BATNA

BATNA is an acronym for "Best Alternative To a Negotiated Agreement." In short, if you have a BATNA while walking into a business negotiation, you will be in a pshychologically stronger situation.

Example: Let's say you are in the coveted MBA program in the MIT Sloan School of Management, and it is time to interview for jobs. Suppose you have a job with Franteractive. But your dream job is to work with Apple. Compare this with "Joe Dumb", who does not have any job, and who is also interviewing with Apple. Now, who will be more desperate to get that Apple job? Surely "Joe Dumb", since he does have nothing to fall back upon, if he does not get the Apple job, or he does not have a BATNA. As opposed to that, you have a BATNA, namely a job with Franteractive. So, you are not going to be as desperate for the Apple job, and the Apple recruiter might actually let you into the main interviewing round with the hiring manager, because he can sense that "Joe Dumb" is desperate, and you are not. In short, if you are desperate in a negotiation situation, you have a disadvantage.

Also see Pareto Negotiations Frontier in our Advanced Frameworks section.