BATNA in Negotiation Theory
1:
BATNA is the concept in negotiation theory which is explained as the best Alternatives To Negotiated Agreements. It refers to the alternatives accessible to the parties and the terms are decided on the basis of the available advantageous alternatives to the parties (Conlon, Pinkley and Sawyer 2014). According to Christians 2013, it has been explained that regulatory state can apply the systems of BATNA to the intrigued observations of the tax policies. According to Marsden and Siedel 2017, it has been stated that BATNA also means the duty to negotiate in good faith towards each other and that of the formulation of the contract. The negotiation should not be such that it adversely affects the interest of the other party. Aubin and Verone 2013 explains that application of BATNA is evident in every aspect of life including the estimation of getting access to water is a matter of property right or public policy. Bressanelli and Chelotti 2018 has applied the theory of BATNA to the explanation of limited influence upon the European Parliament and economic governance where the outcome of the Council is explained with the norm of responsibility.
In the provided case study, the BATNA for my client is:
- The contractual amount offered to us by Fitness Fanatics is 347,820$.
- The contractual amount can be bargained with the value rise of 15% which amounts to 52,173$.
- The minimum reservation value for my client is 399,993$.
2:
BATNA or the Best Alternatives To Negotiable Agreements is the opposite of WATNA which is the worst available alternatives to the parties in case of negotiation. As explained by deMarr Janasz and DeMarr 2013, BATNA provides the greatest benefits and least possible harms to the interests of the negotiating parties. The power of the knowledge of the opponents plays a major role in the affecting the negotiator’s goals or aspiring goals in the process of negotiation (Wong 2014). BATNA is the concept which bring the breaking point in a negotiation process where further bargain may lead to WATNA and loss of interest of one party which is opposite to the rule of BATNA (Reynolds 2014). Beenen and Barbuto 2014 has explained that process of negotiation is a continuous and dynamic exercise. Fitzgerald and Ross 2015 has a minimax approach to BATNA which is explained as the rational answer to the designs of trade bargains.
In the provided case study, BATNA for the other party is:
- The Fitness Fanatics can either agree to our proposed contractual amount or continue the negotiation with other enterprises and agree to the one whose terms suit best to their requirement.
- DeGrandis has the option to either agree to our proposed price or negotiate the terms with us or other enterprise and agree to one whose terms suit best to their interests.
- In both the negotiations, the minimum reservation value is 399,993$ because it is the minimal price quoted by us for our services.
3:
ZOPA is the Zone Of Possible Agreements. This means the equilibrium point being reached by the parties with their minimum interests and terms to confirm the deal (Patel and Rubin 2016). Any negotiation beyond ZOPA shall result in non-confirmation of dealings. Sebenius and Singh 2013 has applied the concept of ZOPA to International relations including the nuclear negotiations with Iran. ZOPA is the combination of tactics and processes of negotiation (Pillar et al. 2013). According to Trotschel, Bundgens and Huffmeier 2013, it has been stated that the success if prevented at the bargaining table because negotiation involves agreement of both the parties on ZOPA. Eichstadt, Hotait and Dahlen 2016 explains that poer of negotiation relates to the constraints to claim the major portion of ZOPA. Thus, ZOPA can be explained as the point of equilibrium where the two minds meet for the purpose of conformity or non-conformity of the deal whose terms and conditions are based on the continuous process of negotiation. However ZOPA establishes the minimum goals to be achieved by the both the parties so that the interests of any party is not compromised at the cost of the benefit of the other party.
ZOPA in Negotiation
In the provided case study the strategy adopted by us for creating value is to negotiate at the price that exceeds the minimum contractual amount expected by us which is 399,993$. Any amount negotiated less than that would result in our minimum contractual value and not below that. This establishes the strategy for ZOPA in the scenario.
PRAVIKUMAR
Email: [email protected]
3rd October 2019
By email: [email protected]
Rotheany Chey
Chief Executive Officer
Dear Rotheany,,
Re: Negotiation For Ms Dhoni Endorsement Contract
Thank you for your instructions.
This email is regarding the offer for campaign for advertising and we would like to make you an offer with our celebrity MS Dhoni. The terms and conditions of the agreement as offered by us are:
- The contract shall be established between DeGrandis Sporting Goods and Elite Sports Stars.
- The purpose of the agreement is the campaign for the endorsement for cricket bats sold by DeGrandis Sporting Goods.
- The tenure of the contract shall be not more than 2 months because any campaign upto the tenure of 2 months results in maintaining the endorsement value of the celebrity. However, third month has neutral affect to the value. Any period for more than three months results in the loss of endorsement value of a celebrity due to overexposure to the market.
