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| Section | Weight | Objectives |
|---|
| Understand key approaches in the negotiation of commercial agreements with external organisations | 35% | - Power dynamics in negotiation
- 1. Relationship types and their effect on negotiation
- 2. Impact of power balance on outcomes
- 3. Sources of power and influence
- Types of negotiation approaches
- 1. Pragmatic and principled negotiation styles
- 2. Collaborative / integrative (win-win)
- 3. BATNA, target setting and reservation price
- 4. Distributive / competitive (win-lose)
- Application of commercial negotiations in procurement and supply
- 1. Team and stakeholder management in negotiation
- 2. Position within the CIPS procurement cycle
- 3. Sources and management of conflict
- 4. Definitions and purpose of commercial negotiation
|
| Know how to prepare for negotiations with external organisations | 35% | - Cost and price analysis
- 1. Types of costs and pricing structures
- 2. Cost modelling and price analysis techniques
- Negotiation criteria and objectives
- 1. Prioritising issues and trade-offs
- 2. Defining measurable outcomes
- Planning and resources
- 1. Information gathering and market intelligence
- 2. Team roles and preparation plans
- Economic and market factors
- 1. Supply and demand conditions
- 2. Inflation, exchange rates and risk factors
- 3. Market structure and competition
|
| Understand how commercial negotiations should be undertaken | 30% | - Review and improvement
- 1. Evaluating results and performance
- 2. Documenting agreements and lessons learned
- Stages of negotiation
- 1. Opening, exploring, bargaining, closing and implementing
- Tactics and influencing methods
- 1. Managing concessions and deadlocks
- 2. Persuasion and influencing techniques
- 3. Cultural and ethical considerations
- Communication skills
- 1. Non-verbal communication and emotional intelligence
- 2. Active listening and questioning
|
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CIPS Commercial Negotiation Sample Questions (Q18-Q23):
NEW QUESTION # 18
Which of thefollowing is the purpose of using stakeholder support level scale?
- A. To identify key stakeholders
- B. To identify stakeholder's needs and expectations
- C. To estimate the gap and the progress towards desired levels of support
- D. To identify stakeholder level of influence and interest and plot them on stakeholder map
Answer: C
Explanation:
Explanation
In order to estimate the gap and the progress towards desired level of support, a stakeholder support scale can be used by the procurement internally. The support level scale measures stakeholder commitment. Current support level for the procurement/negotiation objectives should be gained from engagement with key stakeholders. The following is an example of stakeholder support level scale:
Graphical user interface, application Description automatically generated

LO 1, AC 1.1
NEW QUESTION # 19
Which of the following are types of non-verbal communication that could be used during a negotiation meeting? Select THREE that apply.
- A. Meeting location
- B. Hand gestures
- C. Facial expressions
- D. Reference materials
- E. Room layout
- F. Eye contact
Answer: B,C,F
Explanation:
Non-verbal communicationsignificantly affects the dynamics of negotiation.Hand gestures,eye contact, andfacial expressionscan reinforce spoken words or contradict them. These elements can influence perception, trust, and the tone of the negotiation.
"Non-verbal communication includes gestures, posture, eye contact, and facial expressions. These play a critical role in how messages are received and interpreted." (L4M5 Commercial Negotiation, 2nd edition, Section 3.3 - Verbal and Non-Verbal Communication Techniques)
NEW QUESTION # 20
When is the best time in procurement process in which procurement should get involved so that the cost- saving opportunities are the greatest?
- A. Market consult stage
- B. Post-tender stage
- C. Specification stage
- D. Post-contract stage
Answer: C
Explanation:
The earlier procurement get involved in the procurement processes, the better. If procurement are involved in design at the specification stage they can feed in prices and costs to designer so they know the likely budget implication of choices made. Sending in a procurement team to negotiate at or close to the end of the procurement process effectively ties their hands and limits their negotiation leverage. This is illustrated in the graph below:
Chart Description automatically generated

LO 2, AC 2.1
NEW QUESTION # 21
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 of analysing costs is to classify them into direct and indirect costs. Which ONE of the following is an explanation of 'direct costs'?
- A. Costs of materials, labour, and other expenses that are directly identified with manufactured units of a product
- B. Costs that are connected with materials and labour, excluding expenses used directly in manufacturing products
- C. Costs of labour and expenses incurred directly whether or not the production fluctuates owing to demand or downtime
- D. Costs that are only related to manufacturing firms where raw materials are directly converted into specific product units
Answer: A
NEW QUESTION # 22
Which of the following is the true statement?
- A. Internal stakeholder support will be important for both negotiation and contract performance
- B. Commercial negotiation objectives should be driven by just the instincts of procurement
- C. All connected stakeholders have a low level of impact on procurement negotiations
- D. External stakeholders such as suppliers can largely influence an organisation's procurement negotiations
Answer: A
Explanation:
Internal stakeholder support will be important not just at the initial negotiation of the contract, but potentially throughout the life of the contract right through to exit.
As a general rule, connected stakeholders (with the exception of suppliers) have a low level of influence on procurement negotiations.
Suppliers are connected stakeholders who have contractual relationships with the organisation.
Commercial negotiation objective should be driven by thebusiness needs of the organisation, and not just the instinct of procurement.
NEW QUESTION # 23
......
Our Commercial Negotiation Web-Based Practice Exam is compatible with all major browsers, including Chrome, Internet Explorer, Firefox, Opera, and Safari. No specific plugins are required to take this Commercial Negotiation practice test. It mimics a real L4M5 test atmosphere, giving you a true exam experience. This Commercial Negotiation (L4M5) practice exam helps you become acquainted with the exam format and enhances your test-taking abilities.
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