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NEW QUESTION # 119
A purchasing organisation is discussing its approach to an upcoming negotiation with a key supplier over a contract for critical new services. They have decided they want to find a Win/Win (integrative) solution.
Which TWO of the following would be appropriate in this scenario?
- A. Problem solving
- B. Transfer of risk
- C. Coercion
- D. Collaboration
- E. Persuasion
Answer: A,D
Explanation:
In a Win/Win or integrative negotiation approach, the goal is to achieve mutual benefit, which is characterized by a collaborative environment. According to CIPS principles on integrative negotiation:
Collaboration (A): Actively working together enables both parties to find solutions that maximize joint gains and address the needs of both sides.
Problem solving (B): Focusing on problem-solving allows both parties to address the issues at hand rather than competing over positions, facilitating a solution that satisfies both parties' needs.
By emphasizing collaboration and problem-solving, the organization increases the likelihood of a successful, sustainable agreement that respects both parties' interests.
NEW QUESTION # 120
Which of the following are most likely to be fundamentals of Fisher & Ury's principled negotiation?
1. Depersonalise the argument
2. Focus on positions
3. Generate creative options
4. Using subjective criteria
- A. 1 and 3 only
- B. 2 and 3 only
- C. 1 and 4 only
- D. 2 and 4 only
Answer: A
Explanation:
Principled negotiation is based on four fundamentals: people, interest, options and criteria:
Diagram Description automatically generated
1st Principle: separate the people from the problem: Negotiator should depersonalise the situation and accepting that the subject matter of the negotiation. This can be difficult for untrained negotiators, but this is a key skill to develop
2nd principle: focus on interests, not positions: It is important in principled negotiations not to focus on their parties' positions (what are expressed during negotiations), but on the interests (underlying needs) behind them
3rd principle: invent options for mutual gains: this principle aims to help the parties find a solution that both would benefit from. The more options - or tradeables - that can be brought to the table the better.
4th principle: insist on using objective criteria: is about making sure that the negotiation stays focused on outcomes based on objective criteria and that it is productive.
LO 1, AC 1.2
NEW QUESTION # 121
Which of the following is the process enabling the buyer to share with the supplier their purposes and needs to focus on some specific areas such as quality, cost, social and environmental standards, etc in the supplier's bids?
- A. Supply positioning
- B. Supplier selection
- C. Supplier conditioning
- D. Supplier appraisal
Answer: C
Explanation:
:
Supplier conditioning is the process of influencing a supplier or suppliers to behave in a certain way, or to accept certain circumstances. Within a negotiation, the buyer needs to make sure that the supplier has a number of messages in mind, about the outcomes that the buyer needs to achieve and about the shared sense of purpose that buying organisation has in achieving these outcomes.
Supplier appraisal is a process of evaluating a supplier's ability to carry out a contract in term of quality, delivery, price and other contributing factors.
Supplier positioning is the process of classifying spend with a supplier in terms of the profit potential and supply risk and assists in prioritising categories of spend and developing the right strategy.
Supplier selection is the process of selecting a supplier to acquire the necessary materials to support the outputs of organisations. Selection of the best and/or the most suitable suppliers is based on assessing supplier capabilities (Shih et al., 2004).
NEW QUESTION # 122
Personal power is only used in distributive approach. Is this statement true?
- A. Yes, because only distributive approach to negotiation requires strong personal power
- B. No, because personal power can be veryhelpful in integrative approach
- C. No, because only organisational power will optimise the negotiation outcomes
- D. Yes, because one party will abuse coercive power to maximise the gain
Answer: B
Explanation:
Explanation
Power, or more precisely perceptions of power,are critically important in understanding the commercial negotiation process. From a commercial negotiation point of view (under any circumstances, either integrative or distributive approach), CIPS is interested in power from both a personal and organisational perspective.
When you are negotiating on behalf of your employer, you bring the power of your organisation (its brand, reputation and purchasing spend) as well your own personal power (6 sources of personal power, based on French and Raven's power base model) to the negotiation.
In both integrative and distributive approaches, personal power plays an important role. It helps both parties push through negotiating barriers and secure commitment and final agreement LO 1, AC 1.3
NEW QUESTION # 123
Which of the following are examples of push techniques in commercial negotiations? Select TWO that apply.
- A. Working together to define the problem, the goals and the best solution
- B. Argument based on information, logic and reason
- C. Using language and imagery to 'paint a picture others can see'
- D. Listening to, involving and supporting others
- E. Threat of punishment, costs and damage
Answer: B,E
Explanation:
:
There are two major persuasion methods: 'push' and 'pull'.
Persuasion can be defined as encouraging someone to do something that you want them to do for you.
Persuasion is reasoning with someone so that they will believe or do something they might not otherwise do.
Persuasion can be considered as 'pushing' on TOP so that they can accept the change in attitude or behaviour as a result of your actions.
