Latest [Sep 16, 2023] CIPS L4M5 Real Exam Dumps PDF
L4M5 Practice Test Questions Updated 165 Questions
CIPS L4M5 certification exam covers a range of essential topics related to commercial negotiation, including understanding the negotiation process, preparing for negotiations, identifying and managing negotiation styles, and negotiating contracts and agreements. Additionally, the exam assesses the candidate's ability to communicate effectively, build relationships with stakeholders, and manage potential conflicts during negotiations. Professionals who attain this certification can expect to gain a competitive edge in the job market and increase their earning potential.
NEW QUESTION # 87
Which of the following will help to indicate personality preferences in four dimensions?
- A. Mill's RESPECT mnemonic
- B. Myers-Briggs Type Indicator
- C. Thomas-Kilmann Conflict Resolution model
- D. Intelligence quotient
Answer: B
Explanation:
The Myers-Briggs Type Indicator (MBTI) is an introspective self-report questionnaire indicating differing psychological preferences in how people perceive the world and make decisions. MBTI indicates personality preferences in four dimensions.
The Thomas-Kilmann Conflict Mode Instrument (TKI) is a conflict style inventory, which is a tool developed to measure an individual's response to conflict situations.
Mill's RESPECT mnemonic is set out by Harry A. Mills which describes seven steps to agreements An intelligence quotient (IQ) is a total score derived from a set of standardized tests designed to assess human intelligence.
NEW QUESTION # 88
A procurement professional is negotiating with a supplier on cleaning service. She realises that there are huge cost-saving opportunities if the supplier agrees to reduce its mark-up and unnecessary employee benefits.
Supplier's mark-up and employee benefits are examples of which of the following?
- A. Spend waterfall
- B. Spend tree
- C. Spend cube
- D. Addressable spend
Answer: D
Explanation:
Explanation
A key consideration when seeking to negotiate prices is to establish what proportion of the spend is addressable by procurement action such as negotiation. Addressability of spend is influenceable through negotiations or application of other saving effort or leverage with suppliers.
LO 2, AC 2.1
NEW QUESTION # 89
Which of the following are the most typical characteristics of integrative approach to negotiation? Select TWO that apply.
- A. Claiming value
- B. Short-term wins
- C. Creating more value
- D. Interest-based
- E. Positional-based
Answer: C,D
Explanation:
Integrative approach to negotiation used when the interested parties are attempting to create more of something of value to share, also known as collaborative approach or win-win. Integrative, interest-based negotiation can facilitate constructive, positive relationship and establishes contracts between parties on a foundation of goodwill. In integrative bargaining, both parties seek to 'expand the pie' by creating more value for both the buyer and the seller. Integrative negotiation 'shares thepie' and is interest rather than positional based.
In distributive bargaining, the focus is on claiming value and getting as much of the pie as parties can.
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LO 1, AC 1.2
NEW QUESTION # 90
A purchasing manager is having a negotiation with a supplier to extend the duration of the contract. In order topersuade the supplier to cut the cost by 10%, she promises to shorten the payment period from
45 days to 30 days for each delivery. The supplier's representative does not agree the offer and clearly states that his proposed price is already lower than the market price. The purchasing manager has used which type of power?
- A. Coercive
- B. Reward
- C. Informational
- D. Expertise
Answer: B
Explanation:
In the scenario, to exchange cost cutting, the purchasing manager promises to 'reward' supplier shorter payment period. This is an example of reward power, which results from one person's ability to compensate or reward another for compliance.
The reward does not need to be money, but could be introduction to other buyers in the group, positive references, agreement to trial new product, quicker payment or indeed any other variable that the buyer knows is attractive and valued by the supplier.
NEW QUESTION # 91
Katie is preparing a negotiation with a strategic supplier. Through deep market analysis, she realises that her company and the supplier have equal bargaining power. Via regular communication, Katie knows that both parties are arguing on amount of liquidated damages and neither party shall concede all of their requirements but some are negotiable. Katie and her counterpart from supplying company still desire a long-term relationship and hope that the meeting between them will be a solution for current situation. Which of the following isthe most appropriate approach that Katie should adopt to achieve the above outcome?
- A. Competing approach
- B. Avoiding approach
- C. Accommodating approach
- D. Compromising approach
Answer: D
Explanation:
Explanation
Competing is assertive anduncooperative, a power-oriented mode. When competing, an individual pursues his or her own concerns at the other person's expense, using whatever power seems appropriate to win his or her position. Competing might mean standing up for your rights, defending a position you believe is correct, or simply trying to win. Competing will not allow long-term relationship to flourish.
