[Dec-2021] CIPS Level 4 Diploma in Procurement and Supply L4M5 Exam Practice Dumps
2021 L4M5 Premium Files Test pdf - Free Dumps Collection
CIPS L4M5 Exam Syllabus Topics:
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NEW QUESTION 72
Which of thefollowing are most likely to be sources of conflict that can emerge from the content of commercial negotiations? Select TWO that apply.
- A. Cultural differences
- B. Contract governing law
- C. Payment terms
- D. Framework arrangement
- E. Requisition
Answer: B,C
Explanation:
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 position - the content of negotiation:
Table Description automatically generated
Cultural differences are the source of conflict in the process of negotiation.
Requisition is an internal document raised by user or store to communicate to procurement the need to buy the product or service specified. This is merely a internal document.
Framework arrangement is a rather loose set-up, without any legal standing. It usually occurs when an organisation has decided for itself to limit the number of suppliers it is willing to work with and, through a purely internal process, sets up an approved list of such suppliers.
LO 1, AC 1.1
NEW QUESTION 73
Which of the following can help both parties to break the vicious cycle of blame when a relationship needs repairing? Select TWO that apply.
- A. Emotional-based assessment
- B. Conflict management skills
- C. Constant shadowing and oversights
- D. Focusing onpositions
- E. Both parties understand each other's goals
Answer: B,E
Explanation:
In order to break vicious cycle of blame, procurement will need to use their negotiation and conflict management skills,adopting a collaborative and integrative approach. Your first action should be to establish the facts that led to the situation where the relationship broke down. Most day-to-day relationship between buying organisations and suppliers do not of course involve procurement staff, so you will need to consult with your business partners internally to establish their point of view of where the issue and sources of conflict are. You should also contact the supplier and get their side of the story - this is particularly to when you have previously identified the supplier as critical or otherwise important to your operations. Ideally you will be able to apply principled negotiation here, separating the people from the issue, focusing on interests and not positions,and then looking for options of mutual benefits.
NEW QUESTION 74
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. Costs of changing suppliers are high
- D. SRI's purchase amount makes significant proportion of supplier revenue
- E. There are no close substitutes for rubber
Answer: C,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:
Diagram Description automatically generated
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 75
In a commercial negotiation,a procurement professional believe that the larger the order quantity from buyer, the lower the supplier's average costs. Is this assumption true?
- A. Yes, because larger order quantity will always enable the supplier to reach its economy of scale
- B. No, because supplier's average costs will rise as the buyer's demand increases
- C. No, because the supplier may need to invest in new facility to meet buyer's demand
- D. Yes, because larger order quantity will bring a considerable profit to supplier
Answer: C
Explanation:
In some markets, suppliers experience peaks and troughs in demand and so buyers can increase their leverage through developing an understanding of how busy their vendor are at particular time during the year or business cycle and targetting atquieter period. Similarly, if a buyer can develop an understanding of supplier capacity and to what extent have they covered their fixed cost, they may be able to target suppliers when their average costs are likely to be lowest. Vendor's average costs will be higher at low and high capacity utilisation.
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NEW QUESTION 76
Which of the following are most likely to be fundamentals of Fisher & Ury's principled negotiation?
1. Depersonalise the argument
2. Focuson positions
3. Generate creative options
4. Using subjective criteria
- A. 1 and 3 only
- B. 2 and 4 only
- C. 2 and 3 only
- D. 1 and 4 only
Answer: A
Explanation:
Explanation
Principled negotiation is based on four fundamentals: people, interest, options andcriteria:
Diagram Description automatically generated
1st Principle: separate the people from the problem: Negotiator should depersonalise the situation and accepting that the subject matter of the negotiation. This can be difficult for untrained negotiators, but this is a key skill to develop
2ndprinciple: focus on interests, not positions: It is important in principled negotiations not to focus on their parties' positions (what are expressed during negotiations), but on the interests (underlying needs) behind them
3rd principle: invent options for mutual gains: this principle aims to help the parties find a solution that both would benefit from. The more options - or tradeables - that can be brought to the table the better.
4th principle: insist on using objective criteria: is about making sure that the negotiation stays focused on outcomes based on objective criteria and that it is productive.
LO 1, AC 1.2
NEW QUESTION 77
Which of the following may help the procurement professional increase expert power in commercial negotiation? Select TWO that apply.