Influence is the ability to affect the manner of thinking of another. Influence can be considered as pulling on TOP so that you achieve the same result, but TOP feels they have changed their attitude or behaviour as a result of their reflection and thinking, and not your direct actions.
There are 5 options in this question:
'Threat of punishment, costs and damage': The influencer tries to 'push' the other party to act as he/she wants by using force. This method is effective but short-lived. The influencer also risks to developing reputation for being heavy handed and dictatorial.
'Argument based on information, logic and reason': The influencer uses logic and reasons to persuade the other party. This is also known as 'Persuasive Reasoning' (Push)
'Using language and imagery to 'paint a picture others can see'': The influencer seeks to influence another by understanding the other's emotions, and stimulating that party's imagination to visualise the desired future goal of the influencer. This is also known as 'visionary (pull)'
'Working together to define the problem, the goals and the best solution': In this technique, the person seeking to influence another involves the other party in the decision making process. This is known as 'collaborative (pull)'
'Listening to, involving and supporting others': In this technique, the person seeking to influence another tries to discover the other party's emotion and aims at mutual understanding. This is also a collaborative approach.
NEW QUESTION # 124
Which of the following would describe a push approach to influencing?
Exerting power or authority
Extensive use of open questioning
The party being influenced is fully aware of the process occurring
The party being influenced may not be aware of the process happening
- A. 1 and 2 only
- B. 1 and 3 only
- C. 3 and 4 only
- D. 2 and 4 only
Answer: B
Explanation:
A push approach typically involves exerting authority or power (1) with the party being influenced generally aware of the influence process (3). This method involves overtly directing or persuading the other party, often through explicit information or directives, as per CIPS's understanding of push influence techniques.
NEW QUESTION # 125
A breakeven analysis uses which of the following aspects as part of the analysis?
- A. Selling price minus variable cost per unit
- B. Buying cost minus variable cost per unit
- C. Fixed cost
- D. Variable cost
Answer: A,C
NEW QUESTION # 126
Which of the following is most likely to be a reason why a supplier charges its customer higher price after it has reached the break-even point?
- A. Supplier may have high fixed cost - variable cost ratio
- B. The supplier may have reached economy of scale
- C. Supplier may need to open new facilities to meet increasing customer's demand
- D. Supplier may want to encourage buyer's demand
Answer: C
Explanation:
'Supplier may want to encourage buyer's demand': the buyer tends to prefer lower price, if supplier wants to encourage its customers to buy more, it needs to offer discount at bulk amount. So this option is not acceptable.
'Supplier may have high fixed cost - variable cost ratio': Supplier with high fixed cost needs high volumes to break even, but once achieved, it may be able to offer significant discounts for bulk orders
'The supplier may have reached economy of scale': when economy of scale is reached, cost per unit will be minimal which often leads to more favourable price.
'Supplier may need to open new facilities to meet increasing customer's demand': Increasing customer's demands may excess supplier's current capacity. Therefore, supplier may need to extend its capacity by investing more in facilities. To cover these fixed cost investment, supplier may charge higher price.
LO 2, AC 2.1
NEW QUESTION # 127
Which of the following will positively affect reputational strength of an organisation? Select TWO that apply.
- A. High ethical standards
- B. Adopting out-of-date technology
- C. Strong customer focus
- D. Great gap between reputation and reality
- E. Weak internal coordination
Answer: A,C
Explanation:
Explanation
In a globalisedcommercial world characterised by dynamic market and multiple companies competing for business, a positive corporate reputation can be an enormous asset. Reputational strength in one organisation might be based on some or all of the following characteristics:
- Quality of products or services
- Low cost/high value for money
- High ethical standards
- Reliability
- Cutting-edge technology
- Strong customer focus
- Engineering excellence
LO 1, AC 1.4
NEW QUESTION # 128
Which of the following is considered a weakness of a 'dealer' style negotiator?
- A. May shift position quickly
- B. Very precise
- C. May be too assertive
- D. Focuses on the facts and not the people
Answer: A
Explanation:
A useful and simple shorthand for preferred negotiation styles is summarised by four simple descriptor:
'warm', 'tough', 'logical' and 'dealer', which can be applied to describe individuals' dominant preferred style in most circumstances.
Warm - a people person
Tough - a hard-nosed negotiator
Logic - a numbers person
Dealer - a trader who loves bargaining
Strengths, weaknesses of dealer style are described below:
Table Description automatically generated
LO 2, AC 2.4
NEW QUESTION # 129
Which of the following are most likely to be the potential cultural differences that can make transactions with an international supplier more problematic that with local suppliers? Select TWO that apply.
