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CIPS Commercial Negotiation Sample Questions (Q71-Q76):

NEW QUESTION # 71
There are no commitments in hypothetical questions. Is this statement true?

  • A. Yes, because hypothetical questions generate a specific response
  • B. Yes, because hypothetical questions only mention possible situations
  • C. No, because the party who makes hypothetical questions cannot withdraw their proposals
  • D. No, because hypothetical questions are made explicitly to the other party

Answer: B

Explanation:
There are four types of questions that can be used in a commercial negotiation:
Hypothetical questions, where you ask about a possible situation or abstract concept, are very useful at the testing and proposal phases. Hypothetical question does not state any commitment as it is only about 'if something happens, then ...'. This type of question can be useful at giving suggestion.
Text Description automatically generated

LO 3, AC 3.3


NEW QUESTION # 72
Win-lose approach is most likely to be associated with which of the following type of relationship?

  • A. Strategic alliance
  • B. Adversarial
  • C. Outsourcing
  • D. Partnership

Answer: B

Explanation:
:
Distributive approach to negotiation used when the interested parties are attempting to divide something up or distribute something of value, also known as zero-sum approach or win-lose. Win-lose approach is useful when the relationship with the other party (TOP) is short-term and once-off.
The question mentions 4 types of relationship:
Adversarial: Both seek to maximize position at the expense of the other. Almost no trust, communication and cooperation. These suppliers will probably provide non-core products or services with the buyer purchasing them on a one-off basis.
Outsourcing relationship: Use competent suppliers to manage non-core businesses previously done in-house.
Require high level of trust and collaboration
Partnership: Both work closely on long term development by sharing information, technology and ideas.High level of trust with the aim to benefit both parties (win-win) Strategic alliance: Both parties identify areas where they could collaborate to create mutual benefits Among these 4 types of relationship, only adversarial is once-off. Then it is the correct answer.


NEW QUESTION # 73
The bargaining power of buyers is likely to be high in relation to suppliers in which of the following situations?

  • A. The buyer is large in size relative to the supplier
  • B. The buyer demand is urgent and cannot be postponed
  • C. The buyer spend is a low proportion of the supplier's revenue
  • D. The buyer does not have the option to make as an alternative to buy

Answer: A

Explanation:
The bargaining power of buyers increases when the buyer is large relative to the supplier. A large buyer can leverage its size to negotiate more favorable terms due to its significant impact on the supplier's business.
CIPS notes that a buyer's size and purchasing volume are key factors that enhance its negotiating power in buyer-supplier relationships.


NEW QUESTION # 74
In a commercial negotiation, a procurement professional negotiates on his company's behalf. The power of buying organisation is the only factor that influences the behaviours of the other party. Is this assumption true?

  • A. No, because power of supplier is the only factor that influences the other party
  • B. Yes, because the outcomes of negotiation are attributable to the buying organisation
  • C. No, because personal power of negotiators also attributes to the outcomes
  • D. Yes, because buyer's brand, reputation and purchasing spend largely determine the outcomes

Answer: C

Explanation:
:
The assumption is false, because when a procurement professional negotiates on behalf of his employer, he brings the power of his organisation (its brand, reputation and purchasing spend) as well his own personal power (that which is embedded within him) to the negotiation.
From a negotiation perspective, both organisational and personal power have the ability to influence the behaviours of other or the cause of event. This power is clearly core to negotiation, and of enormous important in seeking to achieve the objectives.


NEW QUESTION # 75
The trust is built based on the other party's professional qualifications or proven or certified technical capability or experience is known as...?

  • A. Contractual trust
  • B. Goodwill trust
  • C. Competence trust
  • D. Irrevocable Trust

Answer: C

Explanation:
:
Trust is the expectation that the other party will behave in a predictable and mutually acceptable way. In inter- firm relationships, the presence and absence of trust can affect the level of cost in a relationship. The existence of trust is taught to lower the transaction cost in a relationship. Dr. Mari Sako identified taxonomy of 3 types of trust in commercial relationship, which is very useful from the perspective of procurement.
Contractual trust: Trust based on the contract with TOP. This is potentially the weakest source of trust if there is nothing else to base the trust on, but it is the quickest to establish.
Competence trust: Trust based on TOP's professional qualifications or proven or certified technical capability or experience.
Goodwill trust: Trust based on knowing TOP has your interest at heart and will not behave opportunistically.
This is potentially the strongest type of trust, but it takes the longest time to build.


NEW QUESTION # 76
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