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Negotiation Essentials for Students

1) BATNA refers to a negotiator's best alternative to a negotiated agreement. It is important to know your BATNA and try to improve it before negotiating. 2) Reservation price is the lowest price/terms a party is willing to accept. It should be defined before negotiating and equal to one's BATNA plus other factors. Reservation prices should generally not be revealed. 3) The bargaining zone exists between the buyer and seller's reservation prices, representing the range of possible agreements. If reservation prices do not overlap there is no bargaining zone.

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Rahul Rajeev
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178 views10 pages

Negotiation Essentials for Students

1) BATNA refers to a negotiator's best alternative to a negotiated agreement. It is important to know your BATNA and try to improve it before negotiating. 2) Reservation price is the lowest price/terms a party is willing to accept. It should be defined before negotiating and equal to one's BATNA plus other factors. Reservation prices should generally not be revealed. 3) The bargaining zone exists between the buyer and seller's reservation prices, representing the range of possible agreements. If reservation prices do not overlap there is no bargaining zone.

Uploaded by

Rahul Rajeev
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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BATNA

- and it’s related terms

Rahul Rajeev – IU1881810044


Shivani Patel – IU1881810038
Key Negotiation Principles
• Best Alternative To a Negotiated
Agreement (BATNA)
• Reservation price

• Bargaining zone
• Aspiration level
1) BATNA
• Most advantageous alternative course of action a party
can take
• Exact opposite - WATNA (worst alternative to a
negotiated agreement)
• Diverse situations - suspension of negotiations,
transition to another negotiating partner, appeal to the
court's ruling, the execution of strikes, and the
formation of other forms of alliances.
BATNA Tips
• Know your BATNA
 Do not think of your BATNA in aggregate
terms

• Improve your BATNA before you


negotiate

• You want your counterpart to think you


have a good BATNA
2) Reservation Price
• Reservation Price is your bottom line
 The point at which you are indifferent to whether you
achieve a negotiated agreement or walk away. Beyond the
reservation price, you prefer no agreement.

• Reservation Price is equal to your BATNA +/- other


issues that make you want to do the deal
 e.g., opportunity costs, switching costs, ego,
miscellaneous preferences
• Define your reservation price before negotiating
• Learn your opponents’ reservation price, if
possible
Should you reveal your BATNA and
Reservation Price?
• Do not reveal your reservation price
 One of the critical pieces of information in a
negotiation is the other party’s reservation point. If it
becomes known to one party, the negotiator can
push for a resolution that is only marginally
acceptable to the other party.
• Do not state ranges
• Reveal your BATNA only when:
 You are nearing an impasse
 You have a strong BATNA
 You want to make an agreement
in the current negotiation
3) Bargaining Zone
Buyer’s Reservation Price (BR)
Buyer’s Target Price (e.g., Rs.25K)

Seller’s Reservation Price (SR) Seller’s Target


(e.g., Rs.17K)

•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 B
R > SR, then a Positive Bargaining Zone exists. The zone of agreement is
from SR to BR (e.g., Rs.8K).
A Negative Bargaining Zone
Seller’s Reservation Price (SR)
(e.g., Rs.25K)

Buyer’s Reservation Price (BR)


(e.g., Rs.17K)

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


4) Aspiration Level
Final Price (In Rupees)

23,500
23,000
22,500 Buyer focused on
BATNA
22,000
Buyer focused on
21,500 aspiration level
21,000
20,500

Our aspiration is what we would like to get, it is what we expect the


outcome to be, it is our intended objective. And in negotiation there is a
key principle, and it is this: the person who aims high usually gets more.
Thank You

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