- However, the tenure of contract can be extended with the contractual amount rise up to 15% for a tenure of not more than further 2 months. Every extension of contract by 2 months would result in the increase of contractual amount by 15% with rest of the terms remaining same.
- The contractual amount payable by DeGrandis Sporting Goods to Elite Sports Stars shall be 399,993$ which is the minimum value chargeable for our services.
- 50% of the amount shall be payable as advance at the acceptance of the contract and remaining 50% shall be payable after the final completion of the campaign.
- Contingency Clause: If the product sales revenue generated from the advertising campaign is less than 8 million$, Elite Sport Stars agrees to pay DeGrandis Sporting Goods a rebate of 200,000$. If the product sales revenue generated from the advertising campaign is more than 1.8 million$, DeGrandis Sporting Goods agrees to pay Elite Sports Stars a surcharge of 200,000$.
- DeGrandis Sporting Goods shall be restrained to enter into any contract with any other enterprise for the advertising campaign in relation with the endorsement of cricket bats sold by them during the course of contractual period with Elite Sports Stars.
It must be noted that the acceptance to this offer should be by email and the contract shall not be enforced until the same has been accepted by you. This is only an offer to contract with you and our terms regarding the same.
For any query you can email me at [email protected] or call me at +9876543210 during business hours.
We would be looking forwards to your reply.
Thanks,
Yours Sincerely,
Pravikumar,
(Agent to Elite Sporting Stars)
References:
Aubin, D. and Varone, F., 2013. Getting access to water: property rights or public policy strategies?. Environment and Planning C: Government and Policy, 31(1), pp.154-167.
Beenen, G. and Barbuto Jr, J.E., 2014. Let’s Make a Deal: A Dynamic Exercise for Practicing Negotiation Skills. Journal of Education for Business, 89(3), pp.149-155.
Bressanelli, E. and Chelotti, N., 2018. The European Parliament and economic governance: explaining a case of limited influence. The Journal of Legislative Studies, 24(1), pp.72-89.
Christians, A., 2013. Getting to Yes: Thoughts on a Batna for International Tax. Wis. L. Rev. Online, p.7.
DeMarr, B.J., De Janasz, S.C. and DeMarr, B., 2013. Negotiation and dispute resolution. Prentice Hall.
Eichstädt, T., Hotait, A. and Dahlen, N., 2016, June. Bargaining Power–Measuring it’s Drivers and Consequences in Negotiations. In International Conference on Group Decision and Negotiation (pp. 89-100). Springer, Cham.
Fitzgerald, M.E. and Ross, A.M., 2015. Effects of enhanced multi-party tradespace visualization on a two-person negotiation. Procedia Computer Science, 44, pp.466-475.
Marsden, G.J. and Siedel, G.J., 2017. The Duty to Negotiate in Good Faith: Are BATNA Strategies Legal. Berkeley Bus. LJ, 14, p.127.
Patel, B.N. and Rubin, G.D., 2016. Deal or no deal? Negotiation 101. Journal of the American College of Radiology, 13(6), pp.756-758.
Pillar, P.R., Reardon, R., Sebenius, J.K. and Singh, M.K., 2013. Nuclear Negotiations with Iran. International Security, 38(1), pp.174-192.
Pinkley, R.L., Conlon, D.E., Sawyer, J.E., Sleesman, D.J., Vandewalle, D. and Kuenzi, M., 2017. Unpacking BATNA Availability: How Probability Can Impact Power in Negotiation. In Academy of Management Proceedings (Vol. 2017, No. 1, p. 16888). Briarcliff Manor, NY 10510: Academy of Management.
Reynolds, J.W., 2014. Breaking BATNAs: Negotiation Lessons from Walter White. NML Rev., 45, p.611.
Sebenius, J.K. and Singh, M.K., 2013. Is a nuclear deal with Iran possible? An analytical framework for the Iran nuclear negotiations. International Security, 37(3), pp.52-91.
Trötschel, R., Bündgens, S., Hüffmeier, J. and Loschelder, D.D., 2013. Promoting prevention success at the bargaining table: Regulatory focus in distributive negotiations. Journal of Economic Psychology, 38, pp.26-39.
Wong, R.S., 2014. Same Power But Different Goals: How Does Knowledge of Opponents’ Power Affect Negotiators’ Aspiration in Power-Asymmetric Negotiations?. Global Journal of Business Research, 8(3), pp.77-89.
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