100% Pass Top-selling L4M5 Exams - New 2021 CIPS Pratice Exam
CIPS Level 4 Diploma in Procurement and Supply Dumps L4M5 Exam for Full Questions - Exam Study Guide
CIPS L4M5 Exam Syllabus Topics:
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NEW QUESTION 64
Personal power is only used in distributive approach. Is this statement true?
- A. No, because only organisational power will optimise the negotiation outcomes
- B. Yes, because only distributive approach to negotiation requires strong personal power
- C. No, because personal power can be veryhelpful in integrative approach
- D. Yes, because one party will abuse coercive power to maximise the gain
Answer: C
Explanation:
Explanation
Power, or more precisely perceptions of power,are critically important in understanding the commercial negotiation process. From a commercial negotiation point of view (under any circumstances, either integrative or distributive approach), CIPS is interested in power from both a personal and organisational perspective.
When you are negotiating on behalf of your employer, you bring the power of your organisation (its brand, reputation and purchasing spend) as well your own personal power (6 sources of personal power, based on French and Raven's power base model) to the negotiation.
In both integrative and distributive approaches, personal power plays an important role. It helps both parties push through negotiating barriers and secure commitment and final agreement LO 1, AC 1.3
NEW QUESTION 65
Which of the following method should be used in negotiation if both parties want to communicate verbally and non-verbally without having to meet face-to-face?
- A. Teleconferencing
- B. Web conferencing
- C. Telephone
- D. In-person meeting
Answer: B
Explanation:
Explanation
Using webcams in a web conference means you are able to communicate both verbally and non verbally.
Over the phone, you cannot see TOP, the only cue/signal you have regarding their mood, interest and attitude is person's voice, intonation andany delay.
A teleconference is a telephone meeting among two or more participants involving technology more sophisticated than a simple two-way phone connection.
In-person meeting requires you team and TOP to be in the same place at the same time.
LO 2, AC 2.4
NEW QUESTION 66
Which of the following is most likely a consequence of falling interest rate?
- A. Decrease investment
- B. Increase aggregate demand
- C. Decreaseconsumption
- D. Increase savings
Answer: B
Explanation:
If interest rate are too low and credit is too, cheap rates can fund a spending boom with consumers and businesses buying (investment) more than they can afford to pay back.
NEW QUESTION 67
Which of the following are tools that help procurement visualise cost breakdowns of products and services purchased from supplier?
1. Spend candlesticks
2. Spend tree
3. Aggregate expenditure model
4. Spendwaterfall
- A. 2 and 4 only
- B. 1 and 3 only
- C. 1 and 2 only
- D. 3 and 4 only
Answer: A
Explanation:
Understanding where and with whom your supplier spends their money, or understanding the 'cost breakdowns' or 'price build-up' of the goods andservices you purchase from the supplier, will help you know where and when they can offer price concessions.
Cost information can be expressed with more impact through graphs that can be created using Excel and PowerPoint or other softwares. There are two commonly used models known as 'spend waterfall' and 'spend tree'. Spend waterfall shows the build-up of costs, while the spend tree shows all the spends that an organisation makes.
There is no graph known as 'spend candlesticks'. Candlestick chart is astyle of financial chart used to describe price movements of a security, derivative, or currency.
The aggregate expenditure model is a method of calculating GDP. The aggregate expenditure model focuses on the relationships between production (GDP) and planned spending: GDP = planned spending = consumption + investment + government purchases + net exports.
NEW QUESTION 68
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. Shorter payment period
- C. Reduction in delivery errors
- D. Compliance with agreed repair lead time
- E. Ensuring an increased number of repeat orders
Answer: B,E
Explanation:
Explanation
Becoming a preferred customer to supplier's perspective can increase the purchaser's leverage in negotiation.
Beside the size of buying organisation or its spend, the following may be sufficient to differentiate the buyer from other buying organisations:
- Simple procurement processes
- Simple contracting processes
- Clear and concise documentation
- Absence of onerous supplier terms and conditions (onerous supplier terms and conditions mean that obligations imposed on suppliers are greater than their gains)
- On-time payment: The reduction in hassle for both supplier and the buyer, if bills are paid on time, is significant. From the customer's perspective it could also be the opener to agreeing preferential payment terms. A supplier may weigh up that payment on time at 60 days is worth taking, over the current 30-day terms that slip to 90 days and beyond.
-Transparent processes
- Ethical behavior
LO 1, AC 1.3
NEW QUESTION 69
'What specific tests do you carry out to ensure quality is achieved?' This is an example of which type of negotiation question?
- A. Reflective
- B. Leading
- C. Closed
- D. Probing
Answer: D
Explanation:
Explanation
The question requires more detailed answer, it is an example of probing question.
