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Question # 4

Which of the following are examples of variable costs?

    Building and site rent

    Annual insurance premium

    Raw materials expenditure

    Delivery costs for materials

A.

1 and 3

B.

2 and 3

C.

1 and 4

D.

3 and 4

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Question # 5

Which of the following are internal factors when a supplier is making its pricing decision?

Price elasticity of demand

Environmental legislation

Risk management

The stage in the product life cycle

A.

1 and 2 only

B.

1 and 4 only

C.

2 and 3 only

D.

3 and 4 only

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Question # 6

Which of the following is definition of elasticity of demand in microeconomics?

A.

The percentage change in the quantity demanded divided by the percentage change in income

B.

The percentage change in price of a good divided by the percentage change in the quantity demanded of that good.

C.

The percentage change in the quantity demanded of a good divided by the percentage change in the price of that good

D.

The percentage change in income divided by the percentage change in the quantity demanded

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Question # 7

A buyer is approaching a negotiation where the company is in a low-power negotiating position in relation to the supplier. How can the buyer improve leverage and power with the supplier?

A.

1 and 2 (Consolidate expenditure and understand supplier costs)

B.

2 and 3 (Understand supplier costs and take a distributive approach)

C.

3 and 4 (Take a distributive approach and limit communication)

D.

1 and 4 (Consolidate expenditure and limit communication)

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Question # 8

XYZ Ltd decides to go to market for a cleaning contract to service a number of offices. It knows that it will get a price which may, or may not, be better than the one it is currently paying. To gain leverage in the marketplace, the organisation decides to add other related services to the scope, such as gardening, security and maintenance, which increase the value of the contract. This is an example of which forms of spend consolidation?

A.

Purchasing consortia

B.

Volume consolidation across categories

C.

Volume pooling

D.

Volume redistribution

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Question # 9

Collaborative approach in negotiation not only can fully satisfies the concerns of both, but also ensure that neither party will seek to be opportunistic in later time during the life of the contract. Is this statement true?

A.

Yes, because all parties must have exactly the same goals in integrative negotiation

B.

No, because any party may leverage its own advantage during the contract

C.

Yes, because both parties have well understood each other's goals when they engage in collaborative negotiation

D.

No, because the parties will always find a compromise solution in integrative approach

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Question # 10

Which of the 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 # 11

Colin Smith is preparing for a negotiation with a supplier that provides a chemical for grass fertiliser. Colin has been given an action to secure a commercial deal that achieves his organisation’s objective of ‘ethical and sustainable procurement.’ As part of his negotiation plan, Colin is using the ‘must, intend, like (MIL)’ framework to prepare for the negotiation. Colin would categorise his organisation’s objective within the negotiation plan as:

A.

Likely to have

B.

Intend to have

C.

Must have

D.

Like to have

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Question # 12

Which of the following is considered a strength of a ‘logical’ style negotiator?

A.

Assertive

B.

Methodical

C.

Friendly and accessible

D.

Interrelate issues easily and make quick decisions

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Question # 13

Leitax is a consumer electronics firm with headquarters in the US and with a global sales presence. The company maintains seven to nine models in its product portfolio, each of which has multiple SKUs. Product life ranges from fifteen to nine months and is getting shorter. The demand planning and master planning processes at the company were ill-defined. Data relevant to forecasting were usually inaccurate, incomplete, or unavailable and the lack of objectives and monitoring mechanisms for the demand planning process meant that process improvement could not be managed. Support for supply management was equally ill-defined, as master production schedules were sporadic and unreliable and suppliers had learned to mistrust them. Leitax's newly appointed Supply chain director, Jessica realises that the “buy-in” of different functional groups was critical to the improvement of demand planning. She invites relevant stakeholders to a meeting so that they can express their opinions openly. What tactic is Jessica using?

A.

Coalition

B.

Pressure

C.

Consultation

D.

Persuasion

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Question # 14

Jessica Taylor, a senior buyer, is reflecting on her most recent negotiation. She has been asked by her manager to create a written record of performance. Which of the following should Jessica include in this negotiation performance report? Select THREE that apply:

A.

Travel expenses to attend the meeting

B.

