Fast & Easy Limited, a global fast food retailer, is in a negotiation with its major meat supplier. The supplier is asking for a 2% price increase, which Fast & Easy is strongly resisting. The supplier justifies this increase by stating that currency fluctuations, an unstable economic climate, and rising transport costs have necessitated this increase. Which influencing tactic is the supplier using?
Citywide Developments Ltd (CDL) is a construction programme management company that delivers the design and build of high-value property development schemes. CDL uses third-party consultant design services, using named consultants in the contract. CDL has recently observed increases in the consultancy day rate for these consultants. Which of the following tradeable concessions could CDL offer when negotiating with the suppliers of design services, in order to achieve lower rates of pay, but without lowering the quality of service?
Which of the following is a source of information on microeconomic factors?
Which of the following is a source of power in organisational relationships?
The purpose of ongoing supplier relationship management following a negotiation and contract award is that it:
How can having a best alternative to a negotiated agreement (BATNA) support the buyer in a negotiation? Select THREE options that apply.
There are no commitments in hypothetical questions. Is this statement true?
According to Professor Gavin Kennedy, in which of the following forms of dispute resolution, both parties will voluntarily exchange their ideas and beliefs?
Personal power is only used in distributive approach. Is this statement true?
When implementing value analysis or value engineering, which of the following acronyms reminds both buyer and supplier of ideas on removal, substitution and design-out of cost elements?
A buyer is approaching a negotiation where the company is in a low-power negotiating position in relation to the supplier. How can the buyer improve leverage and power with the supplier?
During a negotiation, the supplier requests for payment term shortened to 45 days from 60 days. Seeing that this proposal lies within the concession plan, the procurement manager asks for 5% discount in return. Is that right thing to do?
Buying organisation may increase its leverage with suppliers by concentrating spend. Which of the following are most likely to be forms of supplier spend consolidation? Select THREE that apply.
XYZ Ltd decides to go to market for a cleaning contract to service a number of offices. It knows that it will get a price which may, or may not, be better than the one it is currently paying. To gain leverage in the marketplace, the organisation decides to add other related services to the scope, such as gardening, security and maintenance, which increase the value of the contract. This is an example of which forms of spend consolidation?
AB Manufacturing seeks to buy a new materials resource planning (MRP) software system. At the ‘defining the business need’ stage of the procurement cycle, the procurement manager ensured that all the internal stakeholders involved had the power to contribute and sign off on requirements. For the MRP system, the procurement manager consulted the head of production planning of AB Manufacturing. The head of production contributed to demand levels, existing manufacturing planning, and existing staff levels. What type of power does the head of production demonstrate?
Which of the following are most likely to be abilities of a person with high emotional intelligence? Select TWO that apply.
Are tactical ploys only used in distributive approach?
Where can we find the data on macroeconomics?
1. From trade journal
2. From supplier's marketing catalogue
3. From stock exchange market
4. From government's statistics
Maria is a professional services category buyer within the National Health Service. Due to the severe financial budget cutbacks the National Health Service is facing, the procurement team has been tasked with achieving cost savings so that funding available can be spent on patient care. Maria plans to achieve savings with one of her collaborative suppliers. Which negotiation approach should she undertake?
Which of the following is definition of elasticity of demand in microeconomics?
According to Fiona Dent and Mike Brent, which of the following are characteristics of Push approach? Select TWO that apply.
Which of the following is the area where two or more negotiating parties may find common ground?
When is an adversarial style of negotiation appropriate?
Which of the following are types of non-verbal communication that could be used during a negotiation meeting? Select THREE that apply:
The bargaining power of buyers is likely to be high in relation to suppliers in which of the following situations?
What are the potential sources of conflict between the buyer and supplier? Select TWO that apply:
At the first stage of CIPS Procurement and Supply Cycle (Understand need), which of the following is the most important duty of procurement professional?
Which of the following are rules of attentive listening? Select TWO that apply.
