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CIPS L4M5 Exam Syllabus Topics:

TopicDetails
Topic 1
  • Costing methods such as absorption, marginal or variable and activity based costing
  • Know how to prepare for negotiations with external organisations
Topic 2
  • Setting objectives and defining the variables for a commercial negotiation
  • Use of telephone, teleconferencing or web based meetings
Topic 3
  • Building relationships based on reputation, and trust
  • Repairing a relationship
  • The relationship spectrum
Topic 4
  • Analyse how to assess the process and outcomes of negotiations to inform future practice
  • Protecting relationships after the negotiation
Topic 5
  • How purchasers can improve leverage with suppliers
  • The importance of power in commercial negotiations
Topic 6
  • Understand key approaches in the negotiation of commercial agreements with external organisations
  • Sources of conflict that can arise in the work of procurement and supply
Topic 7
  • Identify the different types of relationships that impact on commercial negotiations
  • Pragmatic and principled styles of negotiation
Topic 8
  • Team management and the influence of stakeholders in negotiations
  • Definitions of commercial negotiation
Topic 9
  • Setting targets and creating a best alternative to a negotiated agreement (BATNA)
  • Collaborative win-win integrative approaches to negotiations
Topic 10
  • Macroeconomics and its influence on commercial negotiations
  • Contrast the economic factors that impact on commercial negotiations
Topic 11
  • Analyse the application of commercial negotiations in the work of procurement and supply
  • Negotiation in relation to the stages of the sourcing process

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CIPS Commercial Negotiation Sample Questions (Q59-Q64):

NEW QUESTION # 59
Which of these personal power bases stems from the manager's position in the organisation and the authority that lies in that position?

  • A. Expert power
  • B. Legitimate power
  • C. Reward power
  • D. Coercive power

Answer: B

Explanation:
Explanation
Legitimate power comes from the belief that a person has the formal right to make demands, and to expect others to be compliant and obedient. Legitimate power comesfrom rules, formal authority, organisation rank, staff grade or official position held. In commercial negotiation, legitimate power can be demonstrated by job title and rank.
LO 1, AC 1.3


NEW QUESTION # 60
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?

  • A. Yes, because all parties must have exactly the same goals in integrative negotiation
  • B. No, because the parties will always find a compromise solution in integrative approach
  • C. Yes, because both parties have well understood each other's goals when they engage in collaborative negotiation
  • D. No, because any party may leverage its own advantage during the contract

Answer: D

Explanation:
Integrative, interest-based negotiation can facilitate constructive, positive relationship and establish contracts between parties on a foundation of goodwill. It is important to note it can only facilitate these positive outcomes, it does not guarantee that the other party will not seek to be opportunistic at a later time during the life of the contract. Previous knowledge of the behaviours of the other party regarding honouring contractual and other commitments will be useful here in predicting long-term outcomes, not ensuring that they will not leverage their advantages.


NEW QUESTION # 61
It may be more difficult to buy on a credit from supplier who locates in a country with a hyperinflation? Is this assumption true?

  • A. No, because supplier's bank will take risks from currency fluctuation
  • B. Yes, because thesupplier's currency will lose its value overtime
  • C. No, because the higher the inflation rate, the stronger the supplier's currency
  • D. Yes, because buyer has more advantage if they make payment in their own currency

Answer: B

Explanation:
If theinflation rate is running high, then obtaining credit as a buyer is normally more difficult or expensive as money in the future will be worth less than money today.


NEW QUESTION # 62
Premium pricing strategies used by suppliers are characterised by which of the following? Select TWO that apply.

  • A. Premium price is determined by variable costs only
  • B. This strategy is often used when supplier attempts to enter new market
  • C. Price is based on cost structures
  • D. Typically found in the early part of the product life cycle
  • E. Products are charged at a price based on supplier's reputation

Answer: D,E

Explanation:
There are several pricing strategies used by suppliers:
Cost-plus pricing - Total variable + Fixed cost + profit
Premium pricing - based on branding. Supplier determines to charge a very high price, notconnected with cost structures, usually based on its reputation and/or the perception that the product/service is of a superior quality. This strategy typically found in the early part of the product life cycle/when demand exceeds supply.
Penetration pricing - Supplier attempts to enter a new market or extend its share in an established one. It is characterised by price reductions to increase volume, followed by steady price increases; may even be loss leading at start (no profit made) Marginal cost pricing - covers only variable cost Market pricing - suppliers prices in line with what the market is willing to pay


NEW QUESTION # 63
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?

  • A. Unavailable technical support
  • B. Volume separation
  • C. Unclear tender award criteria
  • D. Spend concentration

Answer: D

Explanation:
Explanation
According to Paul Steele's 'The Seller's Perspective', customer can be classified into 4 categories as below:
To increase theleverage in negotiation, buyer may increase its attractiveness and/or increase spend value. In this scenario, the buyer is already attractive to supplier as it always pays on-time, but the spend is still low. So to have greater leverage, the buyer has toincrease its spend volume by spend concentration. Spend concentration may take many forms as following:
- Vendor base reduction
- Volume pooling
- Volume redistribution
- Volume consolidation across categories
- Standardisation and harmonisation of specifications
- Forming purchasing consortia
Chart, treemap chart Description automatically generated
L4M5-2d6c35c595e734d0f947d63d5f800009.jpg
LO 1, AC 1.3


NEW QUESTION # 64
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