Feb 12, 2022 Step by Step Guide to Prepare for L4M5 Exam BrainDumps
CIPS Level 4 Diploma in Procurement and Supply L4M5 Real Exam Questions and Answers FREE Updated on 2022
NEW QUESTION 44
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 45
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 incremental money generated for each product/unit sold after deducting the variable costs
- D. The production level at which total revenues for a product equal total expenses
Answer: A
Explanation:
As a financial metric, the margin of safety (safety margin) is equal to the difference between current or forecasted sales and sales at the break-even point. The margin of safety is sometimes reported as a ratio, in which the aforementioned formula is divided by current or forecasted sales to yield a percentage value. The figure is used in both break-even analysis and forecasting to inform a firm's management of the existing cushion in actual sales or budgeted sales before the firm would incur a loss.
This is a question that a student met in her actual exam. The margin of safety is not even mentioned in the CIPS study guide.
NEW QUESTION 46
Which of the following are recognised techniques in contract negotiation? Select THREE that apply.
- A. Pacing and leading
- B. Anchoring
- C. Validation
- D. Role ethics
- E. Framing and reframing
- F. Ratification
Answer: A,B,E
Explanation:
Explanation
The question asks about negotiation techniques which are not present in the book. In this question, there are only 3 recognised techniques:
- Framing and reframing: A frame is an assumption, or set of assumptions, that guides our attention and behavior. Reframing is the ability to identify and significantly change assumptions or perspectives. Framing has a significant impact on the effectiveness of negotiation outcomes and negotiator working relationships.
You can read more on framing and reframing here.
- Anchoring: Anchoring bias is well-known cognitive bias in negotiation and in other contexts. The anchoring bias describes the common tendency to give too much weight to the first number put forth in a discussion and then inadequately adjust from that starting point, or the "anchor." We even fixate on anchors when we know they are irrelevant to the discussion at hand. You can read more on anchoring here.
- Pacing and leading: Pacing and leading is a two-step lever of persuasion. First - You "match your pace" to the person you want to influence in as many ways as possible. You can do this by mimicking the way the person talks, stands, their appearance, etc. You can also mimic less tangible aspects like the way they act, or their emotional state.Second - Once you've set your pace with someone, lead them to whatever decision or behavior you want them to take! You can read more on pacing and leading here.
NEW QUESTION 47
Which of the following should be done by the procurement team at the closing stage of a negotiation? Select TWO that apply.
- A. Leave the meeting as soon as possible
- B. Seek agreement in principle if TOP does not have the final authority
- C. Tell TOP that they could have got a better deal
- D. Accept ambiguity or uncertainty
- E. Gloat publicly about the deal
Answer: A,B
Explanation:
Explanation
The agreement and closingphase is the phase when it is either clear through explicit language, or strongly suggested through non-verbal signals, that TOP is ready to move to agreement. Judging when to close can be difficult and as with phases of the negotiation, experience, observation, practice and reflection will be the best ways to learn here.
In the closing phase, procurement should:
- Watch for closing/buying signals
- Check to ensure all issues have been resolved
- Consider using visual aids to summarise
- Use 'summary close'
- Make a decision to conclude/close
- Seek agreement in principle if TOP does not have the final authority
- Make your own private notes on the final agreement
- Shake hands on the agreement
- Leave the meeting as soon as possible thereafter.
LO 3, AC 3.1
NEW QUESTION 48
Should a buyer use closed questions in a negotiation?
- A. Yes, because they urge the supplier to provide more detailedExplanation::
- B. No, the buyer should maximise the use of open questions
- C. Yes, because closed questions help to reconfirm certain facts
- D. No, supplier will consider closed questions as provocation
Answer: C
Explanation:
Asking questions the right way is both an art and a science. Ask the question the wrong way, and the other negotiator might act like a turtle, becoming defensive and withdrawing into their shell. Ask the question the right way, and the other negotiator might "spill the beans.".
Closed Questions: How and when to use them?
Closed questions are those thatrequire a short and focused answer, and are especially helpful in the beginning stages of the negotiation to encourage interaction. They can be used to clarify a point, or to reconfirm certain facts. For example, you can use a closed question to confirm the amount of units the company can produce in a week, or to clarify that what they are really saying is that they don't feel comfortable outsourcing their accounts to India. Most closed questions only require a simple "yes" or "no" response, so there reallyisn't much room for misinterpretation - great for finding out where both you and they stand.
NEW QUESTION 49
Jasmine and the IHL sales team have a negotiation scheduled with one of AB's lead buyers, Samuel, at AB's premises. This is one of the biggest negotiations that Jasmine has been involved in and is eager not to make any mistakes. Jasmine has heard from a colleague that Samuel tends to adopt an integrative negotiation style.
