Commercial Negotiation L4M5 Exam Training Material

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Commercial Negotiation L4M5 exam training material is available, which is helpful for you to pass the test. To take CIPS Certification L4M5 exam, you will be able to identify approaches to successfully achieving negotiated commercial agreements with external organisations. If you decide to take L4M5 exam, the online training material is important in the preparation. Free Commercial Negotiation L4M5 exam training material is available below.

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1. 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, ormay 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?

Purchasing consortia

Volume consolidation across categories

Volume pooling

Volume redistribution

2. From the principled point of view about negotiation environment, which of the following is a true statement?

Advantage gained from uncomfortable negotiation environment is likely to last long after the negotiation

The room layout can be seen as a source of tactical advantage

Home advantage should not be exploited to win a temporary advantage

There is no ideal negotiation environment in real life

3. Collaborative approach in negotiation not only can fully satisfies the concerns of both, but

also ensure that neither party will seek to be opportunistic in later time during the life of the contract. Is this statement true?

Yes, because all parties must have exactly the same goals in integrative negotiation

No, because any party may leverage its own advantage during the contract

Yes, because both parties have well understood each other's goals when they engage in collaborative negotiation

No, because the parties will always find a compromise solution in integrative approach

4. One difference between perfect competition and monopolistic competition is that...?

In perfect competition, firms produce slightly differentiated products

A perfectly competitive industry has fewer firms.

Monopolistic competition has no barriers to entry

Firms in monopolistic competition face a downward-sloping demand curve

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

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

Yes, because the supplier will comply with legally binding obligations

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

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

6. Which of the following are macroeconomic factors that may have influence to the commercial negotiation? Select TWO that apply

Equilibrium price

Supply curve

Unemployment rate

Bargaining power of supplier

Rising import tariffs

7. 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?

Yes, because smiling shows supplier's readiness in signing the deal off

No, because nodding and smiling are etiquette of polite rejection

No, because nodding and smiling are not clear signs of neither acceptance nor rejection

Yes, because negotiator should rely on non-verbal communications only

8. Which of the following should be done when undertaking a reflection activity on negotiation? Select TWO that apply.

Identify areas in your skill set where you need to improve

Gloss over areas where you need to improve your skills or performance

Be overly modest about your contribution to the outcomes of negotiation

Use generalised or ambiguous language when describing your strengths and development areas

Be honest and objective about your skills

9. Consumer tastes shift toward substitute products

3 and 4 only

4 and 2 only

1 and 3 only

1 and 2 only

10. 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.

Incoterms and logistics difficulties

The use and interpretation of body language

Currency exchange fluctuation

The importance of timescales

Payment mechanism

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11. After studying Thomas-Kilmann conflict resolution model and considering different approaches carefully, the procurement team of XYZ Ltd. decides to adopt an avoiding approach to the upcoming negotiation with one of their suppliers.

Which of the following will be the objective of XYZ procurement team in this negotiation?

Yielding the supplier's point of view

Postponing the issue

Seeking a quick middle-ground position

Confronting and trying to find a creative solution immediately

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

Market consult stage

Post-contract stage

Specification stage

Post-tender stage

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

Exploring a disagreement to learn from each other’s insights

Yielding to another’s point of view

Resolving some conditions that would otherwise have them competing for resources

Trying to win at any cost

Trying to find a creative solution to current problem

Seeking a quick middle-ground position

14. Influence

3 and 4 only

1 and 3 only

1 and 2 only

2 and 3 only

15. 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.

Framework arrangement

Payment terms

Contract governing law

Requisition

Cultural differences

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

Both parties understand each other's goals

Focusing onpositions

Conflict management skills

Constant shadowing and oversights

Emotional-based assessment

17. Which of the following best describes Leverage quadrant in Kraljicmatrix?

Low risk, high importance

High value, high complex

Low risk, low importance

High complex, low importance

18. 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?

Supplier selection

Supply positioning

Supplier appraisal

Supplier conditioning

19. 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?

Value engineering

Part substitution

Budgetlinkages

Compare total cost of ownership

Volume pooling

20. Which of the following should be adopted to minimise the conflict between parties in commercial negotiation?

The rule of law

Ground zero

Ground beam

Ground rules

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21. How contribution is calculated in break-even analysis?

Fixed costs divided by variable costs

Variable costs subtracted from price

Price minus fixed costs

Variable costs subtracted from fixed costs

22. According to Fiona Dent and Mike Brent, which of the following are characteristics of Push approach? Select TWO that apply.

Inspirational

Persuasion

Collaborative

Seeking commitment

Directive

23. Which of the following are typical characteristics of activity-based costing (ABC) method? Select TWO that apply.

ABC provides the information required to take action and realise improvements

Limited understanding of true costs incurred

ABC has tended to over cost products on long runs and under cost those on short runs

Costs are allocated based on volume

Variable and all related overhead expenses are specifically assigned to a business activity

24. Jane is planning for a forthcoming negotiation with a key supplier. She has learned what are important to the supplier and what are important to her company from previous contracts between them. In order to avoid negotiation deadlocks, she has set up several concession plans. But Jane has little experience in dealing with suppliers and doesn't know when to trade these concessions.

