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BATNA – 5 Tips to Master the Art of the Deal
- BATNA stands for “Best Alternative to a Negotiated Agreement.” It’s your backup plan in case negotiations don’t lead to a deal.
- A strong alternative gives you more flexibility and power in negotiations. It allows you to walk away from unsatisfactory deals.
- Understanding your negotiation partner’s alternative is crucial. Knowing their alternatives helps you gauge their position and tailor your strategy accordingly.
When negotiations get tough, you rely on your BATNA to either get out of it or to at least get something out of the deal. But how does one use it to their advantage?
For this article, we are going to talk about how to use it to your advantage.
After this article, you should be creating a BATNA during negotiations like a pro.
What is BATNA?
It’s an abbreviation for “Best Alternative to a Negotiated Agreement”. It’s your backup plan if your negotiation doesn’t lead to a deal. By determining your alternatives, you’ll have more confidence because you have a backup plan if the negotiation doesn’t work out. Because of this, you won’t feel forced to make a bad deal.
Being forced into a bad deal will usually give you no choice but to leave the negotiation table. We clearly don’t want that to happen as much as possible!
One of the main reasons for entering into a negotiation is to achieve better results than without negotiating.
The stronger the BATNA, the greater the range of alternative courses of action. The stronger the BATNA, the greater the ability to walk away from an unsatisfactory negotiation.
When you find an alternative supplier to your current one that can deliver the same goods or service, the option of a ‘no agreement’ deal is not a risk anymore and as a result of having a BATNA, you’ll have more confidence and more choices to make. Having a well-developed and attractive BATNA is a source of great power in any negotiation.
By determining your alternative plans, you’ll have more confidence because you have a backup plan if the negotiation doesn’t work out.
The BATNA is your point of departure. Anything you can ‘win’ in your negotiation makes your alternative less attractive.
An Example of BATNA
Mark, a procurement manager of a large supermarket, is negotiating with a supplier of canned food. The supplier offers to deliver 100,000 pieces for a price of $1.50 within two weeks. The procurement manager knows that a different supplier offers the same product for $1.40, therefore Mark knows this offer is worse than his BATNA and he shouldn’t agree.
Of course, there are other variables that Mark will consider. Is the BATNA able to deliver the same volume? How long will it take the BATNA to deliver? In the end, deals aren’t just closed soley because of price but on many other variables. Having a strong BATNA will help you to unlock your full power and use it to your advantage.
How to Determine Your BATNA
Finding alternatives to your current negotiation can be difficult. Sometimes it will take time to identify the alternatives and even more time to make them attractive. You have to establish a concrete value for your alternatives. For example, what is the value of a supplier who is able to deliver within 2 weeks, compared to a supplier who delivers in 2 months, but at a lower price?
However, exploring your BATNA is always a good time investment as having a strong alternative improves your ability to negotiate a good deal in the current negotiation.
Here’s how you find your own BATNA:
- What are your 5 best alternatives to a negotiated agreement?
- Review the list. What alternatives would be the best?
- How can you improve it? Can you make a better arrangement with another partner?
- After improving your best alternative, write your new BATNA.
How to Use BATNA
One of the greatest dangers in a negotiation is being too committed to coming to an agreement. Your negotiation partner will immediately sense this and will get the upper hand in the negotiation.
Before you begin a negotiation, know your options. Are you able to walk away? What are the pros and cons of each alternative? However, don’t stop here. Let’s determine your opponent’s BATNA.
How to Determine Your Opponent’s BATNA
Here’s how you find your opponent’s BATNA:
- What are their 5 best alternatives to a negotiated agreement?
- Review the list. What alternatives would be the best for them?
- How can they improve this alternative?
- Can they make a better arrangement with another partner?
- Is there a way to change the terms of their alternatives?
- Can they remove some of the constraints of your alternatives?
- Can they leverage your current negotiation to improve their alternatives?
- After improving their best alternative, write their new BATNA.
After determining your opponent’s alternative, it’s time to reflect on the results and how they impact your negotiation. Are you able to influence your opponent’s BATNA? Experienced negotiators frequently try to convince their opponents that BATNA isn’t as great an alternative as they think it is.
Now you know their alternatives, you should consider the following things:
- What will be their main goal in this negotiation?
- What will be their strategy?
- What competitive pressure do they experience?
- Are they on a tight deadline?
My Personal Experience With BATNA
The Founder of Procurement Tactics
LinkedIn Profile: linkedin.com/in/marijn-overvest
“In my time as Procurement Manager, I focused almost 40% of my time on contacting, visiting, and negotiating with BATNA or ‘alternative suppliers’. For me, this is the key driver for getting less dependent on current suppliers, and as a result, this achieves successful negotiation results with your current suppliers. Why? Well… No supplier wants to lose business, and having an actual alternative gives endless power at the negotiation table. Yes, finding the right alternatives takes a lot of time. And yes, you still might not achieve all your goals due to external reasons, but trust me, it will be worth it!”
Final Thoughts on BATNA
In most negotiation situations you will have a continuing relationship with the other person. That’s why it’s important to come to a mutual feeling of ‘winning’ for both parties. If the other person feels like he lost, he might lack commitment in the execution phase of the deal. Or even worse, he will be after retaliation.
What is BATNA?
BATNA is the acronym for the “best alternative to a negotiated agreement.”
What is BATNA used for?
It is used to find a good alternate solution to a difficult negotiation.
Why is it important to know your opponent's BATNA in negotiations?
Knowing your opponent’s BATNA allows you to understand their goals, strategy, competitive pressures, and deadlines, empowering you to influence their alternatives and negotiate more effectively for a mutually beneficial outcome.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.