IHL senior management decides to send a team of three members to the negotiation. Jasmine is among the team and she is assigned to check body language, reactions, feeds insight to her leader and to record important comments and information from the meeting for minutes. Which of the following are roles of Jasmine in the forthcoming negotiation? Select TWO that apply.
- A. Chief negotiator
- B. Secretary
(Correct) - C. Commercial expert
- D. Technical expert
- E. Observer
Answer: B,E
Explanation:
A negotiating team can be as few as two people, and one person can play one or more of these roles:
Table Description automatically generated
As from the scenario, Jasmine will act as an observer and a scribe (or secretary).
NEW QUESTION 50
In which of the following persuasion methods, the influencer uses logics and objective reasons to persuade the others to buy intoinfluencer's ideas?
- A. Persuasive reasoning (push)
- B. Visionary (pull)
- C. Directive (push)
- D. Collaborative (pull)
Answer: A
Explanation:
There are two major persuasion methods: 'push' and 'pull'.
Persuasion can be defined as encouraging someone to do something that you want them to do for you.
Persuasion is reasoning with someone so that they will believe or do something they might not otherwise do.
Persuasion can be considered as 'pushing' on TOP so that they can accept the change in attitude or behaviour as a result of your actions.
Influence is the ability to affect the manner of thinking of another. Influence can be considered as pulling on TOP so that you achieve the same result, but TOP feels they have changed their attitude or behaviour as a resultof their reflection and thinking, and not your direct actions.
There are multiple variables to consider when choosing between 'push' and 'pull'. Professor Fiona Dent of Ashridge Business School proposes situations when each style might be most appropriate, breaking down push into 'directive' and 'reasoning' and 'pull' into 'collaborative' and 'visionary':
Table Description automatically generated
Text Description automatically generated
Using logical and objective reasons is one of the typical characteristics of persuasion reasoning method.
NEW QUESTION 51
If the value of the British Pound in other currencies is strong, which of the following is most likely to occur?
- A. The price of UK products in the UK will rise
- B. The price of UK products abroad in foreign currency will fall
- C. The price of UK products abroad in foreign currency will rise
- D. The price of UK products in the UK will fall
Answer: C
Explanation:
Explanation
Currency exchange rates are determined bymacroeconomic factors and demand and supply. In general, countries with stable political and economic systems, a growing economy and a strong rule of law will have stronger and more stable currency than those without these characteristics. In this question, the British Pound is stronger than other currency, which means that buyers who import goods from the UK have to pay higher in their own currencies.
LO 2, AC 2.2
NEW QUESTION 52
A procurement professional is preparing for anegotiation with supplier. She is setting targets for price which her company is seeking to achieve. Which of the following acronyms can help her identify limits before engaging in the negotiation?
- A. PPCA
- B. RAQSCI
- C. MIL
- D. TIMWOOD
Answer: C
NEW QUESTION 53
One difference between perfect competition and monopolistic competition is that...?
- A. In perfect competition, firms produce slightly differentiated products
- B. Monopolistic competition has no barriers to entry
- C. A perfectly competitive industry has fewer firms.
- D. Firms in monopolistic competition face a downward-sloping demand curve
Answer: D
Explanation:
Explanation
Monopolistic competition exists in market where there are many competing producers but they will try to use product differentiation. Although their products may be very similar, their ability to differentiate means that they can act as monopolies in short run, irrespective of the actions of their competitors.
In perfect competition, there are no barriers to entry to the market or exit from the market. In monopolistic competition, there tend to be fewer barriers to entry or exit in these markets than in oligopolistic markets, but it doesn't mean that there are absolutely no barriers to entry in monopolistic competition.
In perfect competition, the demand curve is perfectly elastic, which means that it will be horizontal.
Otherwise, in monopolistic competition market, the demand curve will have normal downward slope.
LO 2, AC 2.2
NEW QUESTION 54
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. Volume separation
- B. Unavailable technical support
- C. Spend concentration
- D. Unclear tender award criteria
Answer: C
Explanation:
Explanation
According to Paul Steele's 'The Seller's Perspective', customer can be classified into 4 categories as below:
To increase theleverage in negotiation, buyer may increase its attractiveness and/or increase spend value. In this scenario, the buyer is already attractive to supplier as it always pays on-time, but the spend is still low. So to have greater leverage, the buyer has toincrease its spend volume by spend concentration. Spend concentration may take many forms as following:
- Vendor base reduction
- Volume pooling
- Volume redistribution
- Volume consolidation across categories
- Standardisation and harmonisation of specifications
- Forming purchasing consortia
Chart, treemap chart Description automatically generated
LO 1, AC 1.3
NEW QUESTION 55
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 56
Where can we find the data on macroeconomics?
1. From trade journal
2. From supplier's marketing catalogue
3. From stock exchange market
4. From government's statistics
- A. 2 and 4 only
- B. 1 and 3 only
- C. 1 and 2 only
- D. 3 and 4 only
Answer: D
Explanation:
Explanation
Macroeconomic indicators are statistics or data readings that reflect the economic circumstances of a particular country, region or sector. They are used by analysts and governments to assess the current and future health of the economy and financial markets.
