AS-2: BATNA, WATNA And ZOPA

What is BATNA?

Right from accompanying mom’s to market where they used to check out entire market before purchasing anything to seeing dad working late nights looking for better alternatives we have realized the importance of bargains. As human beings, we all expect something more or better always. And to facilitate this we indulge is necessary research that gives us enough information and confidence to achieve what we want. This basic concept which has been a part and parcel of life is widely practiced in business environments and is termed as BATNA: Best Alternative To Negotiated Agreement!

What does it usually used for?

BATNA is usually used for NEGOTIATIONS of all kinds. Few examples for the same are:

While purchasing goods or services: As consumers we make use of all available resources like the internet, acquaintance feedback, meeting all vendors, gut feelings and so on before actually buying a product. This fetching activity is a search for nothing but BATNA.

Business environment: Not just trading, but also while planning strategies for business or arriving at a course of action for problem, it is imperative to look for best alternatives than accepting the proposed one. This selection proposes though not directly but does uses BATNA.

Judicial environment: Before going to court, parties on either side try resolving the conflict outside the court to save on amount as well as time. During such situations a thorough research is undertaken by the representatives of the parties or parties themselves to settle in best possible way.

These and all other situations that involve negotiations, make use of BATNA.

WHEN, WHERE AND WHOM was it originally conceptualized?

BATNA was conceptualized by Harvard’s negotiation researchers Rorger Fisher, William Ury and Bruce Patton. It was discussed in their series of books on ‘Principled negotiations’ that started with Getting to say YES. The idea has evolved largely from Game theory concept of disagreement point that arises from bargaining problems and the Nash equilibrium. According to game theory Nash equilibrium is a state wherein no player can gain from one sided change in strategy until the strategies of other players remain unchanged. This simply means that at Nash equilibrium stage there would be no conclusion to the game/deal if there are no changes made in each player strategies. There has to be a settlement wherein best alternative is selected.

Impact of BATNA on communication skills:

What is it that enhances the power of communication? CONTENT!

It is a matter of fact that under prepared negotiators are bound to overlook sources of value and walk away from beneficial agreements. This problem cannot be sort out just by having good communication skills. On the other hand good communication skills could add on advantage for a negotiator.

The preparation mentioned above, entails BATNA. It is that extra effort we need to undertake before presenting our deal on the table. It gives us the necessary boost to communicate clearly and confidently the bargain we are expecting. Knowing the deal’s BATNA has a direct effect on the negotiators speech. He/she sounds:

Clear

Informed

Confident

Firm

Even if there is no BATNA available and the deal offered is the best one could get, the negotiator is aware of how quick it is to settle and could communicate accordingly.

There could be some rare situation wherein knowledge of one’s BATNA could lead to overconfidence and rude attitude. In cases like there could be severe repercussions like

A long term relation could get affected

Negative word of mouth

Loss of a better deal that could’ve have been offered

Missing out some crucial information

Differences between BATNA, WATNA and ZOPA:

Negotiations do not always happen in a cookie cutter pattern; there are always some sort of issues arising. The reason being, changing business scenarios and the human element involved in them. Application of BATNA, WATNA and/or ZOPA depends on various factors surrounding the negotiations. Some of them are:

The time factor

Importance attached to the negotiations

Negotiator’s position

Negotiator’s knowledge on the subject matter

Some key differences are:

BATNA is best alternative to the negotiated argument where as WATNA IS the worst and ZOPA is the zone of the agreement between the two.

BATNA is applicable when you hold a stronger position when compared to their opponent. You have a best alternative easily available and can walk out. WATNA is accepted when you hold a weaker stance due to some reason like urgency of settling, some ulterior motive or lack of importance of the issue. Example: A student has to attend an exam and on the way decides to buy a pen. He stops at a shop and enquires for the rate. He finds the rate to be abnormally high but at the same time has decided to settle as there is urgency. Thus, WATNA becomes the course of settlement.

WATNA is also considered when the business environment is highly unstable. Here you cannot take the risk of walking out of a meeting because there is a possibility of all other alternatives being blocked. In this case you decide to settle with the worst alternative, thinking that something is better than nothing. Example: A manufacturer of highly niche product is in lookout for raw materials which are available with only a few agencies which are spread across the country and are subject to fluctuations. He decides to settle with the nearest deal to avoid not having raw materials at all.

ZOPA is the range between the best and the worst alternative. It is the minimum value at which the buyer is ready to sell and maximum the seller is willing to pay for the same.

ZOPA MODEL

Seller’s worst Seller’s best

Buyer’s best Buyer’s worst

ZOPA is a range in between both the parties desired bargains and is that midpoint wherein both can be satisfied. Where as BATNA or WATNA are extremes which fetch one party best bargain and other party a worst.