- A. The importance of timescales
- B. The use and interpretation of body language
- C. Payment mechanism
- D. Incoterms and logistics difficulties
- E. Currency exchange fluctuation
Answer: A,B
Explanation:
The question requires student to detect factors of cultural differences. Problems may occur on the international scene with such things as the importance of extending courtesy between cultures, the importance of timescales, the use of negotiating ploys, the sense of 'fair play', the use and interpretation of body language, the role of women in negotiations (or indeed, in business in general), the importance of status, the role of conflict, standards of dress and deportment and the readiness to ignore or uphold contract terms and conditions.
LO 3, AC 3.3
NEW QUESTION # 130
Listening is a key activity in any negotiation. Which of the following are characteristics of effective listeners?
- A. 1 and 3 only (Showing empathy and Paraphrasing)
- B. 2 and 4 only (Persuading and Offering immediate solutions)
- C. 1 and 2 only (Showing empathy and Persuading)
- D. 3 and 4 only (Paraphrasing and Offering immediate solutions)
Answer: A
NEW QUESTION # 131
An organisation is developing the specification for a capital purchase project. An important stakeholder has doubt on the draft specification. The buyer invites him to the product function meetings. In these meeting the attendees can raise their concerns, the specification development team takes in all the concerns and adjusts the specification accordingly. What kind of technique is the specification development team using?
- A. Visionary
- B. Directive
- C. Persuasive reasoning
- D. Coalition
Answer: D
Explanation:
:
In the scenario, anyone who has concerns can join a meeting to raise their thoughts. The project team takes the stakeholders' ideas into account. This is known as coalition: A group of people or organisations come together and work collaboratively to achieve some goals. Specifically in this scenario, the goal is creating a high-quality and unified specification for an important project.
NEW QUESTION # 132
What are the potential sources of conflict between the buyer and supplier? Select TWO that apply.
- A. Unequal sharing of gains, risks, and costs with the supplier
- B. Requesting early supplier involvement
- C. Persistent late payment of the supplier's invoices
- D. Scheduling agreed supplier delivery dates
- E. Planning scheduled visits to the supplier site
Answer: A,C
Explanation:
Persistent late payment of the supplier's invoices (A) and Unequal sharing of gains, risks, and costs with the supplier (B) are potential sources of conflict as they create dissatisfaction and imbalance in the relationship.
According to CIPS materials:
Late payments (A) can strain the supplier's cash flow, affecting their operational stability and leading to mistrust in the buyer.
Unequal sharing of gains, risks, and costs (B) can result in one party feeling exploited or unfairly treated, which undermines the collaborative spirit essential for long-term partnerships.
In contrast, requesting early supplier involvement, planning visits, or setting delivery dates are typically part of constructive relationship management practices and do not inherently lead to conflict.
NEW QUESTION # 133
Which of the following statements about oligopoly isincorrect?
- A. Prices in oligopoly are predicted to fluctuate widely and frequently
- B. Oligopolistic firms recognize their interdependence
- C. One firm's behaviour is a function of what its rivals do
- D. A few firms play an important role in the sale of a product
Answer: A
Explanation:
Explanation
An oligopoly exists when there are small number of producers that exert a significant influence in the market.
Oligopoly's main characteristics are discussed as follows:
- Interdependence
The most important feature of oligopolyis the interdependence in decision-making of the few firms which comprise the industry. This is because when the number of competitors is few, any change in price, output, product etc. by a firm will have a direct effect on the fortune of its rivals, which will then retaliate in changing their own prices, output or products as the case may be.
- Importance of advertising and selling costs
A direct effect of interdependence of oligopolists is that the various firms have to employ variousaggressive and defensive marketing weapons to gain a greater share in the market or to prevent a fall in their market share. For this various firms have to incur a good deal of costs on advertising and on other measures of sales promotion. Therefore, thereis a great importance of advertising and selling costs under conditions of market situation characterised by oligopoly
- Group behaviour
Another important feature of oligopoly is that for the proper solution to the problem of determination of price and output under, it analysis of group behaviour is impor-tant.
- Indeterminateness of demand curve facing an oligopolist
In this question, 'Prices in oligopoly are predicted to fluctuate widely and frequently' is an incorrect statement as producers in oligopoly often try to set up price. Prices fluctuate more frequently in perfect competition.
LO 2, AC 2.2
NEW QUESTION # 134
In airline industry, suppliers prefer to adopt dynamic pricing in order to constantly monitor and change their fares in response to market conditions. Dynamics pricing is based on which costing method?
- A. Marginal costing
- B. Activity-based costing
- C. Cost plus costing
- D. Absorption costing
Answer: A
Explanation:
:
Dynamic pricing is the practice of dynamically calculating the price of a product or service in order to incorporate real-time market conditions, input costs, and/or competitive perspectives. Dynamic pricing which is based on marginal costing, is used by airlines and many other organisations.