Macroeconomic indicators will vary in their meaning and the impact that they have on the economy, but broadly speaking there are two main types of indicator.
- Leading indicators, which forecast where an economy might be heading. They are often used by governments to implement policies because they represent the first phase of a new economic cycle. These include the yield curve, interest rates and share prices.
- Lagging indicators, which reflect an economy's historical performance and only change after a trend has been established. They are used to confirm a trend is underway. These include gross domestic product (GDP), inflation and employment figures.
There is also the category of coincident indicators, but these are generally grouped in with lagging indicators as they either happen at the same time or after an economic shift.
The best macroeconomic indicator to watch will heavily depend on your personal preferences, what positions you are taking and which country your portfolio is focused on. However, there are some very common indicators that most traders and investors will keep an eye on.
For simplicity's sake, we have split these out into leading and lagging indicators.
Top leading indicators:
1. The stock market
2. House prices
3. Bond yields
4. Production and manufacturing statistics
5. Retail sales
6. Interest rates
Top laggingindicators:
1. GDP growth rates
2. The Consumer Price Index (CPI) and inflation
3. Currency strength and stability
4. Labour market statistics
5. Commodity prices
A procurement professional may find stock market data from the security exchange, whilemost lagging indicators (such as GDP, CPI, unemployment rate, currency and inflation rate, etc) can be found from government statistics data.
NEW QUESTION 57
Which of the following is the best description of direct cost?
- A. Direct costs are only variable raw materials that constitute a product
- B. Direct costs include raw materials, labour andoverheads
- C. Direct costs include raw materials, labour and other expenses attributable to the final product
- D. Direct costs include only raw materials and labour of making the final product
Answer: C
Explanation:
Direct costs are those costs of a product/service directly attributable/traceable to its production, for example, the costs of labour and materials directly used to produce the goods/services which the organisation sells.
NEW QUESTION 58
Which of these personal power bases stems from the manager's position in the organisation and the authority that lies in that position?
- A. Reward power
- B. Legitimate power
- C. Expert power
- D. Coercive power
Answer: B
Explanation:
Explanation
Legitimate power comes from the belief that a person has the formal right to make demands, and to expect others to be compliant and obedient. Legitimate power comesfrom rules, formal authority, organisation rank, staff grade or official position held. In commercial negotiation, legitimate power can be demonstrated by job title and rank.
LO 1, AC 1.3
NEW QUESTION 59
Representatives from South African Department of Health is negotiating the price of hospital drugs with US pharmaceutical companies. Which of the following are most likely to be macro factors that influence the outcomes of the negotiation? Select TWO that apply.
- A. Order quantity
- B. Forward integration
- C. Regulations on health and safety
Switching costs of buyer - D. Digitalisation of medicine
Answer: C,D
Explanation:
Explanation
All one-to-one commercial negotiations between a specific purchaser and a specific supplier take place within an industrial market and a larger business environment characterised by multiple forceswhich both parties typically have little control over. STEEPLE framework highlights the 6 main external influences on a business:
Table Description automatically generated
Particularly, pharmaceutical industry is a heavily regulated sector, therefore, legal and regulatory matters in theindustry is highly important. Otherwise, technological trends also permeate into pharmaceutical companies, technologies like digitalisation may transform the balance of power in such negotiation.
LO 1, AC 1.3
NEW QUESTION 60
Which of the following are hardball tactics in negotiations? Select TWO that apply.
- A. Expand the pie
- B. Bridging
- C. Snow job
- D. Good cop, bad cop
- E. Sweetening the deal
Answer: C,D
Explanation:
In difficult negotiations and disputes, hardball tactics like punishment and threats often seem like the only way to win concessions. Some negotiators seem to believe that hardball tactics are the key to success in any negotiation. They resort to extreme demands and even unethical behaviour to try to get the upper hand in a negotiation.
The following are 8 typical hardball tactics:
1. Good cop / Bad cop
2. Low ball / High ball
3. Bogey
4. The Nibble
5. Chicken
6. Intimidation
7.Aggressive Behaviour
8. Snow Job
You can read the details of each tactic here.
In the contrary to hardball tactics, negotiators can adopt integrative approach to the negotiation. Some of integrative tactics are:
1. Expand the Pie
2. Bridging
3. Post Settlement -Settlement
Et cetera
NEW QUESTION 61
......
Ultimate Guide to Prepare L4M5 Certification Exam for CIPS Level 4 Diploma in Procurement and Supply: https://www.examboosts.com/CIPS/L4M5-practice-exam-dumps.html
L4M5 Ultimate Study Guide: https://drive.google.com/open?id=1XnNTwDku9u9SVRHcdy5wb20cSJVsrQ2U