- A. Personality
- B. Official positions
- C. Insights
- D. Ability to compensation
- E. Expertise knowledge
Answer: C,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 78
Which of the following are examples ofnon-verbal negotiation? Select THREE that apply.
- A. Communicating with the other party by using gestures
- B. Asking the supplier to repeat their proposal
- C. / Speaking softly with long pauses
- D. Getting messages across with facial expressions
- E. Using the body language
- F. Explaining to the supplier about the scope of the project
Answer: A,D,E
Explanation:
Explanation
Nonverbal communication is important because it gives us valuable information about a situation including how a person might be feeling, how someone receives information and how to approach a person or group of people.
There are several types of nonverbal communications you should be aware of, including:
1. Body language
Body language is the way someone situates their body naturally depending on the situation, the environment and how they are feeling.
Example: Someone might cross their arms if they are feeling angry or nervous.
2. Movement
The way you move your arms and legs such as walking quickly or slowly, standing, sitting or fidgeting, can all convey different messages to onlookers.
Example: Sitting still and paying attention in a meeting conveys respect and attention.
3. Posture
The way you sit or stand can also communicate your comfort level, professionalism and general disposition towards a person orconversation.
Example: Someone might slouch their shoulders if they feel tired, frustrated or disappointed.
4. Gestures
While gestures vary widely across communities, they are generally used both intentionally and unintentionally to convey information toothers.
Example: Someone in the United States might display a "thumbs up" to communicate confirmation or that they feel positively about something.
5. Space
Creating or closing distance between yourself and the people around you can also convey messages about your comfort level, the importance of the conversation, your desire to support or connect with others and more.
Example: You might stand two to three feet away from a new contact to respect their boundaries.
6. Paralanguage:
Paralanguage includes the non-language elements of speech, such as your talking speed, pitch, intonation, volume and more.
Example: You might speak quickly if you are excited about something.
7. Facial expressions
One of the most common forms of nonverbal communication isfacial expressions. Using the eyebrows, mouth, eyes and facial muscles to convey can be very effective when communicating both emotion and information.
Example: Someone might raise their eyebrows and open their eyes widely if they feel surprised.
8. Eye contact
Strategically using eye content (or lack of eye contact) is an extremely effective way to communicate your attention and interest.
Example: Looking away from someone and at the ground or your phone may convey disinterest or disrespect.
9. Touch
Somepeople also use touch as a form of communication. Most commonly, it is used to communicate support or comfort. This form of communication should be used sparingly and only when you know the receiving party is okay with it. It should never be used to conveyanger, frustration or any other negative emotions.
Example: Placing your hand on a friend's shoulder may convey support or empathy.
NEW QUESTION 79
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 3only
- B. 2 and 4 only
- C. 1 and 2 only
- D. 3 and 4 only
Answer: D
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 80
When is the best time for buyer to propose the negotiation agenda to potential supplier?
- A. At testing stage
- B. Atconclusion stage
- C. At opening 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. Agendascan 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 bothways, 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 81
Buying organisation may increase its leverage with suppliers by concentrating spend. Which of the following are most likely to be forms of supplier spend consolidation? Select THREE that apply.
- A. Volume separation
- B. Volume redistribution
- C. Volume consolidation across categories
- D. Paying supplier on time
- E. Forming purchasing consortia
- F. Simplify procurement process
Answer: B,C,E
Explanation:
Buying organisation may increaseits leverage with suppliers by concentrating spend. Supplier spend consolidation can take many forms as outlined below:
Vendor base reduction: straightforward reduction of number of suppliers in any category Volume pooling: pooling cross organisational requirement until your order volume is high enough to attract new bidders/additional discounts Volume redistribution: making recommendations following spend analysis to move from one supplier to another Volume consolidation across categories: certainpurchase requirements may be common across a number of categories Standardisation and harmonisation of specifications: analysis of specifications and standards for a high spend purchased input, may show that there is a little difference between them and that the specification can be standardised or at least harmonised across the group or across national, regional or global operations.
Forming purchasing consortia: buyers may decide to come together and combine their purchase volumes to attract better deals.
NEW QUESTION 82
Which of the following statements about oligopoly isincorrect?
- A. Oligopolistic firms recognize their interdependence
- B. A few firms play an important role in the sale of a product
- C. Prices in oligopoly are predicted to fluctuate widely and frequently
- D. One firm's behaviour is a function of what its rivals do
Answer: C
Explanation:
Explanation
An oligopoly exists when there are small number of producers that exert a significant influence in the market.
