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  • Exam Name: Commercial Negotiation
  • Last Update: Jun 18, 2024
  • Questions and Answers: 162
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L4M5 Practice Exam Questions with Answers Commercial Negotiation Certification

Question # 6

Which type of question should be used to receive affirmation on statement?

A.

Open

B.

Closed

C.

Leading

D.

Narrow

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Question # 7

Which of the following is mostlikely to be a reason why a supplier charges its customer higher price after it has reached the break-even point?

A.

Supplier may need to open new facilities to meet increasing customer's demand

B.

Supplier may have high fixed cost - variable cost ratio

C.

Supplier may want to encourage buyer's demand

D.

The supplier may have reached economy of scale

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Question # 8

’What specific tests do you carry out to ensure quality is achieved?’ This is an example of which type of negotiation question?

A.

Leading

B.

Probing

C.

Reflective

D.

Closed

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Question # 9

Neville is a senior procurement specialist in a automaker. He has good relationship with his team mates and other departments because of his amazing purchasing skills and kindness. Which of the following sources of power is Neville likely to possess?

A.

Reward

B.

Referent

C.

Legitimate

D.

Coercive

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Question # 10

Which of the following are tools that help procurement visualise cost breakdowns of products and services purchased from supplier?

1. Spend candlesticks

2. Spend tree

3. Aggregate expenditure model

4. Spendwaterfall

A.

2 and 4 only

B.

3 and 4 only

C.

1 and 2 only

D.

1 and 3 only

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Question # 11

Which ofthe following is a true statement regarding macroeconomic factors and their potential impact on negotiations?

A.

Macroeconomic factors always directly influence the negotiations

B.

Expectations on macroeconomic prospect are always correct

C.

Changes in macroeconomic factors may affect businesses and individuals differently

D.

Macroeconomic factors cannot be influenced by anyone's expectation or sentiment

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Question # 12

Should a buyer use closed questions in a negotiation?

A.

Yes, because closed questions help to reconfirm certain facts

B.

Yes, because they urge the supplier to provide more detailedExplanation::

C.

No, the buyer should maximise the use of open questions

D.

No, supplier will consider closed questions as provocation

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Question # 13

Distributive approach in negotiation is typified by which of the following?

A.

Distributive approaches are inherently inferior tointegrative approaches in commercial negotiation

B.

Both parties understand each other's goals

C.

Each party attempts to maximise the value obtained at other's expense

D.

Both parties share 50:50 of the 'pie'

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Question # 14

Stalemate is morelikely to happen if both parties trade more variables in a commercial negotiation. Is this assumption true?

A.

No, because the party who offers more variables will have lower bargaining power

B.

Yes, because the negotiation will last endlessly if there aretoo many variables

C.

No, because more variables will facilitate more possible negotiated outcomes

D.

Yes, because more variables will cause more conflicts of interest

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Question # 15

Which of the following is the area where two or more negotiating parties may find common ground?

A.

Zone of potential agreement

B.

Zone of proximal development

C.

Walk away area

D.

Best alternative to a negotiated agreement

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Question # 16

A buying organisation with a low spend but the reputation for paying on-time. In order to increase buyer's leverage in negotiation with suppliers, which of the following should be a priority of this buyer?

A.

Unclear tender award criteria

B.

Volume separation

C.

Spend concentration

D.

Unavailable technical support

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Question # 17

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.

Spend analysis

B.

Value engineering

C.

Price analysis

D.

Total cost analysis

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Question # 18

Personal power is only used in distributive approach. Is this statement true?

A.

Yes, because only distributive approach to negotiation requires strong personal power

B.

No, because personal power can be veryhelpful in integrative approach

C.

No, because only organisational power will optimise the negotiation outcomes

D.

Yes, because one party will abuse coercive power to maximise the gain

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Question # 19

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

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Question # 20

Economic growth can be measured by...?

A.

The PPI

B.

GDP

C.

The CPI

D.

SBLI

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Question # 21

According to Professor Gavin Kennedy, in which of the following forms of dispute resolution, both parties will voluntarily exchange their ideas and beliefs?

A.

Litigation

B.

Persuasion

C.

Negotiation

D.

Gambling

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Question # 22

An organisation is developing the specification for a capital purchase project. An important stakeholder has doubt on the draft specification. The buyer invites him to the product function meetings. In these meeting the attendees can raise their concerns, the specification development team takes in all the concerns and adjusts the specification accordingly. What kind of technique is the specification development team using?

A.

Directive

B.

Persuasive reasoning

C.

Coalition

D.

Visionary

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Question # 23

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's purchase amount makes significant proportion of supplier revenue

B.

Costs of changing suppliers are high

C.

Rubber from different suppliers is virtually similar

D.

SRI sets up its own rubber plantation

E.

There are no close substitutes for rubber

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Question # 24

Ma Bell was the sole provider of landline telephoneservice to most of the US in 1980s. This is an example of...?

A.

Monopsony

B.

Monopoly

C.

Monopolistic competition

D.

Perfect competition

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Question # 25

When is the best time to adopt accommodating style according to Thomas-Kilmann conflict mode instrument?

A.

When both buyer and supplier want to find anintegrative solution as their concerns are too important to be compromised

B.

When buyer needs to gather more information to gain more advantages in later negotiations

C.

When preserving harmony and avoiding disruption with supplier are especially important

D.

When buyer and supplier have equal power but are strongly committed to mutually exclusive goals

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Question # 26

Which of thefollowing is the purpose of using stakeholder support level scale?

