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CIPS L4M5 Commercial Negotiation Exam Practice Test

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Total 317 questions

Commercial Negotiation Questions and Answers

Question 1

Which of the following are rules of attentive listening? Select TWO that apply.

Options:

A.

Prepare for what to say next

B.

React to the person who is speaking

C.

Listen deliberately

D.

Only focus on verbal cues

E.

Do not interrupt when the other party is speaking

Question 2

Which of the following are signs indicating that the trust between buyer and supplier has improved? Select TWO that apply.

Options:

A.

Cost overruns

B.

Decreasing percentage of missed delivery overtime

C.

Transparent decision making process

D.

Less frequent communication on business requestsDuplication of effort

Question 3

Tony is undertaking a negotiation with a strategic supplier and is frustrated by the lack of progress. He proposes using threats to get what he wants from the negotiations. Is this the correct course of action?

Options:

A.

Yes, Tony will get what he requires from the negotiations

B.

Yes, a long-term relationship is not required with the supplier

C.

No, a long-term relationship built on trust is required with the supplier

D.

No, it does not guarantee Tony will get what he requires from the negotiations

Question 4

Champion Toys (CT) is negotiating a large order of luxury toys with its supplier. CT has identified that lead times, order quantities, and delivery locations are tradeables that could be used in this negotiation. At which negotiation stage should CT introduce these tradeables?

Options:

A.

Bargaining

B.

Opening

C.

Closure

D.

Proposing

Question 5

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?

Options:

A.

Yes, financial budgeting task would be a lot easier with fixed pricing arrangement

B.

No, fixed price should be only applied to contracts that last 60 months or longer

C.

No, the refinery would not be able to reap the benefits from falling commodity price and currency rates

D.

Yes, the supplier would bear the risk when the material price increased

Question 6

All of the following shift the supply of watches to the right except...?

Options:

A.

An advance in the technology used to manufacture watches

B.

A decrease in the wage of workers employed to manufacture watches

C.

An increase in the price of watches

D.

Manufacturers' expectation of higher watch prices in the future

Question 7

Which of the following are internal factors when a supplier is making its pricing decision?

Options:

A.

1 and 2 only (Price elasticity of demand and Environmental legislation)

B.

1 and 4 only (Price elasticity of demand and The stage in the product life cycle)

C.

2 and 3 only (Environmental legislation and Risk management)

D.

3 and 4 only (Risk management and The stage in the product life cycle)

Question 8

Lina Rawlins, a senior buyer for a medical equipment company, is in charge of the company's largest supplier account. Recently, the supplier's performance has declined, leading to more rejected items. Lina has asked the supplier for an urgent meeting. In the meeting, she asks: “Can you tell me exactly what you are doing to ensure quality?”

What type of question is Lina asking?

Options:

A.

Hypothetical

B.

Leading

C.

Reflective

D.

Probing

Question 9

At which stage in a negotiation would questions be asked to obtain missing information?

Options:

A.

The bargaining stage

B.

The proposing stage

C.

The opening stage

D.

The testing stage

Question 10

Which of the following are most likely to be characteristics of a perfectly competitive market? Select TWO that apply

Options:

A.

In a competitive market, both buyers and sellers are price givers

B.

Firms can freely enter or exit the market

C.

In a perfectly competitive market, each seller has a large impact on the market priceA perfectly competitive market consists of products that are all slightly different from one another

D.

There are many buyers and sellers in the market

Question 11

In general, which of the following is the consequence of a flatter demand curve?

Options:

A.

Quantity elastic

B.

Price elastic

C.

Price inelastic

D.

Unit price elastic

Question 12

In a commercial negotiation, a procurement professional negotiates on his company's behalf. The power of buying organisation is the only factor that influences the behaviours of the other party. Is this assumption true?

Options:

A.

Yes, because the outcomes of negotiation are attributable to the buying organisation

B.

No, because personal power of negotiators also attributes to the outcomes

C.

No, because power of supplier is the only factor that influences the other party

D.

Yes, because buyer's brand, reputation and purchasing spend largely determine the outcomes

Question 13

Which of the following are features of a single-sourced type of relationship on the relationship spectrum?

Exclusivity granted in relation to a particular product

The supplier is an oligopoly market structure

The supplier is trusted and collaborative

Framework contracts are used to identify the supplier

Options:

A.

1 and 2 only

B.

1 and 3 only

C.

2 and 3 only

D.