Marginal cost is the cost of producing an additional unit of output. Marginal Costing is a costing technique wherein the marginal cost, i.e. variable cost is charged to units of cost, while the fixed cost for the period is completely written off against the contribution.
NEW QUESTION # 135
Which of the following is the most appropriate approach to investors or shareholders who have high level of influence but low interest in the running of business?
- A. Engage and consult with them regularly
- B. Keep these people inform through general communication media
- C. Manage them closely
- D. Engage and keep them satisfied
Answer: D
Explanation:
Investors or shareholders who have high level of influence but low interest belong to 'Keep satisfied' quadrant of Mendelow's Stakeholder Matrix.
You may read 2 versions from L4M1 and L4M5 here:
Table Description automatically generated
LO 1, AC 1.1
NEW QUESTION # 136
Under EU public procurement directives, which of the following are procedures in which there is no commercial negotiation allowed?
- A. Competitive Dialogue
- B. Competitive Procedure with Negotiation
- C. Open Procedure
- D. Restricted Procedure
- E. Innovation Partnerships
Answer: C,D
Explanation:
Under the European Union public procurement directives, all public sector bodies must abide by certain rules when they procure goods and services over a threshold value. These rules are codified under 5 procurement procedures:
1. Open Procedure
2. Restricted Procedure
3. Competitive Dialogue
4. Competitive Procedure with Negotiation
5. Innovation Partnerships.
Under normal circumstances, there is no commercial negotiation allowed under the two most commonly used procedure, Open and Restricted. Under these procedures, the prices and terms and conditions of contract should be decided via reference only to the tenderers' responses to the buyer's requests for tenders, and not through 'post-tender negotiation'. Under the other procedure, negotiation within the rules is permitted.
Interested learners can read more about these procedures here.
LO 1, AC 1.1
NEW QUESTION # 137
A supplier has offered international football tickets to the procurement manager while they are in the middle of a contract negotiation. What should the procurement manager do?
- A. Accept the offer of the tickets as this will enhance the relationship between both parties
- B. Reject the offer as this may be seen as a conflict of interest during the negotiation
- C. Reject the offer as the procurement manager will have to repay the gesture
- D. Accept the offer as this will not affect the relationship with the supplier
Answer: B
NEW QUESTION # 138
Which of the following are tools that help procurement visualise cost breakdowns of products and services purchased from supplier?
1. Spend candlesticks
2. Spend tree
3. Aggregate expenditure model
4. Spendwaterfall
- A. 1 and 2 only
- B. 3 and 4 only
- C. 1 and 3 only
- D. 2 and 4 only
Answer: D
Explanation:
Understanding where and with whom your supplier spends their money, or understanding the 'cost breakdowns' or 'price build-up' of the goods andservices you purchase from the supplier, will help you know where and when they can offer price concessions.
Cost information can be expressed with more impact through graphs that can be created using Excel and PowerPoint or other softwares. There are two commonly used models known as 'spend waterfall' and 'spend tree'. Spend waterfall shows the build-up of costs, while the spend tree shows all the spends that an organisation makes.
There is no graph known as 'spend candlesticks'. Candlestick chart is astyle of financial chart used to describe price movements of a security, derivative, or currency.
The aggregate expenditure model is a method of calculating GDP. The aggregate expenditure model focuses on the relationships between production (GDP) and planned spending: GDP = planned spending = consumption + investment + government purchases + net exports.
NEW QUESTION # 139
From the principled point of view about negotiation environment, which of the following is a true statement?
- A. The room layout can be seen as a source of tactical advantage
- B. Advantage gained from uncomfortable negotiation environment is likely to last long after the negotiation
- C. Home advantage should not be exploited to win a temporary advantage
- D. There is no ideal negotiation environment in real life
Answer: C
Explanation:
From a principled point of view, the focus of negotiation is on resolving the issue and not on winning temporary advantage over TOP through exploiting home advantage. From the principled point of view, the location and room layout should not be viewed as a source of tactical advantage and should not be used to try to gain advantage over TOP or unfairly influence them in the meeting room.
From a pragmatic point of view, not all of these elements in the ideal negotiation environment may be feasible, so the host may have to make compromises and explain these to TOP.
From a distributive point of view, the host will seek to create an advantage for themselves either explicitly or more subtly. It is arguable that any advantage gained through intentionally creating an uncomfortable environment to put short-term pressure on TOP is likely to be short-lived as TOP will likely reflect on this later and seek means to get even.
LO 2, AC 2.4
NEW QUESTION # 140
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CIPS L4M5 certification exam is designed for individuals who are involved in commercial negotiations, whether it be within their own organization or with external suppliers and partners. L4M5 exam covers a wide range of topics related to commercial negotiations, including negotiation strategies, tactics, and techniques, as well as legal and ethical considerations. It is a comprehensive exam that is designed to test the knowledge and skills of individuals in this field.
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