A.

To identify stakeholder level of influence and interest and plot them on stakeholder map

B.

To identify stakeholder's needs and expectations

C.

To estimate the gap and the progress towards desired levels of support

D.

To identify key stakeholders

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Question # 27

It may be more difficult to buy on a credit from supplier who locates in a country with a hyperinflation? Is this assumption true?

A.

No, because supplier's bank will take risks from currency fluctuation

B.

Yes, because thesupplier's currency will lose its value overtime

C.

Yes, because buyer has more advantage if they make payment in their own currency

D.

No, because the higher the inflation rate, the stronger the supplier's currency

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Question # 28

Which of the following are macroeconomic factors that may have influence to the commercial negotiation? Select TWO that apply

A.

Equilibrium price

B.

Supply curve

C.

Unemployment rate

D.

Bargaining power of supplier

E.

Rising import tariffs

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Question # 29

In a detailed cost breakdown, a company has a salary cost of 9%, raw materials cost 51% and overheads cost 24%. Which of the following represents themark-up of that company?

A.

Approximately 84%

B.

Approximately 19%

C.

Approximately 116%

D.

Approximately 16%

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Question # 30

When is the best time for buyer to propose the negotiation agenda to potential supplier?

A.

At opening stage

B.

Atconclusion stage

C.

At testing stage

D.

At preparation stage

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Question # 31

Which of the following would cause a demand curve for a good to be price inelastic?

A.

There are a great number of substitutes for the good

B.

The consultancy service

C.

The luxury goods

D.

The necessary goods

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Question # 32

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.

Reward

B.

Expertise

C.

Coercive

D.

Informational

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Question # 33

A supplier’s mark-up on all products is 25%. Supplier's profit margin is...?

A.

20%

B.

30%

C.

75%

D.

15%

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Question # 34

A senior buyer analyses the supply market and he realises that his organisation is treated asExploit according to supplier's perspective model. What does he need to do?

A.

Adopt opaque processes

B.

Increase the spend value

C.

Raise the transactional costs to do business

D.

Pay the suppliers on time

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Question # 35

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

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Question # 36

Win-lose approach is most likely to be associated with which of the following type of relationship?

A.

Adversarial

B.

Partnership

C.

Strategic alliance

D.

Outsourcing

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Question # 37

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.

Telephone

C.

Teleconferencing

D.

In-person meeting

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Question # 38

All of the following shift the supply of watchesto 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 thefuture

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Question # 39

An oil refinery plant imports much of its crude oil from overseas. A procurement manager in the refinery suggests that fixing the crude oil contract price for 36 monthswould be beneficial for the company. Would this be a right thing to do?

A.

Yes, financial budgeting task would be a lot easier with fixed pricing arrangement

B.

No, fixed price should be only applied to contracts that last 60 months or longer

C.

No, the refinery would not be able to reap the benefits from falling commodity price and currency rates

D.

Yes, the supplier would bear the risk when the material price increased

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Question # 40

Which of the following are signs indicating that the trust between buyer and supplier has improved? Select TWO that apply.

A.

Cost overruns

B.

Decreasing percentage of missed delivery overtime

C.

Transparent decision makingprocess

D.

Less frequent communication on business requests

Duplication of effort

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Question # 41

Which of the following should be done when undertaking a reflection activity on negotiation? Select TWO that apply.

A.

Identify areas in your skill set where you need to improve

B.

Gloss over areas where you need to improve your skills or performance

C.

Be overly modest about your contribution to the outcomes of negotiation

D.

Use generalised or ambiguous language when describing your strengths and development areas

E.

Be honest and objective about your skills

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Question # 42

Under EU public procurement directives, which of the following are procedures in which there is no commercial negotiation allowed?

A.

Innovation Partnerships

B.

Open Procedure

C.

Restricted Procedure

D.

Competitive Dialogue

E.

Competitive Procedure with Negotiation

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Question # 43

Can a party gain huge advantages innegotiation from setting room layout?

A.

Yes, because the host can freely manipulate the other party's mind through setting room layout

B.

No, because the advantages gained from manipulating room layout are short-lived

C.

Yes, because the other party can capitulate to the host

D.

No, because room layout contributes nothing to the negotiation outcomes

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Question # 44

Which of the following is the process enabling the buyer to sharewith the supplier their purposes and needs to focus on some specific areas such as quality, cost, social and environmental standards, etc in the supplier's bids?

A.

Supplier selection

B.

Supply positioning

C.

Supplier appraisal

D.

Supplier conditioning

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Question # 45

Which of the following will shift the supply curve to the right?

A.

Changes in customer taste

B.

New disruptive technology

C.

Decreased market price of substitute products

D.

Increasedcustomers' disposable income

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Question # 46

Which of the following isthe definition of safety margin?

A.

The difference between current or forecasted sales and sales at the break-even point

B.

The amount of revenue that remains after subtracting costs directly associated with production

C.

The production level at which total revenues for a product equal total expenses

D.

The incremental money generated for each product/unit sold after deducting the variable costs

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Question # 47

Which of the following is categorised as fixed cost?

A.

Additional pallet hires due to higher demand in year-end season

B.

Land rental paid in advance

C.

Governments taxes

D.

Raw materials for next year production

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Question # 48

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.

Value engineering

B.

Part substitution

C.

Budgetlinkages

D.

Compare total cost of ownership

E.

Volume pooling

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