Compromising is intermediate in both assertiveness and cooperativeness. When compromising, the objective is to find an expedient, mutually acceptable solution that partially satisfies both parties. Compromising falls on a middle ground between competing and accommodating, giving up more than competing but less than accommodating. Likewise, it addresses an issue more directly than avoiding but doesn't explore it in as much depth as collaborating. Compromising might mean splitting the difference, exchanging concessions, or seeking a quick middle-ground position. It is a valid approach when long-term relationships are at stake and it is important to find some common ground on which to base an agreement. Both sides get something but not everything. Therefore, this is the most appropriate for this scenario.
Avoiding is unassertive and uncooperative. When avoiding, an individual does not immediately pursue his or her own concerns or those of the other person. He or she does not address the conflict. Avoiding might take the form of diplomatically sidestepping an issue, postponing an issue until a better time, or simply withdrawing from a threatening situation. In the scenario, both parties want to take the opportunity, then avoiding is not an appropriate solution.
Accommodating is unassertive and cooperative-the opposite of competing. When accommodating, an individual neglects his or her own concerns to satisfy the concerns of the other person; there is an element of self-sacrifice in this mode. Accommodating might take the form of selfless generosity or charity, obeying another person's order when you would prefer not to, or yielding to another'spoint of view. In the scenario, neither party shall concede all of their requirements, it is unnecessary to adopt this approach.
LO 1, AC 1.1
NEW QUESTION # 92
End users are the only stakeholders that are involved in the preparation of a negotiation. Is this statement true?
- A. No, because end-users are external stakeholders
- B. Yes, because only end-users understand their demand
- C. No, because budget holders also play an important role
- D. Yes, because end-users have greaterexpert power
Answer: C
Explanation:
Explanation
Commercial negotiation objectives should bedriven by the business needs of the organisation. Organisations are made up of different stakeholder groups, some of whom may have different, even conflicting objectives.
From a negotiation perspective, stakeholders can be defined as persons or groups thathave interest (or stake) in the outcome of the negotiation you are leading or participating in.
CIPS distinguishes between 3 sets of stakeholders:
- Internal stakeholders
- Connected stakeholders
- External stakeholders
End-users are examples of internalstakeholders. They are the people who will benefit from the purchase of a product or service. However, their interest may conflict with other groups, i.e. the budget controllers whose objective is minimising the expense. In negotiation perspective, procurement should involve different groups of stakeholder.
LO 1, AC 1.1
NEW QUESTION # 93
Which of the following may help the procurement professional increase expert power in commercial negotiation? Select TWO that apply.
- A. Expertise knowledge
- B. Official positions
- C. Personality
- D. Ability to compensation
- E. Insights
Answer: A,E
Explanation:
Expert power is based on a person's high levels of skill and knowledge, formal training, qualifications and experience in aparticular procurement category would give someone expert status and mean that in negotiation their voice is listened to as a more objective, informed knowledge leader. Expert power is based on facts, knowledge, research, insight and study.
Legitimate power comes from rules, formal authority, organisation rank, staff rate or official position held.
Reward power comes from one person's ability to compensate or reward another for compliance.
Referent power stems from their personality, way of engaging with others and habit of acting in a way that is in line with a strong set of values and principles.
NEW QUESTION # 94
SBL provides contract bathroom furniture and fittings for a wide variety of domestic and commercial clients.
To some suppliers, SBL spendclaims a large portion of their revenue. But SBL is famous for imposing draconian obligations on these suppliers. Which of the following is most likely to be overarching objective of these suppliers to SBL?
- A. Charge a higher price to compensate for all the pain SBL has put
- B. Drop the business with SBL immediately
- C. Win and keep business with SBL at any costs, even without profits
- D. Hold on and keep SBL happy but make sure that the business is profitable
Answer: A
Explanation:
According to Paul Steele's 'The Seller's Perspective', customer can be classified into 4 categories as below:
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In this scenario, although SBL's spend claims large portion in suppliers' revenues, their draconian treatment will reduce SBL's attractiveness in supplier's perspective.SBL falls into Exploit quadrant. With exploitable customers, suppliers tend to 'milk' the customer and charge a high price to compensate for all the pain customer put on them.
NEW QUESTION # 95
In a negotiation for a new contract, the supplier suggests the buyer to shorten payment period from 45 days to
15 days because they are investing in new facilitiesto expand the supply capacity. The buyer replies that she can only sign off the deal if the payment period is 30 days or more since it often takes at least 30 days for her company to collect the payment from customers. A permission from senior managementis required for this suggestion. In order to ensure that supplier understands the matter, she reiterates it throughout the meeting.
Which tactics is she using?
1. Outrageous initial demand
2. Salami slicing
3. Lack of authority
4. Broken record
- A. 3 and 4 only
- B. 1 and 2 only
- C. 2 and 4 only
- D. 1 and 3only
Answer: A
Explanation:
In the scenario, the buyer states that permission from senior management is required to shorten payment period and she only has authority to sign off a deal in which thepayment period lasts at least 30 days. The buyer is using lack of authority. The buyer also repeats the matter again throughout the negotiation. This is a common tactic known as broken record.