Other suppliers that could have been used

C.

A detailed pricing structure

D.

A checklist of for future

E.

Evaluation of the negotiator’s performance

F.

A comparison of actual versus set objectives

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Question # 15

If the price of a good is above the equilibrium price, which of the following will happen?

A.

The quantity demanded is equal to the quantity supplied and the price remains unchanged

B.

There is a shortage (i.e. an excess demand) and the price will fall

C.

There is a surplus (i.e. an excess supply) and the price will rise

D.

There is a surplus (i.e. an excess supply) and the price will fall

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Question # 16

A breakeven analysis uses which of the following aspects as part of the analysis?

A.

Fixed cost

B.

Buying cost minus variable cost per unit

C.

Variable cost

D.

Selling price minus variable cost per unit

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Question # 17

Which of the following roles would support negotiations with an external supplier when planning a negotiation for a low-value, routine purchase? Select TWO that apply.

A.

The Human Resource (HR) manager

B.

A legal advisor

C.

The procurement manager

D.

The Chief Executive Officer (CEO)

E.

An internal business user

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Question # 18

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.

Budget linkages

D.

Compare total cost of ownership

E.

Volume pooling

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Question # 19

A garden furniture supplier who is currently in negotiations for a high-value contract has offered the procurement manager a visit to their site. The supplier suggests that during this visit, they can undertake the contract negotiation. What would be an appropriate response from the procurement manager?

A.

Accept the offer as this would be an ideal opportunity to see what the supplier can offer and will provide the supplier with familiarity while negotiating

B.

Accept the offer as this would save time; a supplier visit and negotiation could be done at the same time

C.

Decline the offer as it would take too much time to go and visit the supplier

D.

Decline the offer as negotiating while on a site visit will provide the supplier with an unfair advantage, as they will be in a familiar environment

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Question # 20

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 # 21

Citywide Developments Ltd (CDL) is a construction programme management company that delivers high-value property development schemes. CDL uses named consultant design services in contracts. Recently, consultancy day rates have increased. Which of the following tradeable concessions could CDL offer when negotiating with suppliers to achieve lower rates, without lowering service quality?

A.

Accept unqualified trainee consultants

B.

Reduce the volume-based rate discounts

C.

Offer a shorter consultant working day

D.

Remove the requirement for the named personnel

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Question # 22

Which of the following are the most typical characteristics of integrative approach to negotiation? Select TWO that apply.

A.

Positional-based

B.

Claiming value

C.

Interest-based

D.

Short-term wins

E.

Creating more value

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Question # 23

Which of the following are most likely to help buyer become preferred customer in supplier's perspective? Select TWO that apply.

A.

Onerous supplier terms and conditions

B.

Compliance with agreed repair lead time

C.

Shorter payment period

D.

Reduction in delivery errors

E.

Ensuring an increased number of repeat orders

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Question # 24

Which of the following tactics would be appropriate in an integrative negotiation?

A.

Lowball/Highball

B.

Take it or leave it

C.

Expanding the Pie

D.

Mother Hubbard

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Question # 25

Listening is a key activity in any negotiation. Which of the following are characteristics of effective listeners?

A.

2 and 4 only (Persuading and Offering immediate solutions)

B.

1 and 2 only (Showing empathy and Persuading)

C.

1 and 3 only (Showing empathy and Paraphrasing)

D.

3 and 4 only (Paraphrasing and Offering immediate solutions)

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Question # 26

Which of the following are rules of attentive listening? Select TWO that apply.

A.

Prepare for what to say next

B.

React to the person who is speaking

C.

Listen deliberately

D.

Only focus on verbal cues

E.

Do not interrupt when the other party is speaking

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Question # 27

Lina Rawlins is a senior buyer working for a medical equipment company. Lina is in charge of the company’s largest supplier account, Great Barrington Gas (GBG), a medical equipment supplier. Recently GBG’s performance has declined, which has led to an increasing number of rejected items. Lina is aware of the seriousness of this, given the nature of the item, and has asked GBG to attend an urgent meeting. In the meeting, Lina asked the GBG representative “Can you tell me exactly what you are doing to ensure quality?” What type of question is Lina asking?

A.

