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CIPS Commercial Negotiation - L4M5 Exam Questions

QUESTION NO: 1
Langham Industries is seeking to expand its operations globally. The CEO has asked the procurement department to engage in a macroeconomic analysis for its potential new supply chain to meet organisational objectives and outcomes. Which of the following would be a source of macroeconomic data?

A. Attending trade conferences B. Online supplier forums C. Competitor analysis D. Published market indices

Correct Answer: D

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QUESTION NO: 2
Which of the following is the first step in the development of negotiation strategies?

A. Developing scenarios around possible options B. Determining your BATNA C. Defining overarching objectives D. Recognising TOP's needs and wants

Correct Answer: C

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QUESTION NO: 3
Which of the following is categorised as fixed cost?

A. Governments taxes B. Land rental paid in advance C. Raw materials for next year production D. Additional pallet hires due to higher demand in year-end season

Correct Answer: B

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QUESTION NO: 4
Which of the following is an advantage of a fixed-price agreement?

A. Lower storage costs B. Longer payment terms C. Reduction in financial risk D. Increased quality

Correct Answer: C

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QUESTION NO: 5
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?

A. Yes, because buyer's brand, reputation and purchasing spend largely determine the outcomes B. No, because power of supplier is the only factor that influences the other party C. No, because personal power of negotiators also attributes to the outcomes D. Yes, because the outcomes of negotiation are attributable to the buying organisation

Correct Answer: C

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QUESTION NO: 6
A procurement expert has been asked to ensure they consider emotional intelligence in their negotiation strategy. They have agreed to this and have started planning their approach. Which of the following describes emotional intelligence?

A. An individual's ability to understand their own feelings and those of other people B. An individual's ability to gain leverage by persuading the other party to agree to their terms C. An individual's ability to place themselves in a position of authority during a negotiation D. An individual's ability to fully understand another party's cost drivers and profit margins

Correct Answer: A

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QUESTION NO: 7
Which of the following is a source of information on microeconomic factors?

A. Published economic indices such as the Retail Price Index (RPI) B. Data published by the financial markets and commodity markets and exchanges C. The marketing and corporate communications of suppliers D. Analysts published in the mainstream and financial media

Correct Answer: B

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QUESTION NO: 8
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

A. 3 and 4 only B. 1 and 4 only C. 1 and 2 only D. 2 and 3 only

Correct Answer: A

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QUESTION NO: 9
Should a buyer use closed questions in a negotiation?

A. No, the buyer should maximise the use of open questions B. Yes, because closed questions help to reconfirm certain facts C. No, supplier will consider closed questions as provocation D. Yes, because they urge the supplier to provide more :

Correct Answer: B

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QUESTION NO: 10
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.

A. Coercive power B. Trademark power C. Competitive power D. Purchasing spend power E. Legitimate power F. Expert power

Correct Answer: A,E,F

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QUESTION NO: 11
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...

A. Ask Jose to apply the 5% discount against the purchase price B. Accept the offer of a 5% discount against the aftercare package C. Ask Jose to apply a 15% discount against the purchase price D. Decline the offer and walk away from the negotiation

Correct Answer: B

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QUESTION NO: 12
Which characteristics are likely to feature in a partnership relationship in purchasing?
Close collaboration between supplier and buyer
Focus is on price and delivery only
Sharing of information
One-off commercial transactions

A. 2 and 4 only B. 2 and 5 only C. 1 and 3 only D. 1 and 2 only

Correct Answer: C

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QUESTION NO: 13
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?

A. Yes, only if the organisation can handle foreign currencies in their accounts B. No, exchange rates only apply to the national economy C. No, as they only affect the bank's interest rates for loans D. Yes, as they can affect profit and turnover

Correct Answer: D

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QUESTION NO: 14
According to Fiona Dent and Mike Brent, which of the following are characteristics of Push approach? Select TWO that apply.

A. Directive B. Seeking commitment C. Collaborative D. Inspirational E. Persuasion

Correct Answer: A,E

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QUESTION NO: 15
Effective listening is important in integrative negotiations. Is this statement correct?

A. Yes, as it means the supplier's attempts at negotiation can be stopped quickly with reasoning B. Yes, as it allows issues to be shared and understood between all parties C. No, as effective listening is important only in a distributive negotiation D. No, as what the other party has to say is not important

Correct Answer: B

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