How long should I negotiate? When is it time to leave the table?
Question sent by Alyaa and answered by our expert Jan Vincent Meertens
So, you have entered into a negotiation with an objective to reach an agreement. It is important to define your goal and determine your BATNA and the ZOPA. In negotiation theory, the “Best Alternative To a Negotiated Agreement” or BATNA is the most advantageous alternative course of action a party can take if negotiations fail and an agreement cannot be reached. The BATNA is the key focus and the driving force behind a successful negotiator. A party should generally not accept a worse resolution than its BATNA (Fisher and Ury, Roger and William (2011), Getting to YES, Penguin Books.)
BATNA is closely related to your estimate of the ZOPA, the “Zone Of Potential Agreement”. Let’s take the example of my webinar in which we traveled to Tamil Nadu in India to sell a rescue boat. Our goal was to sell the boat, but not at any price or condition. The zone of potential agreement comprises the lowest price you find acceptable and the highest the customer is willing to pay. Within the ZOPA there are a number of variables: the condition of the sale, and aspects like payment, delivery, and warranty terms. Also, aspects such as onsite inspection and training, although training may not be so important to your customer. It may be that you only provide long-term warranty if such training is taken.
Having taken all these aspects into account you can make an estimate of the ZOPA. As long as both parties are maneuvering within the ZOPA, it is worth your while to ‘stick around’. In some cultures, in particular those with a polychronic time orientation, you may find going back and forth time consuming. However, understanding the ZOPA will keep you focused on reaching an agreement. If the negotiations take you outside of the ZOPA, it is time to reconsider; it is the moment to take a look at your BATNA. What is your alternative? Walk away and help the competition secure a deal? Lose a customer? Or move on and invest time in customers that will appreciate the quality of your product. And, equally important, what is your counterpart’s BATNA? How much leverage do they have to forgo a successful outcome?
You must realize that the impact of ‘executing’ the BATNA is different from one culture to another. In some more competitive cultures, it may be a matter of you win some – you lose some. In others, you may lose a valuable relationship. Whatever the result of the negotiation, it is extremely important to make sure no one loses face. In our case in Tamil Nadu, loss of face there may have serious consequences for your business in the rest of India.