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NEW QUESTION 92
'What specific tests do you carry out to ensure quality is achieved?' This is an example of which type of negotiation question?
- A. Closed
- B. Probing
- C. Leading
- D. Reflective
Answer: B
Explanation:
Explanation
The question requires more detailed answer, it is an example of probing question.
Probing questions are typically follow-up questions, and aim to elicit more detailed information on the back of the answer elicited from theopen questions. Probing question are also useful to check that the supplier fully understand their offering, as well as your needs, can also be used to communicate to the suppliers that you know this category well.
LO 3, AC 3.3
NEW QUESTION 93
An experienced procurement professional is developing strategies for forthcoming negotiations with her key supplier. To avoid negotiation deadlocks, she identifies the reasons whynegotiations could fail. Which of the following are most likely to be reasons for negotiation failures? Select TWO that apply.
- A. Underlying interests of TOP are overlooked
- B. Both parties focus on common interests
- C. Buyer helps to create a co-operative atmosphere
- D. Unachievable objectives were set up
- E. MIL objectives are well established
Answer: A,D
Explanation:
It has been said that most negotiations are won (or lost) at the preparation stage. Success in a negotiation cannot be claimed unless you can refer back to your objectives and show how you have achieve them. In broad terms, negotiation plans/strategies involve 4 key activities:
1. Developing and prioritising your objectives and limits
2. Seeking to understand TOP's objectives
3. Developing concession plans
4. Planning the resources and logistics required and agreeing team roles.
Questions to gain an understanding of why a negotiation failed
Did we collect and make effective use of all information available when preparing for the negotiation?
Did we set objectives for the negotiation that were stretching and achievable and established MIL objectives?
Did we determine a strategy for the negotiation?
Did the other party understand our needs correctly?
Were we aware of the underlying interests of the other party?
Were our proposals convincing enough for acceptance by the other party?
Did we explore different variables in the negotiation?
Did we fully understand all proposals?
Did we give any unplanned concessions and did we check the importance of these?
Did we focus on common interests?
Did we ask a range of questions?
Did we get answers to all our questions?
Could we answer all the questions addressed to us in a proper and positive way?
Did we summarise effectively?
Did we use different methods of persuasion in the negotiations?
Which tactics did we use and what effect did they have?
Did our negotiating team work well as a team?
Did we help to create a co-operative atmosphere
NEW QUESTION 94
Which of thefollowing is the purpose of using stakeholder support level scale?
- A. To identify stakeholder's needs and expectations
- B. To estimate the gap and the progress towards desired levels of support
- C. To identify key stakeholders
- D. To identify stakeholder level of influence and interest and plot them on stakeholder map
Answer: B
Explanation:
Explanation
In order to estimate the gap and the progress towards desired level of support, a stakeholder support scale can be used by the procurement internally. The support level scale measures stakeholder commitment. Current support level for the procurement/negotiation objectives should be gained from engagement with key stakeholders. The following is an example of stakeholder support level scale:
Graphical user interface, application Description automatically generated
LO 1, AC 1.1
NEW QUESTION 95
A procurement professional is sourcing low value items. He conducts market analysis and realise that these items can be provided by many suppliers and switching cost between suppliersis relatively low. He also assume that the relationship between buyer and supplier will be transactional rather than long-term. According to Thomas-Kilmann conflict model instrument, which of the following is the most appropriate style that the procurement professional should adopt when negotiating with these suppliers?
- A. Avoiding
- B. Competing
- C. Compromising
- D. Collaborating
Answer: B
Explanation:
According to Thomas-Kilmann conflict model instrument, there are 5 conflict management styles:
Graphical user interface, text, application, email Description automatically generated
In this scenario, the buyer's bargaining power is stronger than suppliers', and the relationship is transactional.
Therefore, to get the most preferable outcome, the procurement professional can take an assertive approach, while he doesn't need to co-operate closely with these suppliers. Competing will be the most appropriate approach to negotiation in this scenario so that the buying organisation can get a better deal.
NEW QUESTION 96
Which type of power is considered the opposite of coercive power?
- A. Informational power
- B. Reward power
- C. Expert power
- D. Referent power
Answer: B
Explanation:
Explanation
The coercive power comes from the belief that a person can punishothers for non-compliance. It can be considered as opposite to reward power, which results from one person's ability to compensate or reward another for compliance.
LO 1, AC 1.3
NEW QUESTION 97
Which of the following is categorised as fixed cost?