Reflective

B.

Leading

C.

Hypothetical

D.

Probing

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Question # 28

Which of the following are examples of non-verbal negotiation? Select THREE that apply.

A.

Asking the supplier to repeat their proposal

B.

Getting messages across with facial expressions

C.

/ Speaking softly with long pauses

D.

Communicating with the other party by using gestures

E.

Explaining to the supplier about the scope of the project

F.

Using the body language

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Question # 29

Buyers should have the ability to analyse the costs of their purchases not only for determining their impact to their organisation’s cost but also for the purpose of reducing them during commercial negotiations to contribute to the profitability of their organisation. One way ofanalysing costs is to classify them into direct and indirect costs. Which ONE of the following is an explanation of ‘direct costs’?

A.

Costs that are only related to manufacturing firms where raw materials are directly converted into specific product units

B.

Costs of materials, labour, and other expenses that are directly identified with manufactured units of a product

C.

Costs that are connected with materials and labour, excluding expenses used directly in manufacturing products

D.

Costs of labour and expenses incurred directly whether or not the production fluctuates owing to demand or downtime

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Question # 30

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 # 31

Which of the following is an objective of proposing phase?

A.

Check hypothesis and assumptions

B.

Trade concessions

C.

Create atmosphere conducive to agreement

D.

Start making tentative offers

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Question # 32

Which of the following are examples of variable costs?

A.

1 and 3 (Building and site rent and Raw materials expenditure)

B.

2 and 3 (Annual insurance premium and Raw materials expenditure)

C.

1 and 4 (Building and site rent and Delivery costs for materials)

D.

3 and 4 (Raw materials expenditure and Delivery costs for materials)

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Question # 33

Which of the following is considered a weakness of a ‘dealer’ style negotiator?

A.

May shift position quickly

B.

May be too assertive

C.

Focuses on the facts and not the people

D.

Very precise

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Question # 34

Which of the following are tactics of distributive bargaining?

    Withholding information that may open up common ground

    Coercing the other party to accept your position

    Finding common ground between parties

    Being open about all your common needs

A.

1 and 4 only

B.

2 and 3 only

C.

1 and 2 only

D.

3 and 4 only

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Question # 35

Before engaging in a negotiation with a supplier of rechargeable lights, procurement team tries to visualise the breakdown of supplier's costs to calculate its break-even point. They estimate that total fixed expenses related to rechargeable electric light are $270,000 per month and variable expenses involved in manufacturing this product are $126 per unit. The supplier charges its customer $180 per unit. Within its current capacity, this supplier will make a profit at which of the following?

A.

More than 5,000 units are sold monthly

B.

Exactly 5,000 units are sold per month

C.

Exactly 1,500 units are sold monthly

D.

More than 1,500 units are sold monthly

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Question # 36

A wide range of factors may be taken into account by suppliers when setting or negotiating prices. Which of the following are external factors in pricing decisions? Select TWO that apply.

A.

Competition in the market

B.

Cost of production

C.

Where the product is in its lifecycle

D.

Customer perception of value

E.

Costs of sales

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Question # 37

A skilled negotiator will use a range of questioning techniques in a negotiation. If they wished to explore options with the other party without making any formal commitment, which type of question style would they use?

A.

Leading

B.

Hypothetic

C.

Reflective

D.

Multiple

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Question # 38

Which of the following are features of a single-sourced type of relationship on the relationship spectrum?

Exclusivity granted in relation to a particular product

The supplier is an oligopoly market structure

The supplier is trusted and collaborative

Framework contracts are used to identify the supplier

A.

1 and 2 only

B.

1 and 3 only

C.

2 and 3 only

D.

2 and 4 only

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Question # 39

What are the potential sources of conflict between the buyer and supplier? Select TWO that apply.

A.

Persistent late payment of the supplier’s invoices

B.

Unequal sharing of gains, risks, and costs with the supplier

C.

Requesting early supplier involvement

D.

Planning scheduled visits to the supplier site

E.

Scheduling agreed supplier delivery dates

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Question # 40

In which of the following persuasion methods, the influencer uses logics and objective reasons to persuade the others to buy into influencer's ideas?

A.

