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100% Pass CIPS Fantastic L4M5 - Valid Commercial Negotiation Practice Materials

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CIPS Commercial Negotiation Sample Questions (Q128-Q133):

NEW QUESTION # 128
When engaging in commercial negotiations, it is important to bear in mind that the suppliers need to make a reasonable profit to maintain continuity of supply. It is therefore necessary for the buyer to have a clear understanding of the break-even analysis concept which relates to cost, volume, and profit.
What is 'contribution' in relation to break-even analysis?

A. The gains from sales revenue which the supplier retains as reserves to contribute to future development projects
B. The gains that the supplier receives when the sales revenue exceeds fixed costs
C. The gains that the supplier receives when the sales revenue exceeds variable costs
D. The gains from sales revenue that the supplier is willing to contribute in a profit-sharing contractual arrangement

Answer: C

Explanation:
Inbreak-even analysis,contributionrefers to the amount from sales revenue that exceedsvariable costs, which then contributes to coveringfixed costsand ultimately generating profit. Understanding this concept enables buyers to better analyze supplier pricing and negotiate more effectively. For example, if a product is priced significantly above its variable cost, there may be room fordiscounts or added value, as the supplier is still contributing toward fixed costs.
Reference: L4M5 Commercial Negotiation 2nd edition (CORE), Section 2.1 - Cost Analysis and Pricing Decisions

NEW QUESTION # 129
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.

A. Incoterms and logistics difficulties
B. The use and interpretation of body language
C. The importance of timescales
D. Payment mechanism
E. Currency exchange fluctuation

Answer: B,C

Explanation:
Explanation
The question requires student to detect factors of cultural differences. Problems may occur on the international scene with such things as the importance of extending courtesy between cultures, the importance of timescales, the use of negotiating ploys, the sense of 'fair play', the use and interpretation of body language, the role of women in negotiations (or indeed, in business in general), the importance of status, the role of conflict, standards of dress and deportment and the readiness to ignore or uphold contract terms and conditions.
LO 3, AC 3.3

NEW QUESTION # 130
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. Online supplier forums
B. Published market indices
C. Competitor analysis
D. Attending trade conferences

Answer: B

Explanation:
Published market indices are a source of macroeconomic data, as they reflect broader economic trends and provide insights into the overall market environment, which is essential for global expansion planning.
Macroeconomic analysis focuses on high-level economic indicators, as recommended in CIPS's guidelines on sourcing macroeconomic data.

NEW QUESTION # 131
When is the best time for buyer to propose the negotiation agenda to potential supplier?

A. At testing stage
B. At opening stage
C. At conclusion stage
D. At preparation stage

Answer: D

Explanation:
:
A business negotiation agenda is a formal agreed upon list of goals to be achieved or items to be discussed in a particular order during a meeting or negotiation. Agendas can be formal and obvious, or informal and subtle in negotiations.
The agenda is one of the main structural elements of negotiation, in addition to such questions as site, identification of participants, and elements of timing. Together, they answer the who, what, when, and where questions. As with other aspects of negotiation, the agenda can be used either manipulatively to enhance leverage or to improve the prospects for agreement and the possibilities for mutual gain. In most cases, it will be used both ways, reflecting the nature of negotiation as a "mixed-motive" situation.
Although it can be instrumental to [research] volunteer as a sole source to write the agenda, in most cases it becomes a joint activity to construct a consensual basis for subsequent negotiation. In these situations, agenda- building becomes one of the pre-negotiation activities that set the tone for the relationship (Saunders, 1985).
In other situations, the parties may engage in actual negotiation without a formal or written agenda. When this occurs, the risks and uncertainties may be high but the party who appreciates the importance of the informal agenda has a tremendous advantage.
Whether one plans it or not, during the course of negotiation the parties will discuss a finite set of issues in some sequence and from a particular perceptual framework. Consciousness of the universality and centrality of the agenda is prerequisite to guiding negotiation to a successful conclusion.

NEW QUESTION # 132
Community Meal Partners (CMP) is a not-for-profit company that delivers cooked meals to older residents in their homes. CMP uses a fleet of bespoke vans with onboard ovens. In planning the future procurement of the fleet, CMP has conducted a review of the microeconomics of the van supply market and found that the vans are supplied by a monopoly supplier due to patented technology. Which of the following strategies could CMP utilise to optimise its bargaining position with the van supplier?

A. Publicly seek alternative service solutions
B. Procure shorter-term lease contracts
C. Renegotiate van lease prices with the supplier
D. Conduct regular and frequent tendering

Answer: A

Explanation:
When facing a monopoly supplier, buyers must find creative ways to introduce leverage. Publicly exploring alternative solutions can create the perception of competition or a fallback plan, thus shifting bargaining power slightly toward the buyer.
Reference: L4M5 Commercial Negotiation 2nd edition (CORE), Section 2.3 - Market Conditions and Negotiation Strategy

NEW QUESTION # 133
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