Negotiation Skills - Lesson 3
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This document provides instruction on understanding one's Best Alternative To a Negotiated Agreement (BATNA) in negotiation situations. It presents two practice negotiation scenarios where the reader takes the role of buyer negotiating for a watch or shoes. It emphasizes that understanding one's BATNA ahead of time allows one to determine when alternative options are better than the negotiation outcome. Tips are given to not accept a bad deal if better alternatives exist and to ask for a seller's best offer if negotiation stalls. Examples of BATNAs in different contexts are also provided.
Negotiation Skills - Lesson 3
- 2. Practice Negotiation #1 2 Situation: l Your role: Buyer. You are at the market and you want to buy a new watch. l Your teacher’s role: Seller. The seller wants to get a high price for the watch. Key Information: l The listed price of the watch is $1,000. l You are happy with your current watch. o The new watch will only make you happier if you can purchase it for less than $750. o At price >$750, you are happier with your current watch. Negotiation Instructions: l Negotiate the price of the watch with the seller. l Don’t forget to try some of the tips from earlier lessons in this course. l Your goal is to choose the outcome that maximizes your happiness.
- 3. Practice Negotiation #2 3 Situation: l Your role: Buyer. You are at the market and you want to buy a new pair of shoes. l Your teacher’s role: Seller. The seller wants to get a high price for the shoes. Key Information: l There is no price tag visible on the shoes. l Another store has agreed to sell you the shoes for $50. l You prefer to buy the shoes now, rather than visit other store. Negotiation Instructions: l Negotiate the price of the shoes with the seller. l Don’t forget to try some of the tips from earlier lessons in this course. l If the negotiation stalls, consider asking the seller for his / her “Best Offer”. l Your goal is to obtain the shoes for the cheapest price.
- 4. Negotiation Tips 4 l Know your BATNA in advance: if you know your BATNA, you can determine the point at which your BATNA is better than the negotiated result. l Don’t be afraid to walk away: you are not required to accept a bad deal. If you can’t negotiate a good deal, sometimes the best option is to walk away from the negotiation. l Ask for a “best offer”: if your negotiation has stalled, ask the seller to provide their “Best Offer”. If the offer is better than your BATNA, accept the deal. If the offer is worse than your BATNA, walk away.
- 5. 5 What is “BATNA” BATNA stands for: Best Alternative To a Negotiated Agreement l Your BATNA is your best option if you can’t reach an agreement during a negotiation. l A strong BATNA gives you leverage during a negotiation; having options means you are willing to walk away from a failed negotiation. l During a negotiation, you should never accept an outcome that is worse than your BATNA. l It is important to understand your BATNA before you negotiate.
- 6. BATNA Examples 6 BATNA Examples 1. Continue using your existing rug. 2. Buy the same rug from a different seller. 3. Buy a different rug. BATNA Examples 1. Seek a higher paying job at a new company. 2. Continue to work at your existing wage. Negotiation: Buying a Rug Negotiation: Wage Raise