Oligopoly's main characteristics are discussed as follows:
- Interdependence
The most important feature of oligopolyis the interdependence in decision-making of the few firms which comprise the industry. This is because when the number of competitors is few, any change in price, output, product etc. by a firm will have a direct effect on the fortune of its rivals, which will then retaliate in changing their own prices, output or products as the case may be.
- Importance of advertising and selling costs
A direct effect of interdependence of oligopolists is that the various firms have to employ variousaggressive and defensive marketing weapons to gain a greater share in the market or to prevent a fall in their market share. For this various firms have to incur a good deal of costs on advertising and on other measures of sales promotion. Therefore, thereis a great importance of advertising and selling costs under conditions of market situation characterised by oligopoly
- Group behaviour
Another important feature of oligopoly is that for the proper solution to the problem of determination of price and output under, it analysis of group behaviour is impor-tant.
- Indeterminateness of demand curve facing an oligopolist
In this question, 'Prices in oligopoly are predicted to fluctuate widely and frequently' is an incorrect statement as producers in oligopoly often try to set up price. Prices fluctuate more frequently in perfect competition.
LO 2, AC 2.2
NEW QUESTION 83
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. Accommodating approach
- B. Avoiding approach
- C. Competing 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 84
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 conflict management style
- B. Types of purchase
- C. Standard terms and conditions
- D. Differences in culture
- E. Line of the best fits
Answer: A,D
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 85
Active listening in negotiation includes which of the following activities?
1. Hearing
2. Interpreting
3. Rapport
4. Influence
- A. 1 and 2 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 3 and 4 only
Answer: A
Explanation:
Explanation
Listening is a hugely important skill in the world of work. It's a key part of effective communication [...].
Regarding active listening, there is a model called 'The SIER Hierarchy of Active Listening'. It details four key stages required for effective listening. As with all models associated with active listening, its purpose is to help the listener be a better, more effective listener who really hears what is being said, connects with the individual with whom they are communicating andbuilds effective relationships.
The model is a hierarchical model meaning that each stage builds on the stage before it. While the model is sometimes used for training in the sales arena, it is helpful in all walks of life. The stages of the model are:
Sensing (including hearing and watching body language), Interpreting, Evaluating and Responding.
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NEW QUESTION 86
According to Fiona Dent and Mike Brent, which of the following are characteristics of Push approach? Select TWO that apply.
- A. Persuasion
- B. Collaborative
- C. Directive
- D. Inspirational
- E. Seeking commitment
Answer: A,C
Explanation:
According to the book 'Influencing: Skills and techniques for business success' by Fiona Dent and Mike Brent, there are two major influencing styles. Push tends to be directive. It tells, and is clear and resolute, but needs to be employed in situations where firmness is required because of difficulties that exist or weakness is evident.
Pull is more participatory and collaborative. It seeks to incorporate everyone's perspective. It can appear wishy-washy if not skilfully employed. That approach should be followed which is most likely to secure commitment and not mere compliance.
The two divisions can be further divided into four style categories: directive; persuasive reasoning; collaborative - team oriented, people oriented to inspire them with a vision. The directive style relies on your expertise and reputation being respected by others, and where there really does seem to be one answer. It is "I" driven whereas persuasive reasoning is more "we" and issue driven. Directive styles can make the user appear as "a bull in a china shop"; persuasive reasoning can be portrayed as tough guy.
Collaborative influencing takes the "we" element further and seeks to mobilise everyone's ideas in a journey of discovery. It may have the flavour of "I'm your best friend", which may not go down too well. Visioning style is concerned to stir people's emotions in support of achieving an objective. This last one has been used by demagogues to stir people's hearts and minds for evil purposes as well as good.
A useful table offers the benefits, problems, words and body language associated with each style along with advice on when to use and when to avoid each. Cases and exercises illustrate these styles.
Empathy comes in for extended treatment with the definition of "standing in the other's shoes". This does not necessarily happen just intuitively, and therefore before a specific influencing effort there should bean intense effort to think about the other person or persons and to sense what it might feel like to be them - their hopes, fears, concerns, what turns them on, what turns them off, where are they coming from.
NEW QUESTION 87
Which of the following is NOT a barrier to entry in amonopolized market?
