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| Section | Objectives |
|---|---|
| Topic 1: Negotiation planning and preparation | - Preparation techniques
|
| Topic 2: Power, ethics and communication in negotiation | - Influencing factors
|
| Topic 3: Negotiation strategies and tactics | - Approaches to negotiation
|
| Topic 4: Negotiation fundamentals | - Principles of commercial negotiation
|
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NEW QUESTION # 306
An adversarial style of negotiation is appropriate where the buyer has greater bargaining power over the supplier. In what other situations may the buyer adopt this style of negotiation?
Answer: B
Explanation:
An adversarial negotiation style is more suitable in a market with many alternative sources and substitutes (B). When there are multiple suppliers, buyers have the upper hand and can adopt a competitive stance without risking supply continuity. This aligns with CIPS guidance on the use of adversarial styles in competitive markets with numerous alternatives.
NEW QUESTION # 307
During a negotiation, the supplier requests for payment term shortened to 45 days from 60 days. Seeing that this proposal lies within the concession plan, the procurement manager asks for 5% discount in return. Is that right thing to do?
Answer: D
Explanation:
When preparing for a negotiation, negotiator should establish a list of tradeables and a concession plan. Good negotiators never give anything away that has not already been planned as part of the bargaining mix in the concession planning stage.
In the above scenario, the procurement manager has planned his own concession, so he can trade with supplier. The answer should be "Yes, since procurement manager has his own cost savings target to achieve and he should make use of supplier's financial status" Table Description automatically generated
LO 2, AC 2.3
NEW QUESTION # 308
A buyer is preparing for an upcoming negotiation with a large supplier on a contract renewal price. The buyer has undertaken some analysis and is concerned that changes in the organisation's macro-environment over the last year will result in a price increase. The buyer's analysis has identified changes in which of the following?
Answer: D
NEW QUESTION # 309
A procurement professional is preparing for a negotiation of purchasing non-critical commodity products. He knows that the product can be easily replaced by other substitutes in the market. The negotiation for these products is typified by which of the following?
Answer: C
Explanation:
With non-critical commodity products, the relationship will be transactional. Buyer should not spend too much time and effort into the negotiation.
LO 1, AC 1.4
NEW QUESTION # 310
Which of the following situations would increase a buyer's bargaining power?
Answer: B
Explanation:
When a buyer's purchase represents asignificant portion of a supplier's revenue, it increases the buyer's leverage. The supplier has a vested interest in maintaining the relationship and is more likely to make concessions to preserve the account.
"Buyer power increases when the buyer represents a large portion of the supplier's total sales. This dependency increases the buyer's ability to influence terms." (L4M5 Commercial Negotiation, 2nd edition, Section 2.3 - Bargaining Power Analysis)
NEW QUESTION # 311
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