Pass CIPS L4M5 Exam with Guarantee Updated 387 Questions
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NEW QUESTION # 144
When is the best time to adopt accommodating style according to Thomas-Kilmann conflict mode instrument?
- A. When buyer and supplier have equal power but are strongly committed to mutually exclusive goals
- B. When preserving harmony and avoiding disruption with supplier are especially important
- C. When both buyer and supplier want to find an integrative solution as their concerns are too important to be compromised
- D. When buyer needs to gather more information to gain more advantages in later negotiations
Answer: B
Explanation:
According to Thomas-Kilmann conflict model instrument, there are 5 conflict management styles:
Accommodating is an unassertive and cooperative approach to resolving the conflict. Accommodating means conceding to the other party with little debate or fight, not challenging or strongly putting forward your own point of view and generally giving and yielding to the other party's point of view. Accommodating is best used when:
1. When others can resolve the conflict more effectively
2. When the issue is much more important to the other person than to yourself - to satisfy the needs of others and to show you are reasonable
3. To build up social credit for later issues which are important to you
4. When continued competition would only damage your cause
5. When preserving harmony and avoiding disruption are especially important
6. To aid in the managerial development of subordinates by allowing them to experiment and learn from their own mistakes LO 1, AC 1.1
NEW QUESTION # 145
Which type of negotiation strategy should be adopted when the relationship is important and both parties want to help each other achieve their goals?
- A. Accommodative
- B. Competitive
- C. Collaborative
- D. Avoidance
Answer: C
Explanation:
The collaborative strategy (win-win, integrative) focuses on joint problem-solving, transparency, and trust. It is best when long-term relationships are critical, and both parties see value in mutual success. By contrast, competitive (win-lose) is adversarial, accommodative sacrifices one party's interests, and avoidance seeks disengagement. Collaborative strategies are common in partnerships, innovation projects, and sustainable procurement. They require sharing information, identifying tradeables, and aligning objectives beyond price to long-term outcomes.
Reference: CIPS L4M5 (2nd ed.), LO 1.1 - Negotiation strategies: collaborative vs competitive, accommodative, avoidance.
NEW QUESTION # 146
Which of the following will positively affect reputational strength of an organisation? Select TWO that apply.
- A. Weak internal coordination
- B. Great gap between reputation and reality
- C. Strong customer focus
- D. Adopting out-of-date technology
- E. High ethical standards
Answer: C,E
Explanation:
Explanation
In a globalisedcommercial world characterised by dynamic market and multiple companies competing for business, a positive corporate reputation can be an enormous asset. Reputational strength in one organisation might be based on some or all of the following characteristics:
- Quality of products or services
- Low cost/high value for money
- High ethical standards
- Reliability
- Cutting-edge technology
- Strong customer focus
- Engineering excellence
LO 1, AC 1.4
NEW QUESTION # 147
An organisation should develop different relationships appropriate to each supply situation. Which ONE of the following analysis methods could help identify these?
- A. Resources and cost spectrum
- B. The relationship spectrum
- C. The colour spectrum
- D. A spectrum of non-critical items
Answer: B
Explanation:
CIPS describes a relationship spectrum from arm's-length/transactional through collaborative/partnership, matched to spend criticality, risk, and strategic importance; analysis helps select the appropriate relationship style before and during negotiation.
Reference: CIPS L4M5 (2nd ed.), LO 3.1 - Relationship types and the relationship spectrum; alignment to sourcing/negotiation approach.
NEW QUESTION # 148
Which of the following is the internal factor that is taken into price of a product?
- A. Elasticity
- B. Risk management
- C. Customer tastes
- D. Exchange rate
Answer: B
Explanation:
In order to answer this question, you should better consider each option:
'Exchange rate' is the value of one nation's currency versus the currency of another nation or economic zone.
This is a macroeconomic factor.
'Elasticity' refers to the degree to which individuals, consumers or producers change their demand or the amount supplied in response to price or income changes. This is a microeconomic factor Consumer tastes refer to the products and services that consumers consciously choose over others. Consumer tastes are so powerful that they can change how businesses conduct their activity. Like elasticity, this is also a microeconomic factor.
Among 4 options, only risk management is the internal factor. Risk pricing is a strategy applied by many companies in the world. To learn how to price the risk, you can read an article from McKinsey: https://www.
mckinsey.com/business-functions/marketing-and-sales/our-insights/how-to-price-risk-to-win-and-profit This is a question that a student met in her actual exam. The knowledge section is unknown.
LO: Unknown, AC: Unknown
NEW QUESTION # 149
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. Observer
- B. Secretary(Correct)
- C. Commercial expert
- D. Technical expert
- E. Chief negotiator
Answer: A,B
Explanation:
A negotiating team can be as few as two people, and one person can play one or more of these roles:
As from the scenario, Jasmine will act as an observer and a scribe (or secretary).