- A. The costs of production make a single producer more efficient than a large number of producers
- B. The government gives a single firm the exclusive right to produce some good
- C. A single firm is very large
- D. A key resource is owned by a single firm
Answer: C
Explanation:
Monopolies exist in many markets in real life for very different reasons:
Ownership of a Key Resource: When one company exerts sole control over a resource that is necessary for the production of a specific product,the market may become a monopoly. For example, the only medication deemed acceptable to treat a disease comes from a particular ingredient X, and knowledge of this ingredient X is owned by a single family owned company. The company can, therefore, be saidto have a monopoly over ingredient X that is needed to cure the disease because it is the only company that can produce a product deemed acceptable.
Government Franchise: In certain instances, a monopoly may be explicitly created by the government if it grants a single company, whether private or government-owned, the right to conduct business in a particular market. For example, when a national railways transportation service is created by the government, in most cases they are granted a monopoly on the operation of passenger trains in the country. As a result, other firms are only able to offer passenger train services with the cooperation and/or permission of the government-owned provider.
Intellectual Property Protection: Extending intellectual propertyprotection to a company in the form of patents and copyrights is yet another way in which monopolies are created. When a government does this, it is in fact giving a single company an exclusive right to provide a particular product / service to the market. Patents and copyrights work in providing owners of intellectual property with the right to act as an exclusive provider of a new product for a specific length of time. This creates a temporary monopoly in the market with regards to new products and services.
Natural Monopoly: A market may also become a monopoly simply because it may be more cost-effective for one company to serve the whole market than to have several smaller firms in competition with one another. A company with virtually unlimited economies of scale is referred to as a natural monopoly. Such firms become monopolies due to their position and size, which makes it impossible for new entrants in the market to compete price-wise. Natural monopolies are common in industries with high fixed costsand low marginal costs of operation such as providers of television, telephone, and internet services.
In this question, 'A single firm is very large' is not enough to tell whether this market is monopolistic.
NEW QUESTION 88
A buying organisation with a low spend and the reputation for paying late might be viewed by a supplier as which of the following?
- A. Core
- B. Nuisance
- C. Develop
- D. Exploit
Answer: B
Explanation:
To answer this question, you should know The seller's perspective as in 'How to Negotiate Professionally':
Chart, treemap chart Description automatically generated
In the scenario, the buyer's spend is low, while they seem unattractive to seller (as they tend to pay late). So the buyer is classified as Nuisance in seller's perspective.
NEW QUESTION 89
Which of the following are types of questions that are useful in opening and testing phases of a negotiation?
Select the TWO that apply.
- A. Open
- B. Leading
- C. Closed
- D. Narrow
- E. Probing
Answer: A,E
Explanation:
In the opening phase, parties should confirm understanding and get the issues on the table.
The testing phase is an information gathering stage where the hypothesis and assumption you have made in the planning stage can be tested or confirmed or disproved.
Opening questions (those that start with 'what', 'how', 'why') are used at the opening and testing stages to uncover needs and underlying motives, and to allow the buyer to get a feel of what is in store in the negotiation.
Probing questions are also useful to check that the supplier fully understand their offering, as well as your needs, and can also be used to communicate to the supplier that you know this category well. These questions are typically useful at the opening andtesting stages.
NEW QUESTION 90
Which of the following are most likely to be fixed costs of an airline? Select TWO that apply.
- A. Catering services
- B. Flightcrew training
- C. Fuel
- D. Purchase of aircraft
- E. Advertising and promotion
Answer: B,D
Explanation:
Explanation
Fixed costs (FC) are costs that do not vary with volume. To an airline once aircraft are purchased, flight crews trained and departures scheduled, costs are disproportionately fixed.
Variable costs (VC) arethose which vary with the amount produced. Fuel, catering services and marketing are examples of variable.
LO 2, AC 2.1
NEW QUESTION 91
In general, which of the following is the consequence of a flatter demand curve?
- A. Unit price elastic
- B. Price elastic
- C. Price inelastic
- D. Quantityelastic
Answer: B
Explanation:
Explanation
Elasticity refers to the responsiveness of quantity demanded or quantity supplied to a change in price or another factor.
In microeconomic graphs,elasticity and inelasticity can be shown by the slope of the demand curve. If a demand curve is almost horizontal, then the product pricing can be described as very elastic. If a demand curve is almost vertical, then the product pricing can be described asvery inelastic.
The formulae of elasticity:
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LO 2, AC 2.2
NEW QUESTION 92
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