When is the best time in a negotiation to trade concessions?

In the testing phase

In the proposing phase

At bargaining stage

At opening stage

25. 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?

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

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

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

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

26. Stalemate is morelikely to happen if both parties trade more variables in a commercial negotiation.

Is this assumption true?

No, because the party who offers more variables will have lower bargaining power

Yes, because the negotiation will last endlessly if there are too many variables

No, because more variables will facilitate more possible negotiated outcomes

Yes, because more variables will cause more conflicts of interest

27. Which of these personal power bases stems from the manager's position in the organisation and the authority that lies in that position?

Coercive power

Legitimate power

Expert power

Reward power

28. Which type of question should be used to receive affirmation on statement?

Open

Closed

Leading

Narrow

29. Which of the following are behaviours that builds trust between the buyer and the supplier in business relationship? Select TWO that apply.

Conducting transparent procurement process

Over-inflated contingency funds

Allowing supplier to involve in early product development

Commercial espionage

Tendency to blame other party

30. 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?

Reward

Referent

Legitimate

Coercive

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

Distributive approaches are inherently inferior tointegrative approaches in commercial negotiation

Both parties understand each other's goals

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

Both parties share 50:50 of the 'pie'

32. 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.

Differences in conflict management style

Differences in culture

Types of purchase

Standard terms and conditions

Line of the best fits

33. 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?

Directive

Persuasive reasoning

Coalition

Visionary

34. Which of the following are most likely to beindirect costs of a garment manufacturer? Select THREE that apply.

Packaging material

Textile

Zips pads

Maintenance materials

Utilities

Depreciation of machinery

35. A senior buyer analyses the supply market and he realises that his organisation is treated asExploit according to supplier's perspective model .

What does he need to do?

Adopt opaque processes

Increase the spend value

Raise the transactional costs to do business

Pay the suppliers on time

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

Cost overruns

Decreasing percentage of missed delivery overtime

Transparent decision making process

Less frequent communication on business requests Duplication of effort

37. A procurement professional is sourcing low value items. He conducts market analysis and realise that these items can be provided by many suppliers and switching cost between suppliersis relatively low. He also assume that the relationship between buyer and supplier will be transactional rather than long-term.

According to Thomas-Kilmann conflict model instrument, which of the following is the most appropriate style that the procurement professional should adopt when negotiating with these suppliers?

Avoiding

Compromising

Competing

Collaborating

38. When is the best time for buyer to propose the negotiation agenda to potential supplier?

At opening stage

At conclusion stage

At testing stage

At preparation stage

39. It may be more difficult to buy on a credit from supplier who locates in a country with a hyperinflation?

Is this assumption true?

No, because supplier's bank will take risks from currency fluctuation

Yes, because thesupplier's currency will lose its value overtime

Yes, because buyer has more advantage if they make payment in their own currency

No, because the higher the inflation rate, the stronger the supplier's currency

40. In which of the following persuasion methods, the influencer uses logics and objective reasons to persuade the others to buy into influencer’s ideas?

Persuasive reasoning (push)

Collaborative (pull)

Visionary (pull)

Directive (push)

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41. An automotive company purchases high quality steel to produce components. The steel is an important raw material and the contract value is enormous. They sources the steel from oversea and contact some potential suppliers. One of the potential suppliers invites the procurement team to their premise for a new business opportunity.

Should the procurement team accept the invitation?

No, because negotiating over telephone is enough to collect information on supplier's capability

Yes, because the visit would increase the buyer's bargaining power

Yes, because this is an opportunity to assess the supplier's capacity

No, because the travel would incur unnecessary costs

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

Macroeconomic factors always directly influence the negotiations

Expectations on macroeconomic prospect are always correct

Changes in macroeconomic factors may affect businesses and individuals differently

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

43. A new manager has been appointed with responsibility for an organisation's category which has major impact on organisational cost base and there are little competitions in the supply market. They have an objective to improve supplier cost structures over time .

Which of the following should they carry out first?

Purchase price cost analysis

Competitive rivalry analysis

Volume concentration

STEEPLE analysis

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

Thomas-Kilmann Conflict Resolution model

Intelligence quotient

Mill's RESPECT mnemonic

Myers-Briggs Type Indicator

45. Which of the following is categorised as fixed cost?

Additional pallet hires due to higher demand in year-end season

Land rental paid in advance

Governments taxes

Raw materials for next year production

46. According French and Raven's base model, which of the following are sources of personal power that can be used in commercial negotiation? Select THREE that apply.

Purchasing spend power

Expert power

Competitive power

Trademark power

Coercive power

Legitimate power

47. Which of the following is a disadvantage of absorption costing method?

Fixed cost allocated to products on the basis of the cost of activities used in producing them

Variable costs are not taken into product final costs

Using marginal cost of producing addition units

Limited understanding of true costs incurred

Commercial Negotiation L4M5 Exam Training Material

Commercial Negotiation L4M5 Exam Training Material

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