# FREEPIK
alternatives in executing the buying decision . In a recruitment process , the remuneration package may be subjected to BATNA - e . g . what are the minimum acceptable benefits besides the salary or what is the minimum acceptable salary , for the employee . The employer BATNA could be the choice for the next best candidate if the top candidate does not match their budget and other terms , even after negotiating .
It is critical that a negotiator in the buying process identifies the BATNA before entering active negotiation phase . It is also important and strategic to find as much about the counter party BATNA . Essentially , they should create a canvas of all possible BATNAs and simulate the best alternatives , based on possible reactions of the counter party . The parties should never forget exit options .
The process of identifying a BATNA includes brainstorming all potential options available in the event that no agreement is reached . This is very critical , before any binding contracts are even drafted . Once all options are identified , an evaluation is done to identify which option is the best alternative . This now becomes the BATNA . It is always critical to have budgets in mind and all other objectives for the buying ( or selling ) decision , to drive the best business outcome e . g . profits , savings , reliability of supply etc .
Once the BATNA is identified , the next step is usually to identify what is known as Zone of Possible Agreement ( popularly known as ZOPA ). BATNA and ZOPA usually work together . They help to identify the range of acceptable terms that can be adopted in the negotiation . The knowledge that one party has a strong BATNA may indicate that they will be unwilling to agree to terms that they consider unfavourable . Weak BATNA may lead to acceptance of terms that are not favourable . This might have been the case for the suppliers in the cited case of buyer power misuse recently in Kenya . Further , the presence of weak or strong BATNA greatly impacts the ZOPA and undermines the success of the negotiation . ZOPA helps in defining the common areas where the negotiating parties may reach an agreement .
So how do we manage BATNAs ? Just as a crucial strategic tool , it is advisable to keep the BATNA as close to the chest as possible . There is no need to let the other party know your weak BATNA . The BATNA should not be disclosed too early either , in the negotiation process .
A bad BATNA is also known as a WATNA ( Worst Alternative to Negotiated Agreement ). It is not great to show how desperate one is to close a deal , even when one is coming from a hopelessly failed one . It is better to stick to the value position that helps to build a strong BATNA . A loss of a previous lucrative deal might be a poor position in starting a negotiation for a new one . A delaying tactic may be useful tip in the negotiation process .
There are instances where the other negotiating party may ask directly for your BATNA . It is always great to be truthful , and be guided to explain that you are working on other options . Most importantly , be clear that you are very keen on the deal at the table . The urge to over hype your BATNA will always be there . It is advisable to avoid over hyping the BATNA to gain bargaining power . This can back fire . It can easily appear to be unethical if facts are not true or are exaggerated . This may cost you a good deal . It is about reputation as well . Be prepared for scrutiny or detailed due diligence by the other party .
Letting the cat out early may encourage the other party to work hard to undermine and weaken your BATNA . One tactic used is to delay the deal to make your BATNA weak .
Take an example where a party discloses that they have another deal which they are about to sign in a fixed time ( e . g . a week time ), the counter party may engage in delays to put pressure and ensure that the deal is missed out . From a behaviour point of view , counter parties my even scold or look down on your BATNA - for example they may actively undermine your product qualities by making competitor comparisons to yours . Be careful , some of the allegations say on functionality , use or after-service support may not be legitimate , but may be well choreographed distractors .
Negotiators may be hesitant to ask counterparts about their BATNA . This could be based on fear that they cannot match or compete with the BATNA . It is good to get the knowledge early in the negotiation process . Getting to know the strengths of the BATNA can save time and energy before engaging in a futile negotiation process , especially if the likelihood of matching the alternatives is low . Early exits are healthy and encouraged .
Once the parties reach grounds for agreements , the cure and safeguards lie in the contract that is executed . The parties should use the respective BATNAs to have contracts that protect their interests , including wellcrafted exit clauses that guarantee exercise of the BATNA .
In the strategic management of the procurement function and specifically buying process , it is very important to gauge buyer powers . Buyer powers may grow over time . The need to evaluate and re-negotiate performance on contracts is critical , at predetermined time intervals or on achievement of business targets and milestones .
At the end , the parties engaged in business should be striving to achieve growth and sustainability . Exploitation is never a winning proposition . Luckily , regulators are gaining powers to protect businesses and to ensure ethical practices .
It should be noted that self-regulation is always a preferred position than when fines and penalties are invoked to drive right behaviours . Choose your BATNAs wisely and thrive !
CPA Michael Nzule is the Finance & Strategy Director of Mitchell Cotts Freight Kenya Limited , a leading total logistics services provider in Kenya . He holds an MBA in Accounting , with specialization in Marketing , and a Bachelors of Commerce ( Accounting Option Hons ) from the University of Nairobi . He is a member of the Institute of Certified Public Accountants of Kenya ( ICPAK ). Views expressed here-in are personal . You can commune with him via mail at : Mikemaithyanz @ gmail . com .