Persuasive reasoning (push)

B.

Collaborative (pull)

C.

Visionary (pull)

D.

Directive (push)

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Question # 41

In airline industry, suppliers prefer to adopt dynamic pricing in order to constantly monitor and change their fares in response to market conditions. Dynamics pricing is based on which costing method?

A.

Activity-based costing

B.

Cost plus costing

C.

Absorption costing

D.

Marginal costing

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Question # 42

Which of the following are most likely to turn buying organisation into an unattractive customer in supplier's perspective? Select TWO that apply.

A.

Demands for kickback

B.

Reduced paperwork in procurement processes

C.

Adopting clear and concise CSR policies

D.

Unclear tender award criteria

E.

Using SRM technology

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Question # 43

When considering a new supply source for a product, a procurement professional will review the suppliers' quotations before a supplier negotiation. Which of the following is a direct cost associated with the product within a potential supplier's quotation?

A.

Metal used in the product

B.

Insurance for production machinery

C.

Rent for the supplier's premises

D.

Wages for the supplier's sales department

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Question # 44

According to Fiona Dent and Mike Brent, which of the following are characteristics of Push approach? Select TWO that apply.

A.

Inspirational

B.

Persuasion

C.

Collaborative

D.

Seeking commitment

E.

Directive

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Question # 45

From the principled point of view about negotiation environment, which of the following is a true statement?

A.

Advantage gained from uncomfortable negotiation environment is likely to last long after the negotiation

B.

The room layout can be seen as a source of tactical advantage

C.

Home advantage should not be exploited to win a temporary advantage

D.

There is no ideal negotiation environment in real life

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Question # 46

During a negotiation, Jose Gomez, the salesperson for a strategic supplier, states that his sales director will not approve discounts against initial purchases. However, Jose offers a 5% discount on the aftercare package, which will provide the same monetary saving. Sally Pampas requires both the product and the aftercare package and has an objective to achieve a 5% discount off the purchase price. To achieve a win-win (integrative) negotiation, Sally should...

A.

Ask Jose to apply a 15% discount against the purchase price

B.

Accept the offer of a 5% discount against the aftercare package

C.

Decline the offer and walk away from the negotiation

D.

Ask Jose to apply the 5% discount against the purchase price

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Question # 47

Langham Industries is seeking to expand its operations globally. The CEO has asked the procurement department to engage in a macroeconomic analysis for its potential new supply chain to meet organisational objectives and outcomes. Which of the following would be a source of macroeconomic data?

A.

Competitor analysis

B.

Attending trade conferences

C.

Published market indices

D.

Online supplier forums

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Question # 48

Which of the following are signs indicating that TOP is using coercive power in commercial negotiation? Select TWO that apply.

A.

Demonstrating fairness and respect

B.

Withdrawal of benefits

C.

Use of guilt

D.

Technical expertise

E.

Positive references

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Question # 49

Which of the following occur within the planning and preparation stage in a negotiation process? Select THREE that apply.

A.

Understanding the other party

B.

Defining the constituents

C.

Making as few concessions as possible

D.

Using questions to elicit information

E.

Narrowing the range of solutions

F.

Analyse the bargaining power

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Question # 50

Which of the following is the most appropriate pricing arrangement in contracts where major inputs are commodities?

A.

Price adjustment mechanism

B.

Cost reimbursable pricing arrangement

C.

Standard schedule of rates

D.

Fixed pricing arrangement

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Question # 51

Which of the following are most likely to be macro factors that may influence the balance of power in commercial negotiation? Select THREE that apply.

A.

Economic growth rates

B.

Disruptive technologies

C.

Purchasing spend volume

D.

Sustainability of natural resources

E.

Intensity of competition in a industry

F.

Number of substitute products or services

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Question # 52

Which of the following are effective approaches when procurement professionals negotiate with monopoly suppliers?

1. Delaying payment with monopoly suppliers as long as possible to increase bargaining power

2. Setting up stronger BATNA

3. Engaging in the negotiation with a distributive approach

4. Eliminating requirements in the specification that prioritises monopoly suppliers

A.

1 and 4 only

B.

3 and 4 only

C.

2 and 3 only

D.