2 and 4 only

Question 14

Which of the following are most likely to be direct costs of a steel manufacturer? Select THREE that apply.

Options:

A.

Cleaning services

B.

Coal

C.

Senior management salary

D.

Insurance for production lines

E.

Scrap metal

F.

Hourly production wages

Question 15

What is the most likely outcome when two organisations with adversarial relationship negotiate with each other?

Options:

A.

Deadlocked

B.

Lose lose

C.

Win lose

D.

Win win

Question 16

Commercial negotiations on prices cover a range of aspects including pricing arrangements. A buyer may negotiate for a 'fixed price agreement'. Why is a fixed price agreement advantageous to the buyer?

Options:

A.

The buyer will benefit from the savings that the supplier makes from the efficient cost management of the contract

B.

The buyer will not need to monitor the supplier’s costs relating to the contract

C.

Suppliers always seek price agreements that include cost-sharing incentives

D.

Suppliers calculate prices using fixed costs which the buyer must counteract by pushing for a fixed price agreement

Question 17

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?

Options:

A.

Supplier selection

B.

Supply positioning

C.

Supplier appraisal

D.

Supplier conditioning

Question 18

Maria has adopted an adversarial style relationship with her stationery supplier. This relationship style can be characterised by which of the following? Select the TWO that apply.

Options:

A.

Minimal sharing of information

B.

Requirement to exceed expectations

C.

Degree of mutual commitment

D.

Use of power to seek the best possible deal

E.

Requirement to secure quality of supply

Question 19

Which of the following will shift the supply curve to the right?

Options:

A.

Changes in customer taste

B.

New disruptive technology

C.

Decreased market price of substitute products

D.

Increased customers' disposable income

Question 20

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?

Options:

A.

Yes, the procurement manager should keep that 5% for himself because that amount is a fair compensation for his effort

B.

No, it is unethical to exploit the weakness of the other party

C.

No, procurement should insist the payment term remains 60 days

D.

Yes, since procurement manager has his own cost savings target to achieve and he should make use of supplier's financial status

Question 21

In addition to organisational power, personal power of each negotiator can influence the outcomes of a negotiation. A good negotiator can leverage different sources of power. Is this statement true?

Options:

A.

Yes, because the good negotiator recognises his own power in a negotiation

B.

No, because each person has only one superior source of personal power

C.

Yes, because all sources of power have similar effectiveness in every situation

D.

No, because only organisational power can be leveraged during a negotiation

Question 22

The stages of commercial negotiation involve which of the following characteristics?

Options:

A.

Preparation, proposal, bargain, leave

B.

Open, testing, bargaining, closing, revisiting

C.

Preparing, opening, bargaining, agreement, closure

D.

Opening, debating, promising, testing, disagreeing, closing

Question 23

Which of the following is the internal factor that is taken into price of a product?

Options:

A.

Risk management

B.

Customer tastes

C.

Elasticity

D.

Exchange rate

Question 24

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?

Options:

A.

SMART

B.

STOPS WASTE

C.

OWN-IT

D.

SAMOA

Question 25

Listening is a key activity in any negotiation. Which of the following are characteristics of effective listeners?

Options:

A.

2 and 4 only (Persuading and Offering immediate solutions)

B.

1 and 2 only (Showing empathy and Persuading)

C.

1 and 3 only (Showing empathy and Paraphrasing)

D.

3 and 4 only (Paraphrasing and Offering immediate solutions)

Question 26

Which of the following will help to indicate personality preferences in four dimensions?

Options:

A.

Thomas-Kilmann Conflict Resolution model

B.

Intelligence quotient

C.

Mill's RESPECT mnemonic

D.

Myers-Briggs Type Indicator

Question 27

Active listening in negotiation includes which of the following activities?

1. Hearing

2. Interpreting

3. Rapport

4. Influence

Options:

A.

3 and 4 only

B.

1 and 3 only

C.

1 and 2 only

D.

2 and 3 only

Question 28

Why is rapport building with the supplier important during the opening phase of a negotiation?

Options:

A.

To assert dominance and to show who is in control of the meeting

B.

To establish trust and common ground between the parties

C.

To test the other party on their position and willingness to collaborate

D.

To persuade the supplier to accept concessions more readily

Question 29

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?

Options:

A.

Unclear tender award criteria

B.

Volume separation

C.

Spend concentration

D.

Unavailable technical support

Question 30

Representatives from South African Department of Health is negotiating the price of hospital drugs with US pharmaceutical companies. Which of the following are most likely to be macro factors that influence the outcomes of the negotiation? Select TWO that apply.