NEW QUESTION # 96
Which of the following are intangible values created by trust in business relationships? Select TWO that apply.
- A. Higher revenues
- B. More focus oncore business
- C. Positive feedbacks from customers
- D. Frequent conflict escalation
- E. Increasing response time to request
Answer: B,C
Explanation:
Explanation
Trust may create value as following:
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LO 1, AC 1.4
NEW QUESTION # 97
According to Professor Gavin Kennedy, in which of the following forms of dispute resolution, both parties will voluntarily exchange their ideas and beliefs?
- A. Negotiation
- B. Persuasion
- C. Gambling
- D. Litigation
Answer: A
Explanation:
Professor Gavin Kennedy highlights that we need to distinguish negotiation from other forms of decision-making by focusing on what is unique about it (the voluntary exchange) and not shared by other techniques such as persuasion, gambling (e.g., coin tossing), command decision, instruction, litigation and coercion.
NEW QUESTION # 98
Sumitomo Rubber Industries (SRI) is a Japan-based tyre manufacturer. In order to increase production, SRI is sourcing rubber from Southeast Asian firms. Which of the following micro factors are most likely to shift the balance of power to supplier? Select TWO that apply
- A. SRI sets up its own rubber plantation
- B. Rubber from different suppliers is virtually similar
- C. SRI's purchase amount makes significant proportion of supplier revenue
- D. Costs of changing suppliers are high
- E. There are no close substitutes for rubber
Answer: D,E
Explanation:
There are many factors that can influence the balance of power in a negotiation. These factors are classified into 3 levels:
Macro level: STEEPLE framework: social, technological, economic, environment, political, legal and ethical Micro level: Porter's five forces:
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One-to-one buyer-supplier dynamics.
The question asks about the micro factors that increases supplier's bargaining power. Among 5 answers, only 2 are likely to increase buyer's power:
There are no close substitutes for rubber: the buyer has to buy rubber, not any other material.
Costs of changing suppliers are high: buyer entails a large barrier if they want to switch supplier.
Other answers cannot be correct because:
SRI sets up its own rubber plantation: Buyer secures its own supply
SRI's purchase amount makes significant proportion of supplier revenue: Suppliers are reliant on buyer. If the buyer stops buying from them, they can face serious cash flow problems Rubber from different suppliers is virtually similar: undifferentiated product would shift the power balance towards buyer.
NEW QUESTION # 99
There are no commitments in hypothetical questions. Is this statement true?
- A. Yes, because hypothetical questions only mention possible situations
- B. No, because the party who makes hypothetical questions cannot withdraw their proposals
- C. Yes, because hypothetical questions generate a specific response
- D. No, because hypothetical questions are made explicitly to the other party
Answer: A
Explanation:
Explanation
There are four types of questions that can be used in a commercial negotiation:
Hypothetical questions, where you ask about a possible situation or abstract concept, are very useful at the testing and proposal phases. Hypothetical question does not state any commitment as it is only about 'if something happens, then ...'. This type of question can be useful at giving suggestion.
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LO 3, AC 3.3
NEW QUESTION # 100
Which of the following is the most appropriate approach to investors or shareholders who have high level of influence but low interest in the running of business?
- A. Keep these people inform through general communication media
- B. Engage and keep them satisfied
- C. Engage and consult with them regularly
- D. Manage them closely
Answer: B
Explanation:
Explanation
Investors or shareholders who have high level of influence but low interest belong to 'Keep satisfied' quadrant of Mendelow's Stakeholder Matrix.
You may read 2 versions from L4M1 and L4M5 here:
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LO 1, AC 1.1
NEW QUESTION # 101
If the value of the British Pound in other currencies is strong, which of the following is most likely to occur?
- A. The price of UK products abroad in foreign currency will fall
- B. The price of UK products in the UK will fall
- C. The price of UK products in the UK will rise
- D. The price of UK products abroad in foreign currency will rise
Answer: D
Explanation:
Explanation
Currency exchange rates are determined bymacroeconomic factors and demand and supply. In general, countries with stable political and economic systems, a growing economy and a strong rule of law will have stronger and more stable currency than those without these characteristics. In this question, the British Pound is stronger than other currency, which means that buyers who import goods from the UK have to pay higher in their own currencies.
LO 2, AC 2.2
NEW QUESTION # 102
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Successfully passing the CIPS L4M5 exam demonstrates to employers and peers that the candidate has the expertise and practical skills required to negotiate complex commercial agreements confidently. It also provides a pathway to further professional development and career advancement within the procurement and supply chain domain.
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