Role of Voice and Body language in negotiations:

It is impossible for us to stop communicating non -verbally. Silences also have their own story to communicate. According to Mehrabian’s rule 93% of communication is non-verbal. This 93% consist of 38% of tone and 55% of gestures.

In business environment wherein negotiations are a part of routines, the need for understanding the importance of non-verbal communication is crucial. The prime reason being, NON-VERBAL communication cannot be faked! With preparation content/words can be mastered but control over non-verbal communication comes with practice. It is important not just to communicate but also while reading opponent parties bargains. It is always in between the lines that the message lies. Even if you have a great BATNA backing you, communicating the same is vital. The most important parts of non-verbal communication are:

VOICE: It’s not just what you say but also how you say it that matters. Pitch, timing, pace and inflection speaks louder than mere words. Let’s take the example of our PM Modiji. His gestures and voice modulations accompanied by the content creates the necessary impact. If the former was missing, however great the content is it would fail to capture. Even while listening it’s important to show some signs of a word or a gesture to show you’re attentive and understanding what’s being said.

Body language: This consists of:

Eye contact: Eyes do a lot of speaking. When a person looks directly into your eyes while negotiating it shows that he is confident, interested and alert. If there is constant blinking he/she might appear weak, under prepared or stressed. Contraction or expansion of pupils also indicate the emotion an individual witnesses.

Gestures: Gestures are culture specifics and should be used appropriately. In India especially we use them quite frequently. A nod saying yes or no, a clenched fist, ‘v’ sign for victory or peace has its own meanings according to countries or cultures.

Proximity: The distance to be maintained during negotiations is a note that should not be forgotten. Standing too very close or too much far might seem inappropriate and also have a bearing on end results. Generally 4-12 feet distance for social meetings is advisable and for public it is12-25 feet.

Postures: Postures could act a wealth of information for the negotiators. N open posture could mean friendliness, confidence and high interest. Where as a closed one could mean arrogance, weak, uninterested or adamant sort.

Hands and arms: While speaking a lot us, use hand gestures. But it is important to use them in accordance of the situations. Crossed arms indicate defensiveness, clasping the hands could indicate anxiety or boredom and too much use of hands while communicating could show excitement or clumsiness.

Other components could include movement of lips, touch, facial expressions and so on.

Relevant examples from intercultural perspectives are:

In Italy loud gestures involving a lot of hand-waving and shouting is normal. Where as in UK it is equally subtle. It becomes crucial for them to know this before conversing with each other.

The thumbs-up gesture which is widely used in English speaking countries including India, it is considered offensive in countries like Greece and Italy.

Women greeting women in America touch both hands as an alternative to handshake. In France while shaking a hand, other is placed on opposite shoulder. In Japan bowing is equivalent to a handshake.

Americans, Germans and Scandinavians are low context countries where as Asians, Africans and south Europeans are largely higher context. In high context cultures communication is indirect, unstructured and understated. Physical space is not so formal and standing close is quiet frequent. In lower context cultures spacing is important and words are highly valued and linear.

In Russia too much smiling is considered insincere and rude.

In UAE while addressing in business environment Sayed Mohamed and Sayeda Maryam is used.

In Brazil standing close while communicating is a trust building gesture.

In Latin America and Middle Eastern countries raising of voice is considered as sign of opposing. On flip side in Scandinavia and Asia silence and unreceptive body language is used to convey opposition.

Examples for BATNA applications in personal and professional life are as follows:

Personal:

Street shopping which most of us frequently engage in could be an example for BATNA. After checking out each stall and enquiring the prices we end up with one of them and also confidently mention our BATNA. Then it is up to the trader to either close the deal as per the demand or try negotiating further or rejecting it totally based on his WATNA.

Professional:

Procuring raw materials: Right from software’s to tangible goods required for manufacturing, great deal of supplier choices are available. It is the manufacturer’s responsibility to carry out market research to find out BATNA and also consider long term factors before settling the negotiations.

Trading: It is a usual practice between wholesalers and retailers or retailers and consumers to look for best bargains and consider their respective BATNA.

Recruiting: While employing HR managers consider a lot many factors and then decide on BATNA before the final recruitments. If the candidate is fit enough he might not take a risk to walk out and will immediately select him/her. If not, he will consider his BATNA.

Partnership or during outsourcing: Situation like these can make or break a business. These negotiations could be carried out clearly and also after considering a lot of factors to determine BATNA. Sometimes the deal on table might seem the best but may not be so for a long run. Opinions from various heads, policies of business and past records should be considered before taking any decision.

Courts: Most of the conflicts are settled out of the court to cut on costs and time. The lawyers involved carry out in-depth analysis of theirs as well as other party’s BATNA AND WATNA before offering a proposal for settlement. If agreed on by both sides it is settled.