Options:

A.

Forward integration

B.

Digitalisation of medicine

C.

Order quantity

D.

Regulations on health and safetySwitching costs of buyer

Question 31

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

Options:

A.

SRI's purchase amount makes significant proportion of supplier revenue

B.

Costs of changing suppliers are high

C.

Rubber from different suppliers is virtually similar

D.

SRI sets up its own rubber plantation

E.

There are no close substitutes for rubber

Question 32

Information generated through Purchase Price Cost Analysis can be useful to the purchaser, by helping to identify which of the following costs relating to the supplier? Select the THREE that apply.

Options:

A.

External costs

B.

Profit

C.

Material costs

D.

Market costs

E.

Budgeted costs

F.

Depreciation on equipment

Question 33

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

Options:

A.

1 and 2

B.

1 and 5

C.

2 and 3

D.

3 and 4

Question 34

During a negotiation, Jose Gomez, the salesperson for a strategic supplier, states that his sales director will not approve discounts against initial purchases. However, Jose offers a 5% discount on the aftercare package, which will provide the same monetary saving. Sally Pampas requires both the product and the aftercare package and has an objective to achieve a 5% discount off the purchase price. To achieve a win-win (integrative) negotiation, Sally should...

Options:

A.

Ask Jose to apply a 15% discount against the purchase price

B.

Accept the offer of a 5% discount against the aftercare package

C.

Decline the offer and walk away from the negotiation

D.

Ask Jose to apply the 5% discount against the purchase price

Question 35

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?

Options:

A.

Collaboration

B.

Problem solving

C.

Coercion

D.

Persuasion

E.

Transfer of risk

Question 36

A buying organisation with a low spend and the reputation for paying late might be viewed by a supplier as which of the following?

Options:

A.

Develop

B.

Nuisance

C.

Core

D.

Exploit

Question 37

To buying organisation, savings can be achieved from different saving levers or tactics. Which of the following are means that deliver savings through optimising specifications?

Options:

A.

Value engineering

B.

Part substitution

C.

Budget linkages

D.

Compare total cost of ownership

E.

Volume pooling

Question 38

Which of the following are most likely to help buyer become preferred customer in supplier's perspective? Select TWO that apply.

Options:

A.

Onerous supplier terms and conditions

B.

Compliance with agreed repair lead time

C.

Shorter payment period

D.

Reduction in delivery errors

E.

Ensuring an increased number of repeat orders

Question 39

Which of the following are common forms of collaborating approach in Thomas-Kilmann conflict resolution model? Select THREE that apply.

Options:

A.

Exploring a disagreement to learn from each other’s insights

B.

Yielding to another’s point of view

C.

Resolving some conditions that would otherwise have them competing for resources

D.

Trying to win at any cost

E.

Trying to find a creative solution to current problem

F.

Seeking a quick middle-ground position

Question 40

Which of the following is a source of power in organisational relationships?

Options:

A.

Referent power

B.

Given power

C.

Tactical power

D.

Intruded power

Question 41

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

Options:

A.

1 and 2 only

B.

1 and 4 only

C.

2 and 3 only

D.

3 and 4 only

Question 42

Before engaging in a negotiation with a supplier of rechargeable lights, procurement team tries to visualise the breakdown of supplier's costs to calculate its break-even point. They estimate that total fixed expenses related to rechargeable electric light are $270,000 per month and variable expenses involved in manufacturing this product are $126 per unit. The supplier charges its customer $180 per unit. Within its current capacity, this supplier will make a profit at which of the following?

Options:

A.

More than 5,000 units are sold monthly

B.

Exactly 5,000 units are sold per month

C.

Exactly 1,500 units are sold monthly

D.

More than 1,500 units are sold monthly

Question 43

The trust is built based on the other party's professional qualifications or proven or certified technical capability or experience is known as...?

Options:

A.

Goodwill trust

B.

Contractual trust

C.

Irrevocable Trust

D.

Competence trust

Question 44

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?

Options:

A.

When the supplier is a monopolist and some advantages need to be gained from the agreement

B.

In a market that is full of alternative sources and substitute products

C.

Where there is a single sourcing strategy to eliminate the competing suppliers and retain only one

D.

In a market where the buyers are competing for fewer supply sources

Question 45

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?

Options:

A.

No, as they only affect the bank's interest rates for loans

B.

Yes, only if the organization can handle foreign currencies in their accounts

C.

