonable expectation and as a result it eliminates any zone of possible agreement. Unreasonable expectations is not a sign of BATNA and the negotiator should focus on having realistic expectations.

  13. IRRATIONAL ESCALATION
  14. Irrational escalation is a process where the selected course of action goes beyond a point where it no longer makes sense. Few professionals make this error because they cannot stand loosing. A negotiator should set clear breakpoints as irrational escalation leads to miscommunication.

DIFFERENCE BETWEEN BATNA, WATNA AND ZOPA

BATNA WATNA ZOPA

BATNA is the best alternative to a negotiated agreement WATNA is the worst alternative to a negotiated agreement ZOPA is Zone of Possible Agreement

BATNA is the best that the dealer can hope for if negotiations don’t succeed WATNA is the worst that the dealer can fear for if negotiations don’t succeed ZOPA is the range in which an agreement is satisfactory to both parties involved in the negotiation process

BATNA is about having an alternative that can be turned to when negotiation takes a halt.

WATNA is the worst that can happen if the dealer walks away from the agreement.

ZOPA exists if there is a potential agreement that would benefit both sides more the alternative options

BATNA deals with alternatives WANTA deals with consequences ZOPA deals with successful outcome of the negotiation

DOES VOICE AND BODY LANGUAGE PLAY A ROLE IN NEGOTIATIONS? HOW? EXPLAIN WITH A RELEVANT EXPERIENCE FROM AN INTERCULTURAL PERSPECTIVE.

Yes. Voice and body language plays an important role in negotiations. Human beings communicate through a variety of channels. It includes language, facial expressions, eye movements, physical gestures, posture, voice tones etc. Thus body language plays an important role especially in business communication and negotiation. Researchers say that 90% of communication is nonverbal.

In business communication, successful negotiation is not mastered by just the language skills or bargaining skills, Nonverbal messages are involuntary and plays an important role in negotiations and business communication.

EYE CONTACT:

The customs of eye contact is different in different countries. For instance, American custom demands that there should be proper eye contact between the speaker and the listener during the communication. If the eye contact is missing, it would imply that there is fear, contempt or uneasiness in the communicator or the listener. Even when the other person is communicating, the listener must occasionally have a gesture or sounds like hmm, umm or nod his head to indicate his attention.

Whereas Chinese avoid long direct eye contact to show politeness or respect wile North Americans see eye contact as a sign of honesty and a lack of eye contact would shift eyes as a sign of untruthfulness. The concept of eye contact differs from country to country. It plays the role of essential communication tool. It is necessary for the negotiator to study the cultural impact of the eye contact.

FACIAL EXPRESSIONS

Facial expressions is the most expressive part of the body. Apart from the hand gestures, single most nonverbal communication is the face. It is capable of conveying several emotions simultaneously

Just like eye contact, facial expression plays a different role in different countries. For instance, smiles and laughter convey friendliness, affection, joy, yet in Chinese culture, for few instances if Chinese laugh out loud, it causes a negative reaction by the westerns. In Japanese culture, it is acceptable to smile or laugh but not to frown or cry. Thus facial expressions plays an important role in negotiation and it is important to communicate or negotiate as per the country culture.

GESTURES

Gestures is an expressive movement of the body parts, for instance hand movements, head movements or leg movements. As with verbal communication, nonverbal codes are not universal. Different culture has different interpretation of gestures. For instance, finger on your lips sound shah is a sign for silence in UK and America where it means disapproval hissing in China. For Americans, the Chinese coming here gesture is like good bye gesture. Thus during negotiations, if the party is not well versed with the use of gestures in that culture, it would misunderstand the other party and send him wrong signal. Thus it is very important to know the cultural gesture of the country in order to avoid miscommunications.

Posture

The impact of nonverbal communication is very strong. General things in cross cultural communication might be a nonverbal act which varies from culture to culture. For instance, swinging a foot in North America during the meeting makes negative impression, whereas crossing the legs during a public meeting is considered to be vulgar in Arab culture. Generally standing erect, shoulders back, head held high displays confidence, energy and a positive impression. On the other hand, abrupt movements, shifting seats positions may show disinterest or an unwillingness to listen.

EXAMPLES OF APPLYING THE PRINCIPLES OF BATNA TO A NEGOTIATION SCNEARIO

  1. PERSONAL
  2. BATNA principle can be implemented during purchase of furniture. Even as there are many resellers in the market, a buyer can get a better deal if he does a proper research of the product and the price at which it is available. In order to avail a good deal, the buyer should set forth a maximum and minimum value which is willing to buy the product at. During the negotiation meeting, the buyer should not do a die hard bargaining or should not be overconfident but should put forth his expectations about the product to the dealer and should negotiate confidently. Proper knowledge of the product and the market prices along with good communication and bargaining skills will help the buyer to implement the BATNA strategy in the right way and to buy the product at best negotiated price possible.

  3. PROFESSIONAL SCENARIO
  1. SALARY NEGOTIATION
  2. When the employee has worked for quite some time in the organization and feels that he needs a salary hike, BATNA concept can be implemented by the employee. The employee can refer the company policies and the standard salary given and accordingly speak to the manager reflecting upon the company polices and his work contribution. The employee needs to be calm and confident during the conversation and should make sure that it doesn’t get converted to a heated argument.

  3. WHILE SELLING SECOND HAND ITEMS
  4. When a dealer is trying to sell the second hand items, in order to get the best price for the product, the dealer should adopt BATNA strategy. The dealer should consider the current value of the product and the market price of the product. The dealer should then fix up the BATNA price and propagate it to the buyer during the negotiation. The dealer should have well versed knowledge about the product and pricing and should focus on bargaining and negotiation skills.

  5. JOB INTERVIEW PROCESS
  6. During the job interview process, if the candidate has the talent and the potential and is capable enough to join the firm and has other job offers to consider, in that case the employer needs to offer better alternatives using BATNA . The employer needs to close the deal and needs to accommodate the employee’s interest and make him join the firm at the best negotiated alternative package.

  7. By Dealers while selling consumer durables
  8. As consumer durables are usually in high demand, the dealer needs to apply the BATNA strategy in order to sell the durables at best rice so that the dealer can enjoy a better profit margin. The dealer should be very careful while applying the BATNA concept and should consider the customer preferences as well.

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