Many of us use BATNA when we negotiate, but have you heard of ZOPA (Zone of possible agreements)? And how do you use both of them together in a negotiation?
The purpose of using BATNA and ZOPA effectively is to understand more clearly when you should rightfully walk away from a negotiation and when you should stay.
We first need to understand our BATNA in order to figure out our alternatives to the current negotiation. If this current negotiation fails, what alternative do you have - and at what point should the BATNA kick-in.
Another result of developing a great BATNA prior to a negotiation is that it will help you to build up your own perception of power. If you lack a BATNA, you could potentially have a perception of lower power prior to the negotiation. Your power influence your way of negotiating.
Having a BATNA is not enough. You need to have a more detailed understanding about your different Zones of Possible Agreements (ZOPA).
The ZOPA helps you understand in more detail your mandates for each negotiable issue.
Hence, your ZOPA usually consists of many negotiable issues which both come from me but also my counterpart. Negotiable issues could be things such as price, quality, delivery times, payment terms, etc. These are the points that we need to agree upon in the negotiation.
Within each negotiable issue one needs to set the range.
For instance, the price range is from €100 (Max price) to €50K (Min. price). You need to do this exercise for all the negotiable issues.
When you then negotiate, you have different ranges to work within for all your negotiable issues. You can now be more flexible and agile.
How do you use my ZOPA and BATNA in my negotiation?
There is an important relationship between the ZOPA and BATNA - when does my BATNA (alternative) kick in during my current negotiation?
Your BATNA becomes valid when you are outside the ZOPA. In other words, when your "offer" in the current negotiation is lower than your total sum of your lowest range numbers.
An example, if you have three negotiable issues.
ZOPA
- Price: Max €100 - Min €50K
- Payment terms: Max 60 days - Min 30 days
- Volume : Max 10 tons - Min 5 tons
If my current negotiations' offer is lower than the total sum of my minimum points (hence, lower than €50K + 30 days + 5 tons), my BATNA will become more attractive alternative.
Hence, your ZOPA will guide you to make the right choice between your current negotiation and your BATNA. In order for this to work, you need to think more carefully about your BATNA prior to the negotiation.
It will be important to understand what you could feasible obtain in your BATNA business agreement.
Good luck with your negotiations.
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