Neville is a senior procurement specialist in a automaker. He has good relationship with his team mates and other departments because of his amazing purchasing skills and kindness. Which of the following sources of power is Neville likely to possess?
An oil refinery plant imports much of its crude oil from overseas. A procurement manager in the refinery suggests that fixing the crude oil contract price for 36 months would be beneficial for the company. Would this be a right thing to do?
In general, which of the following is the consequence of a flatter demand curve?
Which of the following are most likely to be sources of conflict that can emerge from the process of commercial negotiations? Select TWO that apply.
Which of the following best describes Leverage quadrant in Kraljic matrix?
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?
Can a party gain huge advantages in negotiation from setting room layout?
Active listening in negotiation includes which of the following activities?
1. Hearing
2. Interpreting
3. Rapport
4. Influence
Where there are high levels of commitment to relationships between both the buyer and supplier, this is seen as collaborative and beneficial to negotiations. Is this statement correct?
An adversarial style of negotiation is appropriate where the buyer has greater bargaining power over the supplier. In what other situations may the buyer adopt this style of negotiation?
Which of the following will help to indicate personality preferences in four dimensions?
At which stage in a negotiation would questions be asked to obtain missing information?
An experienced procurement professional is developing strategies for forthcoming negotiations with her key supplier. To avoid negotiation deadlocks, she identifies the reasons why negotiations could fail. Which of the following are most likely to be reasons for negotiation failures? Select TWO that apply.
Which of the following stages of the CIPS Procurement Cycle are typically where commercial negotiations take place?
Contract management and improvement
Develop tender documentation
Market sector analysis
Contract award and implementation
Which of the following is categorised as fixed cost?
Which of the following are most likely to be direct costs of a steel manufacturer? Select THREE that apply.
A procurement manager has decided to bring in a junior member of their team to a negotiation meeting. Which of the following would be suitable roles for this junior member of the team?
Note taker
Expert
Observer
Chair
Which type of question should be used to receive affirmation on statement?
The sourcing manager has decided to adopt an adversarial style of negotiation to take advantage of the buyer's greater bargaining power over the suppliers. In what other circumstances should an adversarial relationship be used?
Which of the following may help the procurement professional increase expert power in commercial negotiation? Select TWO that apply.
Which of the following are signs indicating that TOP is using coercive power in commercial negotiation? Select TWO that apply.
Which of the following two are recognized strategies to achieve a win-lose outcome?
Making the other party lower its resistance point
Making the other party think this settlement is the best it can achieve
Employ empathy to gain mutual understanding
Using compromise and creativity tactics
A procurement manager has been asked to procure 1,000 pens. He suggests to his manager that to obtain the best value for money, they should undertake a competitive bidding process. Would this be the best course of action?
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
Which type of power is considered the opposite of coercive power?
A negotiation is coming to the end. Both parties haven't had any official commitments. Right before leaving the room, the buyer strongly disagrees with supplier's set up prices and requests a discount. The supplier doesn't reply but nods and smiles. Can the buyer consider these actions as an acceptance?
Sumitomo Rubber Industries (SRI) is a Japan-based tyre manufacturer. In order to increase production, SRI is sourcing rubber from Southeast Asian firms. Which of the following micro factors are most likely to shift the balance of power to supplier? Select TWO that apply
IHL has been supplying to XYZ Ltd for months. XYZ Ltd procurement manager Diana realises that the IHL's input prices are dropping and this is a good time to re-negotiate the price of the contract. She invites IHL representative to XYZ headquarter to make a bargain on the current price. At the opening stage of the negotiation, Diana requests a 10% reduction in price with an increase in volume purchased.
Is Diana's action appropriate in the opening phase?
Different types of relationships impact commercial negotiations. At a negotiation, which one of the following sources would help to support leverage for the buyer?
Which of the following are internal factors when a supplier is making its pricing decision?
