Best Alternative To A Negotiated Agreement Example

As the famous story „The Gift of the Magi“ shows, the best result in negotiated agreements is sometimes a situation of lots for both parties. . BATNs are essential to negotiations, as you can`t make a smart decision about accepting a negotiated deal unless you know what your alternatives are. If a used car is offered to you for 7500 $US, but there is an even better one at another dealership for US$6500 – the US$6500 car is your BATNA. Another term for the same thing is your „Walk Away Point“. If the seller doesn`t drop its price below $6500, you`re going to buy WEG and the other car. It is not always easy to develop a BATNA close to the result of a negotiation. BATNA can deviate in several ways from the company`s ideal outcome, leading to an „apples with oranges“ comparison with the negotiated agreement. In order to reduce these differences, it may be possible to assign a value to BATNA points that differ from the outcome of the negotiations. As the example above illustrates, it is important to have the best alternative to a negotiated agreement before negotiations begin. If Colin hadn`t had a BATNA, Tom would have had more bargaining powerBuyers` bargaining power, one of porters` strengths Five Force Industry Analysis Framework, refers to the pressure that customers/consumers can exert.

When we know that Colins BATNA is at $ 7500, the highest price for which Tom could sell his car to Colin is 7500 $US. In trade negotiations, two contradictory mistakes are common: reaching an agreement if it was not wise to do so and moving away from a mutually beneficial outcome. How can you avoid these pitfalls? Through careful preparation including an analysis of the area of the possible agreement or ZOPA in trade negotiations. . Reading BATNA is often not perceived by negotiators as a safety net, but as a lever in negotiations. Although a negotiator`s alternative options are theoretically easy to evaluate, the effort to understand the alternative that a party`s BATNA represents is often not invested. . . .

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