Yes, as they can affect profit and turnover

D.

No, exchange rates only apply to the national economy

Question 46

The activity of listening in a negotiation includes which of the following processes?

Hearing

Interpreting

Rapport

Influencing

Options:

A.

1 and 2 only

B.

2 and 3 only

C.

1 and 3 only

D.

2 and 4 only

Question 47

Which of the following types of questions are likely to be the most effective to check facts in negotiations?

Options:

A.

Hypothetical

B.

Open

C.

Leading

D.

Closed

Question 48

In which of the following scenarios could you adopt a distributive-based negotiation approach?

Options:

A.

When asking for changes to the provision of a strategic service provided by a monopoly supplier

B.

When determining costs to incorporate a unique product into your design with the patent holder

C.

When your organisation is dependent on a supplier for delivery of a large contract in the future

D.

When procuring a widely available commodity item which is not strategic to your organisation

Question 49

Which of the following constitutes a key element to developing high-trust supplier relationships?

Options:

A.

Contract management

B.

Supplier audits

C.

Delivering on commitments

D.

Information gathering

Question 50

One of the most important steps in preparing for negotiations is to appraise the relative power of the parties. The buying organisation must assess its bargaining power against that of the supplier it intends to negotiate with. This information is necessary in facilitating the preparation, the negotiation team and the negotiation strategy.

In what situation is the bargaining power of buyers likely to be high relative to suppliers?

Options:

A.

The supplier’s product is critical to the buyer’s business

B.

There are fewer buyers relative to suppliers

C.

The buyer’s requirement is urgent and cannot be postponed

D.

There are few suppliers relative to buyers

Question 51

A garden furniture supplier currently in negotiations for a high-value contract has offered the procurement manager a visit to their site. The supplier suggests that during this visit, they can undertake the contract negotiation. What would be an appropriate response from the procurement manager?

Options:

A.

Accept the offer as this would be an ideal opportunity to see what the supplier can offer and will provide the supplier with familiarity while negotiating

B.

Accept the offer as this would save time. A supplier visit and negotiation could be done at the same time

C.

Decline the offer as it would take too much time to go and visit the supplier

D.

Decline the offer as negotiating while on a site visit will provide the supplier with an unfair advantage because they will be in a familiar environment

Question 52

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?

Options:

A.

Reward

B.

Referent

C.

Legitimate

D.

Coercive

Question 53

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?

Options:

A.

Activity-based costing

B.

Cost plus costing

C.

Absorption costing

D.

Marginal costing

Question 54

Where a negotiator uses numerical reasoning with facts as part of their negotiation approach, which of the following techniques will they be adopting?

Options:

A.

Threat

B.

Logic

C.

Emotion

D.

Power

Question 55

Which of the following tactics would be appropriate in an integrative negotiation?

Options:

A.

Lowball/Highball

B.

Take it or leave it

C.

Expanding the Pie

D.

Mother Hubbard

Question 56

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

Options:

A.

1 and 4 only

B.

3 and 4 only

C.

2 and 3 only

D.

2 and 4 only

Question 57

At the first stage of CIPS Procurement and Supply Cycle (Understand need), which of the following is the most important duty of procurement professional?

Options:

A.

Demand management

B.

Evaluating the interests from suppliers

C.

Undertaking 'reverse marketing'

D.

Deciding whether RFQ or ITT should be used

Question 58

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

Options:

A.

2 and 4 only

B.

3 and 4 only

C.

1 and 2 only

D.

1 and 3 only

Question 59

Which of the following would cause a demand curve for a good to be price inelastic?

Options:

A.

There are a great number of substitutes for the good

B.

The consultancy service

C.

The luxury goods

D.

The necessary goods

Question 60

Which of the following is a true statement regarding macroeconomic factors and their potential impact on negotiations?

Options:

A.

Macroeconomic factors always directly influence the negotiations

B.

Expectations on macroeconomic prospect are always correct

C.

Changes in macroeconomic factors may affect businesses and individuals differently

D.

Macroeconomic factors cannot be influenced by anyone's expectation or sentiment

Question 61

Which of the following is considered a strength of a ‘logical’ style negotiator?

Options:

A.

Assertive

B.

Methodical

C.

Friendly and accessible

D.