- A. Land rental paid in advance
- B. Additional pallet hires due to higher demand in year-end season
- C. Governments taxes
- D. Raw materials for next year production
Answer: A
Explanation:
Anorganisation's expense can be categorised into three groups:
Fixed Costs - costs that do not change with output.
Variable Costs - costs that vary in direct proportion to output.
Semi-variable costs - costs that are a combination of the above, with both a fixed and variable element.
Among the four options:
"Land rental paid in advance": This is fixed cost. The rental won't increase when the production increases.
"Additional pallet hires due to higher demand in year-end season": This can be identified as semi-variable cost (or step cost).
"Governments taxes": The taxes are often levied by a percentage of income or revenue. Therefore, it is variable
"Raw materials for next year production": This is obviously variable cost.
NEW QUESTION 98
Which of the following will positively affect reputational strength of an organisation? Select TWO that apply.
- A. Adopting out-of-date technology
- B. Strong customer focus
- C. High ethical standards
- D. Weak internal coordination
- E. Great gap between reputation and reality
Answer: B,C
Explanation:
Explanation
In a globalisedcommercial world characterised by dynamic market and multiple companies competing for business, a positive corporate reputation can be an enormous asset. Reputational strength in one organisation might be based on some or all of the following characteristics:
- Quality of products or services
- Low cost/high value for money
- High ethical standards
- Reliability
- Cutting-edge technology
- Strong customer focus
- Engineering excellence
LO 1, AC 1.4
NEW QUESTION 99
Which of the following is considered a weakness of a 'dealer' style negotiator?
- A. Very precise
- B. May shift position quickly
- C. May be too assertive
- D. Focuses on the facts and not the people
Answer: B
Explanation:
Explanation
A useful and simple shorthand for preferred negotiation styles is summarised by four simple descriptor:
'warm', 'tough', 'logical' and 'dealer', which can beapplied to describe individuals' dominant preferred style in most circumstances.
Warm - a people person
Tough - a hard-nosed negotiator
Logic - a numbers person
Dealer - a trader who loves bargaining
Strengths, weaknesses of dealer style are described below:
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LO 2, AC 2.4
NEW QUESTION 100
Which of the following is the first step in the development of negotiation strategies?
- A. Defining overarching objectives
- B. Determining your BATNA
- C. Developing scenarios around possible options
- D. Recognising TOP'sneeds and wants
Answer: A
Explanation:
Developing specific negotiation strategies in areas where risk or spend is high involves analysing a wide range of objectives and variables within the context of the organisation'sbusiness requirements. The first stage in any negotiation preparation is to define your overall objectives which may be related to a single variable such as price in the case of a standardised requirement, or many variables in the case of capital equipment. Your negotiating strategies and tactics will all be focused on achieving overall objectives.
NEW QUESTION 101
At which stage in a negotiation would questions be asked to obtain missing information?
- A. The proposing stage
- B. The bargaining stage
- C. The testing stage
- D. The opening stage
Answer: C
Explanation:
There are 5 key phases of negotiation:
The opening phase: confirm understanding and get the issue on the table The testing phase: check assumption and confirm understanding The proposing phase:asking 'if' The bargaining phase: using tradeables The agreement and closing phase The testing could take the form of questions following a presentation by either side or questions on a tender or proposal document received by the buyer from the potential supplier. The testing phase is necessary to confirm that your approach and objectives are appropriate for the negotiation situation you now find yourself in.
Careful listening, observation and interpretation of TOP's responses may give indication of the following:
Areas where TOP is willing and unwilling to make concessions
What factors or issues TOP places a high value on
If there are any non-commercial or emotional factors that may be pertinent TOP's underlying interests - why they are taking the positionthey are.
NEW QUESTION 102
Which of the following method should be used in negotiation if both parties want to communicate verbally and non-verbally without having to meet face-to-face?
- A. Web conferencing
- B. In-person meeting
- C. Teleconferencing
- D. Telephone
Answer: A
Explanation:
Explanation
Using webcams in a web conference means you are able to communicate both verbally and non verbally.
Over the phone, you cannot see TOP, the only cue/signal you have regarding their mood, interest and attitude is person's voice, intonation andany delay.
A teleconference is a telephone meeting among two or more participants involving technology more sophisticated than a simple two-way phone connection.
In-person meeting requires you team and TOP to be in the same place at the same time.
LO 2, AC 2.4
NEW QUESTION 103
Which of the following will help to indicate personality preferences in four dimensions?
- A. Intelligence quotient
- B. Myers-Briggs Type Indicator
- C. Mill's RESPECT mnemonic
- D. Thomas-Kilmann Conflict Resolution model
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 104
Which of the following are typical characteristics of activity-based costing (ABC) method? Select TWO that apply.