Probing questions are typically follow-up questions, and aim to elicit more detailed information on the back of the answer elicited from theopen questions. Probing question are also useful to check that the supplier fully understand their offering, as well as your needs, can also be used to communicate to the suppliers that you know this category well.
LO 3, AC 3.3
NEW QUESTION 70
Which of the following are most likely to turn buying organisation into an unattractive customer in supplier's perspective? Select TWO that apply.
- A. Adopting clear and concise CSR policies
- B. Using SRM technology
- C. Demands for kickback
- D. Unclear tender award criteria
- E. Reduced paperwork in procurement processes
Answer: C,D
Explanation:
Becoming a preferred customerto supplier's perspective can increase the purchaser's leverage in negotiation.
Beside the size of buying organisation or its spend, the following may be sufficient to differentiate the buyer from other buying organisations:
Simple procurement processes: Using SRM technology may help to simplify the process Simple contracting processes Clear and concise documentation: Reduced paperwork helps both supplier and buyer save their time and resources.
Absence of onerous supplier terms and conditions
On-time payment
Transparent processes: Unclear tender award criteria can be seen as opaque. Suppliers who attended the tendering processes cannot know the reasons why their bids are rejected and hesitate to attend other tendering.
Ethical behaviour: Suppliers may prefer a buyer who adopts CSR policy because they can predict potential customer's behaviour. Demands for kickback are unethical behaviours.
NEW QUESTION 71
Which of the following is the first step in the development of negotiation strategies?
- A. Defining overarching objectives
- B. Determining your BATNA
- C. Developing scenarios around possible options
- D. Recognising TOP'sneeds and wants
Answer: A
Explanation:
Developing specific negotiation strategies in areas where risk or spend is high involves analysing a wide range of objectives and variables within the context of the organisation'sbusiness requirements. The first stage in any negotiation preparation is to define your overall objectives which may be related to a single variable such as price in the case of a standardised requirement, or many variables in the case of capital equipment. Your negotiating strategies and tactics will all be focused on achieving overall objectives.
NEW QUESTION 72
What is the most likely outcome when two organisations with adversarial relationship negotiate with each other?
- A. Lose lose
- B. Win lose
- C. Deadlocked
- D. Win win
Answer: B
Explanation:
An adversarial relationship in purchasing and supply arises when identical or equivalent good or services are available from competing suppliers and buyers/sellers are trying to gain an advantage over each other. Low levels of trust are characteristic of adversarial relationships. The outcome when two organisations with adversarial negotiate is most likely to be win-lose.
NEW QUESTION 73
According to Fiona Dent and Mike Brent, which of the following are characteristics of Push approach? Select TWO that apply.
- A. Persuasion
- B. Collaborative
- C. Directive
- D. Inspirational
- E. Seeking commitment
Answer: A,C
Explanation:
According to the book 'Influencing: Skills and techniques for business success' by Fiona Dent and Mike Brent, there are two major influencing styles. Push tends to be directive. It tells, and is clear and resolute, but needs to be employed in situations where firmness is required because of difficulties that exist or weakness is evident.
Pull is more participatory and collaborative. It seeks to incorporate everyone's perspective. It can appear wishy-washy if not skilfully employed. That approach should be followed which is most likely to secure commitment and not mere compliance.
The two divisions can be further divided into four style categories: directive; persuasive reasoning; collaborative - team oriented, people oriented to inspire them with a vision. The directive style relies on your expertise and reputation being respected by others, and where there really does seem to be one answer. It is "I" driven whereas persuasive reasoning is more "we" and issue driven. Directive styles can make the user appear as "a bull in a china shop"; persuasive reasoning can be portrayed as tough guy.
Collaborative influencing takes the "we" element further and seeks to mobilise everyone's ideas in a journey of discovery. It may have the flavour of "I'm your best friend", which may not go down too well. Visioning style is concerned to stir people's emotions in support of achieving an objective. This last one has been used by demagogues to stir people's hearts and minds for evil purposes as well as good.
A useful table offers the benefits, problems, words and body language associated with each style along with advice on when to use and when to avoid each. Cases and exercises illustrate these styles.
Empathy comes in for extended treatment with the definition of "standing in the other's shoes". This does not necessarily happen just intuitively, and therefore before a specific influencing effort there should bean intense effort to think about the other person or persons and to sense what it might feel like to be them - their hopes, fears, concerns, what turns them on, what turns them off, where are they coming from.
NEW QUESTION 74
XYZ Ltd is importing goods from overseas. They prefer to pay theirsupplier in their own currency. Which of the following is a true statement?