Interrelate issues easily and make quick decisions

Question 62

Colin Smith is preparing for a negotiation with a supplier that provides a chemical for grass fertiliser. Colin has been given an action to secure a commercial deal that achieves his organisation’s objective of ‘ethical and sustainable procurement.’ As part of his negotiation plan, Colin is using the ‘must, intend, like (MIL)’ framework to prepare for the negotiation. Colin would categorise his organisation’s objective within the negotiation plan as:

Options:

A.

Likely to have

B.

Intend to have

C.

Must have

D.

Like to have

Question 63

In which of the following costing methods, overhead costs are applied in proportion to production volume?

Options:

A.

Absorption costing

B.

Mark-up costing

C.

Activity-based costing

D.

Marginal costing

Question 64

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

Options:

A.

1 and 2 only

B.

3 and 4 only

C.

1 and 3 only

D.

2 and 4 only

Question 65

JCB is a large manufacturer of heavy machinery. The CPO is going to a negotiation with a Chinese supplier about procuring some major components. He is wondering about balance of power in the negotiation. Which of the following micro factors are most likely to shift the balance of power towards the buying organisation in this commercial negotiation? Select TWO that apply

Options:

A.

Buyers purchase in small volumes

B.

Suppliers are more concentrated than buyer

C.

Eruption of epidemic in supply market

D.

JCB's switching costs are low

E.

These components are highly standardised

Question 66

Distributive approach in negotiation is typified by which of the following?

Options:

A.

Distributive approaches are inherently inferior to integrative approaches in commercial negotiation

B.

Both parties understand each other's goals

C.

Each party attempts to maximise the value obtained at other's expense

D.

Both parties share 50:50 of the 'pie'

Question 67

Freefields Housing Authority (FHA) is a housing provider that has outsourced a range of management services using fixed-price long-term contracts. FHA’s regular supplier credit reviews have identified that some key outsourced service suppliers are at risk of insolvency due to high inflation rates observed in the macroeconomic climate. Which of the following actions would enable FHA to reduce this risk for the lifetime of the affected contracts?

Options:

A.

Allow affected suppliers to review and resubmit their fixed costs

B.

Introduce indexation of contracts linked to the Consumer Prices Index

C.

End the contracts and procure the services

D.

Offer advance payment terms to the affected suppliers

Question 68

What is a benefit to the buyer of having a BATNA (best alternative to a negotiated agreement) in a negotiation?

Options:

A.

To aid detailed pre-meeting data gathering and analysis

B.

To reduce financial and logistical risk for both parties

C.

To be able to confidently walk away from an unfavorable deal

D.

To facilitate information sharing between both parties

Question 69

Which one of these key approaches could be pursued for a successful negotiation of a commercial agreement?

Options:

A.

A distributed approach

B.

An agency approach

C.

A collaborative win-win approach

D.

An integrated spend analysis

Question 70

Which of the following can help both parties to break the vicious cycle of blame when a relationship needs repairing? Select TWO that apply.

Options:

A.

Both parties understand each other's goals

B.

Focusing on positions

C.

Conflict management skills

D.

Constant shadowing and oversights

E.

Emotional-based assessment

Question 71

Which of the following is an attribute of a distributive negotiation approach?

Options:

A.

Focus on problem solving

B.

Identifying common ground

C.

Achieving personal success

D.

Creative problem-solving

Question 72

Which of the following are variable costs?

Options:

A.

Rent

B.

Loan repayments

C.

Insurance

D.

Packaging

Question 73

When planning a negotiation for sourcing internationally, which of the following divergent positions, and therefore potential conflict areas, should be prepared for? Select TWO that apply:

Options:

A.

Team size

B.

Team makeup

C.

Cultural differences

D.

Timing and location

E.

How the negotiation will be closed out

Question 74

Which of the following would be considered appropriate influencing techniques in contract negotiation? Select TWO that apply.

Options:

A.

Ratification

B.

Rule ethics

C.

Framing and re-framing

D.

Validation

E.

Anchoring

Question 75

Which of the following are indicative behaviours of a distributive approach to negotiating?

Options:

A.

1 and 4 only (Maintaining openness and Attempting to cast doubt)

B.

2 and 4 only (Establishing power and Attempting to cast doubt)

C.

1 and 3 only (Maintaining openness and Seeking understanding)

D.

2 and 3 only (Establishing power and Seeking understanding)

Question 76

Which of the following are most likely to be abilities of a person with high emotional intelligence? Select TWO that apply.

Options:

A.

Complex idea comprehension

B.

Controlling one's own emotions

C.

Perceiving how others feel

D.

Reasoning and problem solvingAbstract thinking

Question 77

Which of the following would help build trust in a relationship?

