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CIPS L4M5 - Commercial Negotiation

Page: 10 / 12
Total 395 questions

Which of the following should be done by the procurement team at the closing stage of a negotiation? Select TWO that apply.

A.

Gloat publicly about the deal

B.

Seek agreement in principle if TOP does not have the final authority

C.

Tell TOP that they could have got a better deal

D.

Accept ambiguity or uncertainty

E.

Leave the meeting as soon as possible

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?

A.

In the testing phase

B.

In the proposing phase

C.

At bargaining stage

D.

At opening stage

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

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

Which of the following will positively affect reputational strength of an organisation? Select TWO that apply.

A.

Adopting out-of-date technology

B.

Weak internal coordination

C.

Great gap between reputation and reality

D.

High ethical standards

E.

Strong customer focus

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

A.

Quantity elastic

B.

Price elastic

C.

Price inelastic

D.

Unit price elastic

Which of the following are examples of variable costs?

A.

1 and 3 (Building and site rent and Raw materials expenditure)

B.

2 and 3 (Annual insurance premium and Raw materials expenditure)

C.

1 and 4 (Building and site rent and Delivery costs for materials)

D.

3 and 4 (Raw materials expenditure and Delivery costs for materials)

Commercial negotiations on price cover various aspects, including pricing arrangements. A buyer may negotiate a fixed-price agreement. Why is a fixed-price agreement advantageous to the buyer?

A.

The buyer will benefit from any savings the supplier makes from 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

A procurement manager considers using an integrative negotiation approach with shortlisted suppliers. Which factor favours such an approach?

A.

There is an absence of common or joint goals between the parties

B.

The parties do not trust each other’s integrity

C.

Parties have a stronger motivation to work together than separately

D.

The parties understand the process but are unwilling to exchange data

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?

A.

No, the buyer should also keep the top management and all employees informed

B.

No, the buyer should make preparations in other areas such as determining the negotiation team

C.

Yes, establishing a fallback position is important because it signifies that the negotiations will reach an impasse

D.

Yes, because the market price should be the target price of the negotiations

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.

SMART

B.

STOPS WASTE

C.

OWN-IT

D.

SAMOA