- A. Variable and all related overhead expenses are specifically assigned to a business activity
- B. Limited understanding of true costs incurred
- C. ABC provides the information required to take action and realise improvements
- D. Costs are allocated based on volume
- E. ABC has tended to over cost products on long runs and under cost those on short runs
Answer: A,C
Explanation:
Activity-based costing is an alternative approach to traditional absorption costing. The characteristics of these two methods are illustrated in the graph below:
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NEW QUESTION 105
Procurement team is required to improve leverage with their suppliers through spend consolidation. To check whether there is any opportunity to consolidate spend, which of the following should be priority of procurement team?
- A. Value engineering
- B. Price analysis
- C. Total cost analysis
- D. Spend analysis
Answer: D
Explanation:
Explanation
In order to identify opportunities where you can increase your leverage with supplier, you need to understand your spend. Undertaking spend analysis of your accounts payable (AP) data is an essential first step here.
NEW QUESTION 106
Which of the following are most likely to be sources of conflict that can emerge from the process of commercial negotiations? Select TWO that apply.
- A. Differences in culture
- B. Line of the best fits
- C. Types of purchase
- D. Standard terms and conditions
- E. Differences in conflict management style
Answer: A,E
Explanation:
There are multiple sources of divergent positions that can arise in situations where money is exchange for goods and services. There are 2 different types of sources. Those that arise from the content or subject matter of the negotiation (what is being negotiated) and those that arise from the process of negotiation (how it is being negotiated).
Sources of divergent positions - the process of negotiation:
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Line of best fits is the line that goes approximately through the middle of the data points with an equal number of data points above and below it. Line of best fits is a method of calculating medium value instatistics.
Standard terms and conditions are basic terms and conditions of business governing transactions that do not have a definitive contract, usually designed to be included in form documents such as orders. While there may be conflicts regarding standard terms and conditions, they are about the content of negotiation, not the process.
Type of purchase: when buying organisation makes an decision to purchase an item, a buyer is faced with three possible scenarios. The item to be bought could be a straight re-buy, a modified re-buy or a new purchase. Decision on type of purchase is purely an internal decision.
NEW QUESTION 107
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. 1 and 2 only
- B. 1 and 3only
- C. 3 and 4 only
- D. 2 and 4 only
Answer: C
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 108
Which of the following are factors that might shift the demand curve for a consumer good to the right?
1. Prices of complementary goods decrease
2. Price of the consumer good decreases
3. Customers' expectation of higher prices in the future
4. Consumer tastes shift toward substitute products
- A. 1 and 2 only
- B. 3 and 4 only
- C. 4 and 2 only
- D. 1 and 3 only
Answer: D
Explanation:
Explanation
A shift in demand occurs when an influencing factor other than price changes. Those factors are:
- The income ofbuyers
- The tastes and preferences of buyers
- The prices of other goods and services, especially substitutes and complements
- Expectations of buyer about the future
In this question:
- 'Prices of complementary goods decrease' will lead toquantity demanded for that complements rising, then demand for consumer good will increase accordingly.
- 'Price of the consumer good decreases' will increase the quantity demanded for that good, but it will not shift the demand curve
- 'Customers' expectation of higher prices in the future': in this scenario, customers tend to buy more to store in present, which leads to demand curve shifting to the right
- 'Consumer tastes shift toward substitute products': Demand for substitutes will rise, so demand forthat consumer good will decrease and the demand curve shifts to the left.
LO 2, AC 2.2
NEW QUESTION 109
Rose is a senior buyer from a skiing equipment retailer. Rose is concerned about the current ski boot shortage and the number of invoicing problems from a key supplier. Shehas decided to have a video conference with Victor, CEO of the supplier. Initially, she intends to threaten Victor with contract termination unless he can improve the situation. However, she is a little wary of doing this as the switching costs are high. Eventually, she decides to seek solutions by encouraging the other party to offer their views and ideas. Rose also prepares some ideas to discuss with Victor. Which of the following is the persuasion method that Rose intends to use in the forthcoming conference?
- A. Persuasive reasoning (push)
- B. Collaborative (pull)
- C. Directive (push)
- D. Visionary (pull)
Answer: B
Explanation:
There are two major persuasion methods: 'push' and 'pull'.
Persuasion can be defined as encouraging someone to dosomething that you want them to do for you.
Persuasion is reasoning with someone so that they will believe or do something they might not otherwise do.
