BATNA, WATNA, ZOPA — What do they mean and why are they essential in negotiations?

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Without negotiations, there is no business; we negotiate at every step, with clients, contractors, suppliers, service providers. How we do it, or how our employees do it, depends on our skills, experience, and a bit of self-confidence. However, it’s worth learning and expanding our knowledge so that our companies can achieve success not only in our country but also beyond its borders.

If you want to learn more about negotiations, you may encounter a wealth of theoretical knowledge from books, articles, publications, which are very important, provided that you apply them in practice.

 

Today, I want to show you examples of what three expressions mean and why, in my opinion, they are very important in negotiations. I will give you examples so that you can relate to real situations.

BATNA – (ang. best alternative to a negotiated agrement).

This is the best solution developed outside the negotiation table. I like to call BATNA plan B. Why is it worth having? Below is an example situation:

 

You want to order goods directly from a supplier in China and negotiate the price. What price will you agree to? How will you know if this price is favorable for you? How will you check it? If you have nothing to refer to, you won’t be able to do it. Maybe you’ll manage to negotiate good terms, but you probably don’t want to base your business on chance. That’s why it’s worth having an alternative supplier, for example, from Europe.

 

When you calculate the purchasing costs from this supplier, it will be your BATNA, i.e., what you can refer to during the negotiation with the Chinese supplier. If you see that the prices are the same or higher than the European supplier, you simply end the negotiations, don’t waste time, and move on. Because you know that you won’t get far with one supplier; you always have to have an alternative. I’ve seen many businesses go bankrupt because over 60% of their supplies came from one source.

 

It’s the same when you want to change to a better-paying job. Your BATNA will be your current earnings; you won’t accept less than what you’re currently getting in salary negotiations with a new employer.

 

As you can see, defining BATNA helps a lot in any negotiation situation. Always try to consider it before the meeting. This will also make you feel more confident.

 

WATNA – (worst alternative to a negotiated agreement)

The worst alternative to the negotiated agreement.

 

Looking at the above example, your WATNA will be sticking with the European supplier. If you can’t negotiate good rates with China, you stick with the existing solution. Of course, it’s not satisfactory, so it’s the worst for you in this case. Similarly, with a job, if you don’t get better terms, you stay with the current company.

 

ZOPA – (zone of possible agreement)

It is the area possible for agreement for both sides (win-win).

 

This is precisely the main subject of negotiation. So in our case, cheaper deliveries from China and for the Chinese supplier, gaining a new customer and profit. Then we can say that ZOPA has been achieved. In the search for a new job, for you, it is a more favorable position in terms of salary, for the new employer, acquiring an experienced employee who will help in the company’s development or bring additional profits.

Were you familiar with these terms? Let me know in the comments.


I also recommend reading Joanna Lubecka’s article “Liability for damages for unfair negotiation conduct.”

 

And here you will find my article on the Warto Znać Biznes portal, where I write about negotiations that were difficult for me and how I dealt with them.