Four Key Concepts of

Negotiation

A negotiated solution is advantageous only, if

no better option is available.

Any successful negotiation have a fundamental framework

based on the following:

The Alternatives to negotiation

The minimum threshold for a negotiated deal
What tradeoffs party is willing to make

Three concepts for establishing framework

Best Alternative to Negotiated Agreement (BATNA)
Reservation Price
Zone of Possible Agreement (ZOPA)

BATNA means knowing what will happen of you fail to reach

an agreement
Always know your BATNA, otherwise you wont know whether
deal makes sense or not.
Not knowing your BATNA, one may reject a good offer which is
much better than their alternatives.
Ex.: A Consultant, A damage suit by an employee, King who
knew his BATNA

Strong and Weak BATNA

Knowing that one has something better to fall back on, can
negotiate for favorable terms
A weak BATNA puts you in weak bargaining position
It is difficult to walk away from a proposal, how so ever paltry
it may be
Ex. Union of Unemployed

Three approaches to strengthen your position

Improve your BATNA
Identify the other sides BATNA
Weaken the other partys BATNA

Improve your BATNA

If one has strong BATNA and is certain that other side can not
muster anything better discreetly let the other side know
about your strong position

Identify the other sides BATNA

Contacting sources within the industry
Checking relevant business publications
Ex. A Consultant

Weaken the other partys BATNA

Ex. Final Haven Funeral Homes
BATNA is always not simple
In a negotiation, where there are both quantitative and
qualitative variable, one may quantify the qualitative
variables.
Ex. A Car Dealer

Reservation Price
The reservation price is the least favorable point at which one
will accept a deal.

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 partys 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.

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