Persuasion can be considered as 'pushing' on TOP so that they can accept the change in attitude or behaviour as a result of your actions.
Influence is the ability to affect the manner of thinking of another. Influence can be considered as pulling on TOP so that you achieve the same result, but TOP feels they have changed their attitude or behaviour as a result of their reflection and thinking, and not your direct actions.
There are multiple variables to consider when choosing between 'push' and 'pull'. Professor Fiona Dent of Ashridge Business School proposes situations when each style might be most appropriate, breaking down push into 'directive' and 'reasoning' and 'pull' into 'collaborative' and 'visionary':
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In the scenario, Rose intends to let both parties exchange their views and ideas so that solutions to current problems can be found. This is the typical characteristic of collaborative (pull) method.
NEW QUESTION 110
When is the best time in procurement process in which procurement should get involved so that the cost-saving opportunities are the greatest?
- A. Market consult stage
- B. Post-contract stage
- C. Specification stage
- D. Post-tender stage
Answer: C
Explanation:
Explanation
The earlier procurement get involved in the procurement processes, the better. If procurement are involved in design at the specification stage they can feed in prices and costs to designer so they know the likely budget implication of choices made. Sending in a procurement team to negotiate at or close to the end ofthe procurement process effectively ties their hands and limits their negotiation leverage. This is illustrated in the graph below:
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LO 2, AC 2.1
NEW QUESTION 111
To buying organisation, savings can be achieved from different saving levers or tactics. Which of the following are means that deliver savings through optimising specifications?
- A. Volume pooling
- B. Budgetlinkages
- C. Value engineering
- D. Part substitution
- E. Compare total cost of ownership
Answer: C,D
Explanation:
If driving greater value and efficiency from your supply base is your end, you should remember that there are many ways to do this without seeking to negotiate lowerprices. Below are 7 types of saving levers:
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NEW QUESTION 112
How contribution is calculated in break-even analysis?
- A. Variable costs subtracted from price
- B. Fixed costs divided by variable costs
- C. Price minus fixed costs
- D. Variable costs subtracted from fixed costs
Answer: A
Explanation:
Contribution = Price - Variable cost
Break-evenpoint (volume) = Fixed cost/Contribution
NEW QUESTION 113
Which of the following are the most typical characteristics of integrative approach to negotiation? Select TWO that apply.
- A. Creating more value
- B. Positional-based
- C. Claiming value
- D. Short-term wins
- E. Interest-based
Answer: A,E
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 114
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 in the UK will fall
- B. The price of UK products abroad in foreign currency will rise
- C. The price of UK products in the UK will rise
- D. The price of UK products abroad in foreign currency will fall
Answer: B
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 115
Sally is negotiating with an oversea supplier on the price and payment period. Her company and the supplying organisation are equal in bargaining power.The supplier says that they are investing in new facilities and machinery so the payment period should not be longer than 30 days. Sally knows that her company often pays the suppliers after 45 days from the delivery, but at the moment the company has positive cash flow and it is able to pay immediately. Which of the following should be Sally's concession plan?
- A. Contend on the normal payment period
- B. Demand for a discount without any other concessions
- C. Shorten payment period but ask for a discount
- D. Agree with supplier's payment period without anyfurther demand
Answer: C
Explanation:
Explanation
In the scenario, the length of payment period is particularly important to the supplier as they are investing new facilities. Otherwise, the buyer's company has apositive cash flow position and budget is available for a shorter payment terms. So this tradeable (payment period) is important to supplier but it is not a significant problem with the buyer. This tradeable will fall within 'Easy concession to trade' quadrant in the following matrix:
Table Description automatically generated
If the tradeable fall within this quadrant, Sally should shorten the payment period in supplier's favour and try to win as many concessions as possible in return. Asking for a discount may be a reasonable trade-off.
LO 2,AC 2.3
NEW QUESTION 116
Which of the following are signs indicating that the trust between buyer and supplier has improved? Select TWO that apply.
- A. Less frequent communication on business requests
Duplication of effort - B. Transparent decision makingprocess
- C. Decreasing percentage of missed delivery overtime
- D. Cost overruns
Answer: B,C
Explanation:
Explanation
Signs of trust in business relationships
* Mutually agreed and managed objectives
* Sharing information
* Managing conflict through joint problem solving
* On time delivery of products and services
* High-performance teams that feel empowered to get the job done
* Supplier welcomes opportunity to innovate
* Both parties share ideas and insight
* Clear criteria for decision making
LO 1, AC 1.4
NEW QUESTION 117
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