2 and 4 only

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Question # 53

Which of the following are most likely to be characteristics of a perfectly competitive market? Select TWO that apply

A.

In a competitive market, both buyers and sellers are price givers

B.

Firms can freely enter or exit the market

C.

In a perfectly competitive market, each seller has a large impact on the market priceA perfectly competitive market consists of products that are all slightly different from one another

D.

There are many buyers and sellers in the market

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Question # 54

Lina Rawlins is a senior buyer working for a medical equipment company. Lina is in charge of the company’s largest supplier account, Great Barrington Gas (GBG), a medical equipment supplier. Recently, GBG's performance has declined, leading to an increasing number of rejected items. Lina is aware of the seriousness of this and has asked GBG to attend an urgent meeting. In the meeting, Lina asked the GBG representative, “Can you tell me exactly what you are doing to ensure quality?" What type of question is Lina asking?

A.

Probing

B.

Leading

C.

Reflective

D.

Hypothetical

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Question # 55

Which of the following are behaviours that builds trust between the buyer and the supplier in business relationship? Select TWO that apply.

A.

Conducting transparent procurement process

B.

Over-inflated contingency funds

C.

Allowing supplier to involve in early product development

D.

Commercial espionage

E.

Tendency to blame other party

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Question # 56

Which of the following should be the final step of a negotiation process if both parties cannot reach an agreement?

A.

Reflecting on performance

B.

Tempting TOP to reopen the negotiation

C.

Asking TOP for another concession

D.

Celebrating publicly about the deal

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Question # 57

A procurement manager has decided to bring in a junior member of their team to a negotiation meeting. Which of the following would be suitable roles for this junior member of the team?

A.

1 and 2 (Note taker and Expert)

B.

1 and 3 (Note taker and Observer)

C.

2 and 3 (Expert and Observer)

D.

3 and 4 (Observer and an unspecified fourth option - assumed error)

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Question # 58

Champion Toys (CT) is negotiating a large order of luxury toys with its supplier. CT has identified that lead times, order quantities, and delivery locations are tradeables that could be used in this negotiation. At which negotiation stage should CT introduce these tradeables?

A.

Bargaining

B.

Opening

C.

Closure

D.

Proposing

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Question # 59

Fast & Easy Limited, a global fast food retailer, is in a negotiation with its major meat supplier. The supplier is asking for a 2% price increase, which Fast & Easy is strongly resisting. The supplier justifies this increase by stating that currency fluctuations, an unstable economic climate, and rising transport costs have necessitated this increase. Which influencing tactic is the supplier using?

A.

Rational persuasion

B.

Inspirational appeal

C.

Coalition

D.

Personal appeal

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Question # 60

In which of the following scenarios could you adopt a distributive-based negotiation approach?

A.

When asking for changes to the provision of a strategic service provided by a monopoly supplier

B.

When determining costs to incorporate a unique product into your design with the patent holder

C.

When your organisation is dependent on a supplier for delivery of a large contract in the future

D.

When procuring a widely available commodity item which is not strategic to your organisation

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Question # 61

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 :

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 # 62

The National Schools Purchasing Forum (NSPF) is a procurement organisation that purchases goods and services on behalf of schools on a national scale. NSPF is close to concluding negotiations in a meeting with Hygienics For All (HFA) for the supply of consumables to school washrooms. Both parties have reached an agreeable position, and NSPF feels it is important that they conclude the negotiation at this point. What type of questions should NSPF ask HFA to achieve this?

A.

Hypothetical questions

B.

Open questions

C.

Closed questions

D.

Probing questions

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Question # 63

Citywide Developments Ltd (CDL) is a construction programme management company that delivers the design and build of high-value property development schemes. CDL uses third-party consultant design services, using named consultants in the contract. CDL has recently observed increases in the consultancy day rate for these consultants. Which of the following tradeable concessions could CDL offer when negotiating with the suppliers of design services, in order to achieve lower rates of pay, but without lowering the quality of service?

A.

Accept unqualified trainee consultants

B.

Offer a shorter consultant working day

C.

Reduce the volume-based rate discounts

D.