Price elasticity of demand
Environmental legislation
Risk management
The stage in the product life cycle
Absorption costing is when the total cost per each unit of output:
John Browne, a junior buyer for a corporation, is analyzing the global supply market before undertaking negotiations and is wondering whether foreign exchange rates are important to factor into his research. Should John consider the foreign exchange rates?
The buyer's bargaining power tends to be relatively higher than supplier's bargaining power in which of the following circumstances?
Where a negotiator uses numerical reasoning with facts as part of their negotiation approach, which of the following techniques will they be adopting?
In what circumstances is the bargaining power of suppliers likely to be high, in relation to buyer power? Select the THREE that apply:
Which of the following are most likely to be sources of conflict that can emerge from the content of commercial negotiations? Select TWO that apply.
Which of the following are most likely to be macro factors that may influence the balance of power in commercial negotiation? Select THREE that apply.
In a negotiation for a new contract, the supplier suggests the buyer to shorten payment period from 45 days to 15 days because they are investing in new facilities to expand the supply capacity. The buyer replies that she can only sign off the deal if the payment period is 30 days or more since it often takes at least 30 days for her company to collect the payment from customers. A permission from senior management is required for this suggestion. In order to ensure that supplier understands the matter, she reiterates it throughout the meeting. Which tactics is she using?
1. Outrageous initial demand
2. Salami slicing
3. Lack of authority
4. Broken record
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?
What are the potential sources of conflict between the buyer and supplier? Select TWO that apply.
SBL provides contract bathroom furniture and fittings for a wide variety of domestic and commercial clients. To some suppliers, SBL spend claims a large portion of their revenue. But SBL is famous for imposing draconian obligations on these suppliers. Which of the following is most likely to be overarching objective of these suppliers to SBL?
Economic growth can be measured by...?
A buying organisation with a low spend but the reputation for paying on-time. In order to increase buyer's leverage in negotiation with suppliers, which of the following should be a priority of this buyer?
Which of the following are effective approaches when procurement professionals negotiate with monopoly suppliers?
1. Delaying payment with monopoly suppliers as long as possible to increase bargaining power
2. Setting up stronger BATNA
3. Engaging in the negotiation with a distributive approach
4. Eliminating requirements in the specification that prioritises monopoly suppliers
Which of the following is active listening?
Leitax is a consumer electronics firm with headquarters in the US and with a global sales presence. The company maintains seven to nine models in its product portfolio, each of which has multiple SKUs. Product life ranges from fifteen to nine months and is getting shorter. The demand planning and master planning processes at the company were ill-defined. Data relevant to forecasting were usually inaccurate, incomplete, or unavailable and the lack of objectives and monitoring mechanisms for the demand planning process meant that process improvement could not be managed. Support for supply management was equally ill-defined, as master production schedules were sporadic and unreliable and suppliers had learned to mistrust them. Leitax's newly appointed Supply chain director, Jessica realises that the “buy-in” of different functional groups was critical to the improvement of demand planning. She invites relevant stakeholders to a meeting so that they can express their opinions openly. What tactic is Jessica using?
The trust is built based on the other party's professional qualifications or proven or certified technical capability or experience is known as...?
Which of the following are signs indicating that the trust between buyer and supplier has improved? Select TWO that apply.
Which of the following are hardball tactics in negotiations? Select TWO that apply.
In order to mitigate all risks involved in the negotiation process, the buyer only needs to undertake pre-negotiation research on the supply market and establish a BATNA. Is this a correct suggestion?
Which of the following are types of questions that are useful in opening and testing phases of a negotiation? Select the TWO that apply.
John Browne, a junior buyer for a corporation, is analysing the global supply market before undertaking negotiations and is wondering whether foreign exchange rates are important to factor into his research. Should John consider the foreign exchange rates?
For a commercial negotiation to be effective, the organisation has to identify resources required for negotiation. Which one of the following could help?
When is the best time in procurement process in which procurement should get involved so that the cost-saving opportunities are the greatest?