The mark-up percentage is calculated as the profit divided by the cost of production, then multiplied by 100 to convert it into a percentage.

Calculation:

(

80

/

160

)

×

100

=

50

%

(80/160)×100=50%

Thus, the supplier’s mark-up percentage is 50%, as per standard pricing calculations used in procurement.

A negotiating team can be as few as two people, and one person can play one or more of these roles:

As from the scenario, Jasmine will act as an observer and a scribe (or secretary).

BATNA (Best Alternative to a Negotiated Agreement) is a core preparation concept and should always be considered before negotiations begin . It gives the buyer clarity on the minimum acceptable outcome and provides leverage by ensuring they do not accept a deal worse than their alternative. BATNA is not a legal requirement, nor should it be developed only when negotiations fail, as this weakens negotiating confidence and decision-making. CIPS emphasises BATNA as a fundamental planning tool that underpins effective and disciplined negotiation behaviour.

A collaborative negotiation approach is explicitly designed to achieve win–win outcomes , where both parties work together to maximise joint value. This approach is closely associated with integrative negotiation , emphasising trust, information sharing, and joint problem-solving. Distributive and adversarial approaches are win–lose, focusing on dividing value rather than creating it. “Collective” is not a recognised CIPS negotiation approach. Collaborative negotiation is particularly suitable where long-term relationships, shared objectives, or strategic partnerships are important.

Principled negotiation is based on four fundamentals: people, interest, options and criteria:

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

2nd principle: 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

Integrative negotiation relies on openness and trust, aiming to identify underlying interests, not just positions. Withholding information is typical of distributive (win-lose) bargaining, where each side protects its bottom line. In an integrative context, hiding key details prevents mutual understanding, reduces creative option-building, and damages relationship trust. Instead, transparency enables value creation—such as joint cost reduction or innovation. CIPS emphasises that power must be balanced with openness when integrative outcomes are desired.

The formal negotiation process includes planning and preparation (objectives, BATNA, MIL) and testing/proposing (exchanging offers). Hospitality is not a stage—it may support relationships but is not part of structured negotiation. Arguing/persuasion occurs within bargaining but is not defined as a stage in itself. Understanding the stages ensures structured progress and prevents disorganised discussions, which often result in suboptimal agreements.

Tradeables—alternative offers or concessions—are typically introduced during thebargainingstage of the negotiation. This is when both parties discuss and exchange proposals to reach a mutually acceptable agreement.

Foreign exchange rates impact import costs, profit margins, and overall turnover when transactions are conducted in foreign currencies. Understanding these fluctuations allows buyersto anticipate changes in purchasing costs, supporting informed decision-making, as highlighted in CIPS guidance on global procurement considerations.