Remove the requirement for the named personnel

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Question # 64

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 very helpful 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 # 65

The buyer's bargaining power tends to be relatively higher than supplier's bargaining power in which of the following circumstances?

A.

The buyer does not have the option to move to an alternative supplier

B.

The buyer's spend takes up a small proportion of supplier revenue

C.

The buyer demand is so urgent that it can’t be postponed

D.

The buyer is large in size relative to its suppliers

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Question # 66

Which of the following would describe a push approach to influencing?

Exerting power or authority

Extensive use of open questioning

The party being influenced is fully aware of the process occurring

The party being influenced may not be aware of the process happening

A.

1 and 2 only

B.

3 and 4 only

C.

1 and 3 only

D.

2 and 4 only

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Question # 67

Which of the following are most likely to be fundamentals of Fisher & Ury's principled negotiation?

1. Depersonalise the argument

2. Focus on positions

3. Generate creative options

4. Using subjective criteria

A.

2 and 3 only

B.

2 and 4 only

C.

1 and 3 only

D.

1 and 4 only

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Question # 68

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 # 69

Which factors give rise to conflict within the procurement negotiation context? Select THREE that apply.

A.

Power imbalance

B.

Collaborative working

C.

Differences in goals

D.

Shared values

E.

Shared budget resources

F.

Similar motives

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Question # 70

Where there are high levels of commitment to relationships between both the buyer and supplier, this is seen as collaborative and beneficial to negotiations. Is this statement correct?

A.

Yes, characteristics include risk management and strategic planning

B.

No, this can be classified as adversarial

C.

Yes, characteristics include arm’s length transactions and minimal communication

D.

No, collaboration does not require commitments from either side

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Question # 71

The procurement manager of a private healthcare provider is running an IT project. Who would be the stakeholders?

    General public

    Pharmaceutical suppliers

    Senior Management

    Software support developers

A.

2 and 4 only

B.

1 and 3 only

C.

1 and 2 only

D.

3 and 4 only

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Question # 72

How contribution is calculated in break-even analysis?

A.

Fixed costs divided by variable costs

B.

Variable costs subtracted from price

C.

Price minus fixed costs

D.

Variable costs subtracted from fixed costs

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Question # 73

Hammad Alsuwaidi is a procurement professional leading a negotiation for a vehicle rental contract. Hammad has a clear goal to negotiate a two-year contract in exchange for a minimum of a 20% discount. During the negotiation, Hammad presents to the supplier the facts, figures, and justification for a 20% discount. Which of the persuasion methods below has Hammad chosen?

A.

Push

B.

Visionary

C.

Pull

D.

Collaborative

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Question # 74

Mike is a junior buyer who has been working for a manufacturing organisation for two years, specializing in purchasing research. Over this time, he has built good relationships within his team and with other departments. Which of the following sources of power is Mike most likely to possess?

A.

Referent

B.

Reward

C.

Position

D.

Coercive

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Question # 75

There are no commitments in hypothetical questions. Is this statement true?

A.

No, because the party who makes hypothetical questions cannot withdraw their proposals

B.

No, because hypothetical questions are made explicitly to the other party

C.

Yes, because hypothetical questions generate a specific response

D.

Yes, because hypothetical questions only mention possible situations

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Question # 76

Which of the following is the first step in the development of negotiation strategies?

A.

Determining your BATNA

B.

Developing scenarios around possible options

C.

Recognising TOP's needs and wants

D.

Defining overarching objectives

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Question # 77

Which of the following would help build trust in a relationship?

    Mediation attendance

    Regular meetings

    Keep promises

    Coercion

A.

2 and 4 only

B.

2 and 3 only

C.

1 and 4 only

D.

1 and 3 only

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Question # 78

Effective listening is important in integrative negotiations. Is this statement correct?

A.

Yes, as it allows issues to be shared and understood between all parties

B.

Yes, as it means the supplier's attempts at negotiation can be stopped quickly with reasoning

C.

No, as what the other party has to say is not important

D.

No, as effective listening is important only in a distributive negotiation

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Question # 79

A procurement team has discussed, in advance of a negotiation, what they will do if there is no agreement with the current supplier. They have decided that they will perform the services themselves in-house on a trial basis if no deal is made. Which of the following describes what they have prepared here?