    Mediation attendance

    Regular meetings

    Keep promises

    Coercion

Options:

A.

2 and 4 only

B.

2 and 3 only

C.

1 and 4 only

D.

1 and 3 only

Question 78

When is the best time to adopt accommodating style according to Thomas-Kilmann conflict mode instrument?

Options:

A.

When both buyer and supplier want to find an integrative solution as their concerns are too important to be compromised

B.

When buyer needs to gather more information to gain more advantages in later negotiations

C.

When preserving harmony and avoiding disruption with supplier are especially important

D.

When buyer and supplier have equal power but are strongly committed to mutually exclusive goals

Question 79

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?

Options:

A.

Purchasing consortia

B.

Volume consolidation across categories

C.

Volume pooling

D.

Volume redistribution

Question 80

When developing a negotiation approach, according to recognised theory (for example Mendelow), how should stakeholders with high interest but low power be managed?

Options:

A.

Minimal effort

B.

Key player

C.

Keep informed

D.

Keep satisfied

Question 81

In a detailed cost breakdown, a company has a salary cost of 9%, raw materials cost 51% and overheads cost 24%. Which of the following represents the mark-up of that company?

Options:

A.

Approximately 84%

B.

Approximately 19%

C.

Approximately 116%

D.

Approximately 16%

Question 82

Which of the following is active listening?

Options:

A.

Encouraging the other party to do all the talking

B.

Agreeing with what the other party has to say

C.

Summarising what has been said

D.

Ignoring what the other party has to say

Question 83

Which of the following is the area where two or more negotiating parties may find common ground?

Options:

A.

Zone of potential agreement

B.

Zone of proximal development

C.

Walk away area

D.

Best alternative to a negotiated agreement

Question 84

A negotiation meeting commences with the supplier asking the buyer 'How do you feel about the service you receive from us currently?', followed by 'What do you think about our latest products?' and 'How do we compare with other suppliers you use?'

The supplier is using which type of questions?

Options:

A.

Probing questions

B.

Closed questions

C.

Open questions

D.

Hypothetical questions

Question 85

Commercial negotiation ends at the award of a contract. Is this statement true?

Options:

A.

Yes, because there are no rooms for negotiation after the contract is awarded

B.

Yes, because the supplier will comply with legally binding obligations

C.

No, because improvements can be achieved through post-award negotiation

D.

No, because real commercial negotiation begins after the contract is awarded

Question 86

Which of the following are intangible values created by trust in business relationships? Select TWO that apply.

Options:

A.

Higher revenues

B.

Positive feedbacks from customers

C.

More focus on core business

D.

Increasing response time to request

E.

Frequent conflict escalation

Question 87

A breakeven analysis uses which of the following aspects as part of the analysis?

Options:

A.

Fixed cost

B.

Buying cost minus variable cost per unit

C.

Variable cost

D.

Selling price minus variable cost per unit

Question 88

When is the best time in procurement process in which procurement should get involved so that the cost-saving opportunities are the greatest?

Options:

A.

Market consult stage

B.

Post-contract stage

C.

Specification stage

D.

Post-tender stage

Question 89

Which of the following are the most typical characteristics of integrative approach to negotiation? Select TWO that apply.

Options:

A.

Positional-based

B.

Claiming value

C.

Interest-based

D.

Short-term wins

E.

Creating more value

Question 90

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?

Options:

A.

No, exchange rates only apply to the national economy

B.

No, as they only affect the bank's interest rates for loans

C.

Yes, as they can affect profit and turnover

D.

Yes, only if the organisation can handle foreign currencies in their accounts

Question 91

Which of the following are examples of connected stakeholders in a private organisation? Select TWO that apply.

Options:

A.

Customers

B.

Local community

C.

Media

D.

Government

E.

Shareholders

Question 92

A skilled negotiator will use a range of questioning techniques in a negotiation. If they wished to explore options with the other party without making any formal commitment, which type of question style would they use?

Options:

A.

Leading

B.

Hypothetic

C.

Reflective

D.

Multiple

Question 93

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?

Options:

A.

Supplier may need to open new facilities to meet increasing customer's demand

B.

Supplier may have high fixed cost - variable cost ratio

C.

Supplier may want to encourage buyer's demand

D.

The supplier may have reached economy of scale

Question 94

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?

Options:

A.

Win-Lose

B.

Lose-Lose

C.

Win-Perceived Win

D.

Win-Win

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Total 317 questions