May 1st, 2021

Conducting negotiations with an aim to achieve the most profitable agreement for all parties is quite a complicated process, requiring special knowledge and tools.

The term BATNA was used for the first time by Roger Fisher and William Ury in their book “Getting to Yes: Negotiating Agreement Without Giving In”, published in 1891.

BATNA is an acronym for BEST ALTERNATIVE TO A NEGOTIATED AGREEMENT. It means the most profitable alternative option, which may be achieved by a participant, in case the negotiations do not succeed, and an agreement has not been arrived at between the parties. That is to say, BATNA of one of the parties is that negotiating alternative for the party, that is derived in case negotiations do not turn out to be successful for that party. According to the authors of the term, “it is the best course of action a party can take if negotiations fail to reach an agreement”. BATNA often applies to negotiation tactics and it is recommended that it should always be defined prior to the commencement of negotiations. If the parties define and make a preliminary assessment of their own BATNA prior to taking part into the negotiation process, it would be highly beneficial for them.

On the other hand, WATNA is an acronym for WORST ALTERNATIVE TO A NEGOTIATED AGREEMENT. The term WATNA means the worst option or outcome for a party, in case the parties fail to reach at an agreement during the negotiation process.

If we look at the mediation as a kind of negotiation process, the following needs to be noted. BATNA/WATNA can be used by a mediator as an effective tool when the mediation proceedings come to a standstill. In such a situation, where the parties fail to reach mutually beneficial decision during mediation, a mediator may ask parties a range of questions, aiming to identify the best and the worst options of outcome for each party to the proceeding.

One of the alternatives to the mediation process is a legal proceeding. At that point, parties shall assess the best and the worst options of outcomes for themselves, in case they have to file a suit before the court. At that stage, parties are recommended to consult their lawyers to receive advice regarding prospects in case of dispute resolution by a court.

BATNA and WATNA as tools of Harvard method of negotiating

Harvard method of negotiating was developed by Roger Fisher and William Ury, the authors of the term BATNA/WATNA. Some distinguishing features of this method include strict approach to settlement of issues, which is important for the parties, but a gentler attitude towards the people participating in negotiations. Harvard method aims to reveal common interests of parties, mutually assess current circumstances of the case, consider different options of agreement, and, as a result, to reach a unified solution which will be acceptable by both the parties. This method of negotiating has its own tools, which are aimed to create a zone of possible agreement. BATNA and WATNA are amongst them. As a result, even though the parties are at completely opposite positions, they are able to reach a mutually beneficial decision.

1. WATNA:

It may be used in cases where all possibilities of negotiations are exhausted, and application of power-means is not needed by any of the parties. When parties negotiate the worst option of outcome, they have an opportunity to look at the subject of negotiations from a different angle. Thus, if one offers the worst option of outcome, the second party may hesitate and agree to compromise, and this will turn out to be beneficial for the offering party. However, this method may often appear as a bluff.

2. BATNA.

This tool is a technique whereby information is prepared in advance to have a backup option to arrive at a solution or possibly to create a pressure on the other party. Experienced negotiators often advise parties to prepare the best option for resolution of an issue for themselves on all stages of negotiations.

Harvard law school offers the following algorithm to determine the best alternative i.e., BATNA:

1. To designate all available alternatives to present negotiations, in other words, what would you do in case of unsuccessful negotiations?
2. Then assess the value of each alternative option, that is to say, how much does each alternative cost to me (not only in monetary equivalent)?
3. To dwell on the alternative, which is the most valuable to you (this is your best alternative to agreed decision).
4. After you define your own BATNA, calculate the minimum offer you are ready to accept within the current negotiations.

ZOPA – ZONE OF POSSIBLE AGREEMENT – This is the area (range) of negotiations, where parties of negotiations attempt to find common ground. No matter how much time was spent on negotiations, an arrangement can never be reached beyond zone of possible agreement. To achieve an agreement successfully, parties to the negotiation should try to understand the interests, needs and values of each other.

To arrive at a common decision, parties to the negotiation shall try to find an area, which includes at least some common provisions and ideas for each of party. ZOPA range of negotiation process is crucial to achieve a successful outcome out of the negotiations. However, certainly, time is needed to clarify, whether there is ZOPA in current negotiations or not. Parties study their interests and needs to achieve this goal. If participants to the dispute manage to find and determine ZOPA, there is high probability that they will reach at an agreement.

One of the basic conditions to determine ZOPA is the necessity of parties to know their alternatives: the best and the worst. ZOPA will be possible when there is potential solution, which will be profitable for both parties to the negotiation, more than their alternative options.

Let’s illustrate this using a simple example. I want to sell my laptop for USD 850. I have a potential buyer Max, who is ready to pay USD 700 (this is my BATNA). Besides, I negotiate with Anna. If Anna is ready to pay more than my best alternative i.e., USD 700, I will sell the computer to her. But if we assume that Anna has an alternative to buy similar laptop at the price of USD 600 (Anna’s BATNA), she will not want to pay me more for identical laptop, and the deal between us will not take place. Thus, ZOPA is absent within the present case. Therefore, simple example of negotiating regarding the price of sale/purchase of a laptop illustrates how this works method works practically.

Summarizing the above, it is to be noted that ZOPA exists if there is a match between the positions of parties regarding way out from negotiations. Otherwise, it becomes doubtful that the negotiations will be successful., At times, there are cases when the parties do not know both their own BATNA, and BATNA of other party.

Another case is possible, where a party may bluff during the negotiations and pretend to have better alternatives, due to which the party feels more confident and there is an appearance of having a strong position. However, such deception may make identifying ZOPA an impossible task, which will eventually lead to an unsuccessful negotiation, even when the ZOPA could have been quite identified.

Do not forget that the parties to the negotiation shall work hard to find ZOPA and make the negotiations successful in the end. However, it is always important to remember regarding the trap i.e., “agreement for the sake of agreement”. Sometimes, ZOPA does not exist at all.

Let us take another example. Mark negotiates with an employer regarding prospective salary and bluffs that he has some offers with higher salary, and that he is willing to agree to work if offered more advantageous conditions. Most likely, the employer will deny Mark, due to the following: firstly, he/she is not ready to increase salary for this position; secondly, Mark is not a potentially valuable employee for him/her; thirdly, he/she has other several candidates with similar qualification who agree to work in the given conditions. Such a tactic of negotiation, with the absence of BATNA, is wrong for Mark, who does not have any other options.

Summarizing the abovementioned, it is emphasized by the author that any negotiation requires thorough preparation, long before the commencement of negotiation process. Elaboration and identification of one’s own BATNA provides an opportunity to feel more confident and comfortable during negotiations. One also needs to think about and analyse the possible options of the opposite party. Later, during negotiations, one may clarify the BATNA of the second party by asking them questions. If necessary, one also needs to consider prospects of WATNA for the opposite party and mentally for themselves, that gives one an opportunity to be ready in case the opposite party uses this tool.

Always remember, that knowledge of one’s BATNA is crucial and makes one a more confident negotiator. It will certainly improve the results of the negotiation proceedings.