- A. XYZ is able to pay less if their currency depreciates
- B. Supplier will receive less if XYZ's currency appreciates
- C. XYZ has to pay more if their currency depreciates
- D. XYZ has an advantage in negotiating discounts if their currency appreciates
Answer: D
Explanation:
Explanation
The effect of a change of relative exchange rates will be determined by which currency you pay your supplier in.
Table Description automatically generated
LO 2, AC 2.2
NEW QUESTION 75
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. Volume pooling
- B. Compare total cost of ownership
- C. Budgetlinkages
- D. Value engineering
- E. Part substitution
Answer: D,E
Explanation:
If driving greater value and efficiency from your supply base is your end, you should remember that there are many ways to do this without seeking to negotiate lowerprices. Below are 7 types of saving levers:
Table Description automatically generated
NEW QUESTION 76
Which of the following are factors that might shift the demand curve for a consumer good to the right?
1. Prices of complementary goods decrease
2. Price of the consumer good decreases
3. Customers' expectation of higher prices in the future
4. Consumer tastes shift toward substitute products
- A. 1 and 3 only
- B. 4 and 2 only
- C. 1 and 2 only
- D. 3 and 4 only
Answer: A
Explanation:
Explanation
A shift in demand occurs when an influencing factor other than price changes. Those factors are:
- The income ofbuyers
- The tastes and preferences of buyers
- The prices of other goods and services, especially substitutes and complements
- Expectations of buyer about the future
In this question:
- 'Prices of complementary goods decrease' will lead toquantity demanded for that complements rising, then demand for consumer good will increase accordingly.
- 'Price of the consumer good decreases' will increase the quantity demanded for that good, but it will not shift the demand curve
- 'Customers' expectation of higher prices in the future': in this scenario, customers tend to buy more to store in present, which leads to demand curve shifting to the right
- 'Consumer tastes shift toward substitute products': Demand for substitutes will rise, so demand forthat consumer good will decrease and the demand curve shifts to the left.
LO 2, AC 2.2
NEW QUESTION 77
A procurement professional is negotiating with a supplier on cleaning service. She realises that there are huge cost-saving opportunities if the supplier agrees to reduce its mark-up and unnecessary employee benefits.
Supplier's mark-up and employee benefits are examples of which of the following?
- A. Spend cube
- B. Spend tree
- C. Spend waterfall
- D. Addressable spend
Answer: D
Explanation:
Explanation
A key consideration when seeking to negotiate prices is to establish what proportion of the spend is addressable by procurement action such as negotiation. Addressability of spend is influenceable through negotiations or application of other saving effort or leverage with suppliers.
LO 2, AC 2.1
NEW QUESTION 78
Whenimplementing value analysis or value engineering, which of the following acronyms reminds both buyer and supplier of ideas on removal, substitution and design-out of cost elements?
- A. STOPS WASTE
- B. OWN-IT
- C. SMART
- D. SAMOA
Answer: A
Explanation:
Ray Carter coined the mnemonic STOPS WASTE to remind buyers of 10 cost-reduction ideas they can ask for themselves and their suppliers in any situation when considering a key purchase input. Stop Waste by:
Standardisation - is there a standard specification?
Transportation - is the inbound transport classification appropriate
Over-engineered - is the specification too tight?
Packaging - can packaging be reduced or eliminated?
Substitutes - is there a cheaper substitute material
Weight - is there opportunity to reduce weight of the product?
Any unnecessary processing - is there any unnecessary design or feature?
Supplier's input - are suppliers able to assist with the cost reduction To make - is it more economical to make or buy?
Eliminate - if no one uses the feature, can it be eliminated?
SAMOA is a useful acronym for checking and testing the information gathered from the Internet:
Source
Audience
Methodology
Objectivity
Accuracy
OWN-IT is acronym for 5 steps in the process of collecting and analysing the data andinformation needed in any field:
Outline
Wide search
Narrow search
Increase your stockpile of information
Transform your stockpile into new knowledge
A SMART goal is used to help guide goal setting. SMART is an acronym that stands for Specific,Measurable, Achievable, Realistic, and Time-bound.
NEW QUESTION 79
Which of the following types of questions should be used most often in the proposing phase?
- A. Hypothetical questions
- B. Closed questions
- C. Probing questions
- D. Open questions
Answer: A
Explanation:
Explanation
At the proposing phase either side may start making tentative proposals regarding their offering. In the case of negotiation where TOP has already submitted a tender or proposal, this stage may provide an opportunity for them to make proposals to improve on their initial offers in general or in areas highlighted by the buying side in advance.
The word 'if' is very useful at this stage andallows you to test tentative proposals without committing yourself.
Skilled negotiators use language very carefully. The questions with 'if' are hypothetical ones.
LO 3, AC 3.1
NEW QUESTION 80
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