A.

Best Alternative to a Negotiated Agreement

B.

The Bargaining Mix

C.

Offer of Agreement

D.

Walk Away Point

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Question # 80

The only procurement risk inherent in a distributive negotiation approach is the potential loss in the outcome. Is this statement TRUE?

A.

Yes, because in any commercial negotiation there is always a winner and a loser

B.

Yes, and that is why procurement must seek to engage with suppliers that have less bargaining power

C.

No, both negotiating parties are always committed to ensuring that gains are distributed equally between them

D.

No, there is a chance of reaching an impasse among other outcomes to such negotiations

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Question # 81

Which of the following are most likely to be sources of conflict that can emerge from the content of commercial negotiations? Select TWO that apply.

A.

Framework arrangement

B.

Payment terms

C.

Contract governing law

D.

Requisition

E.

Cultural differences

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Question # 82

What is the most likely outcome when two organisations with adversarial relationship negotiate with each other?

A.

Deadlocked

B.

Lose lose

C.

Win lose

D.

Win win

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Question # 83

All of the following shift the supply of watches to 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 the future

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Question # 84

Which of the following can be prepared before a negotiation with a supplier to achieve an agreement to benefit both parties?

Zone of potential agreement

Attendee list for the negotiation talks

Walk-away point

Venue for the negotiation talks

A.

1 and 2

B.

1 and 3

C.

3 and 4

D.

2 and 3

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Question # 85

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.

Forming purchasing consortia

B.

Volume consolidation across categories

C.

Volume separation

D.

Paying supplier on time

E.

Volume redistribution

F.

Simplify procurement process

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Question # 86

John Browne, a junior buyer for a corporation, is analysing the global supply market before undertaking negotiations and is wondering whether foreign exchange rates are important to factor into his research. Should John consider the foreign exchange rates?

A.

No, exchange rates only apply to the national economy

B.

No, as they only affect the bank's interest rates for loans

C.

Yes, as they can affect profit and turnover

D.

Yes, only if the organisation can handle foreign currencies in their accounts

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Question # 87

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 # 88

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 # 89

Where there are high levels of commitment to relationships between both the buyer and supplier, this is seen as collaborative and beneficial to negotiations. Is this statement correct?

A.

Yes, characteristics include risk management and strategic planning

B.

No, this can be classified as adversarial

C.

Yes, characteristics include arm's length transactions and minimal communication

D.

No, collaboration does not require commitments from either side

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Question # 90

Which of the following is important during the proposing stage of a negotiation?

A.

Not making concessions to the other party

B.

Narrowing the range of options

C.

Attempting to close down any discussions

D.

Forcing the other party to accept your proposal

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Question # 91

Freefields Housing Authority (FHA) is a housing provider that has outsourced a range of management services using fixed-price long-term contracts. FHA’s regular supplier credit reviews have identified that some key outsourced service suppliers are at risk of insolvency due to high inflation rates observed in the macroeconomic climate. Which of the following actions would enable FHA to reduce this risk for the lifetime of the affected contracts?

A.

Allow affected suppliers to review and resubmit their fixed costs

B.

Introduce indexation of contracts linked to the Consumer Prices Index

C.

End the contracts and procure the services

D.

Offer advance payment terms to the affected suppliers

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Question # 92

Which of the following is an attribute of a distributive negotiation approach?

A.

Focus on problem solving

B.

Identifying common ground

C.

Achieving personal success

D.

Creative problem-solving

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Question # 93

Which of the following are most likely to be fixed costs of an airline? Select TWO that apply.

A.

Purchase of aircraft

B.

Catering services

C.

Advertising and promotion

D.

Flight crew training

E.

Fuel

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Question # 94

For a commercial negotiation to be effective, the organisation has to identify resources required for negotiation. Which one of the following could help?

A.

Involve a larger team than the other party

B.

Involve an appropriate cross-functional team

C.

Involve a team of only senior managers

D.

Involve a location-based team only

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Question # 95

Which of the following types of questions should be used most often in the proposing phase?

A.

Hypothetical questions

B.

Probing questions

C.

Closed questions

D.

Open questions

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