NEW QUESTION # 150
XYZ Ltd decides to go to market for a cleaning contract to service a number of offices. It knows that it will get a price which may, ormay not, be better than the one it is currently paying. To gain leverage in the marketplace, the organisation decides to add other related services to the scope, such as gardening, security and maintenance, which increase the value of the contract. This is an example of which forms of spend consolidation?
- A. Volume pooling
- B. Purchasing consortia
- C. Volume redistribution
- D. Volume consolidation across categories
Answer: D
Explanation:
Explanation
Buying organisation may increase its leverage with suppliers byconcentrating spend. Supplier spend consolidation can take many forms as outlined below:
- Vendor base reduction: straightforward reduction of number of suppliers in any category
- Volume pooling: pooling cross organisational requirement until your order volume is high enough to attract new bidders/additional discounts
- Volume redistribution: making recommendations following spend analysis to move from one supplier to another
- Volume consolidation across categories: certain purchase requirements may be common across a number of categories. In the scenario, XYZ has combined different categories but closely related to office services into a larger contract so that they can increase their leverage.
- Standardisation and harmonisation of specifications: analysis of specifications and standards for a high spend purchased input, may show that there is a little difference between them and that the specification can be standardised or at least harmonised across the group or across national, regional or global operations.
- Forming purchasing consortia: buyers may decide to come together and combine their purchase volumes to attract better deals.
LO 1, AC 1.3
NEW QUESTION # 151
A supplier has offered international football tickets to the procurement manager while they are in the middle of a contract negotiation. What should the procurement manager do?
- A. Accept the offer of the tickets as this will enhance the relationship between both parties
- B. Accept the offer as this will not affect the relationship with the supplier
- C. Reject the offer as the procurement manager will have to repay the gesture
- D. Reject the offer as this may be seen as a conflict of interest during the negotiation
Answer: D
Explanation:
Accepting gifts during a negotiation can createconflict of interestconcerns and may violate ethical standards.
Best practice requires rejecting such offers to maintain transparency and objectivity in decision-making.
Reference: L4M5 Commercial Negotiation 2nd edition (CORE), Section 1.4 - Ethics and Professional Standards in Negotiation
NEW QUESTION # 152
Freefields Housing Authority (FHA) is a housing provider that has outsourced a range of management services using fixed-price long-term contracts. FHA's regular supplier credit reviews have identified that some key outsourced service suppliers are at risk of insolvency due to high inflation rates observed in the macroeconomic climate. Which of the following actions would enable FHA to reduce this risk for the lifetime of the affected contracts?
- A. Introduce indexation of contracts linked to the Consumer Prices Index
- B. End the contracts and procure the services
- C. Allow affected suppliers to review and resubmit their fixed costs
- D. Offer advance payment terms to the affected suppliers
Answer: A
Explanation:
Reference: CIPS L4M5 Study Guide, Section 1.1 - Types of Commercial Relationships
NEW QUESTION # 153
Which best describes features of the recovery phase in a business cycle? Select TWO.
- A. Consumer spending rises
- B. New investment falls
- C. Business confidence is low
- D. Production capacity is reached
- E. Prices are stable or rising
Answer: A,E
Explanation:
In the recovery phase, economies move out of recession: consumer spending rises, demand grows, and prices begin to stabilise or increase. Confidence improves, investment starts picking up, and spare capacity is gradually absorbed. Low confidence and falling investment are features of recession, while full capacity is linked to boom phases. For negotiators, recovery phases may mean suppliers regain confidence to raise prices, requiring careful market analysis.
Reference: CIPS L4M5 (2nd ed.), LO 1.2 - Economic cycles and their implications for negotiation.
NEW QUESTION # 154
A negotiation process ends once the negotiating meeting has finished. Is this statement true?
- A. Yes, provided that the meeting results in a win-win for both parties
- B. No, best practice would include a period of reflection after the meeting as part of the process
- C. No, the negotiation of terms should always continue after the meeting and until signed by the supplier only
- D. Yes, because both parties have all of the emotional intelligence they need to proceed
Answer: B
Explanation:
Reference: CIPS L4M5 Study Guide, Section 3.3 - Reviewing Negotiation Outcomes
NEW QUESTION # 155
Ma Bell was the sole provider of landline telephoneservice to most of the US in 1980s. This is an example of...?
- A. Monopsony
- B. Monopolistic competition
- C. Perfect competition
- D. Monopoly
Answer: D
Explanation:
Explanation
A monopoly exists when only one company can supply an essential product or service in a givenregion because of significant barriers to entry for any competitor. The barriers can be legal, regulatory, economic, or geographic. Ma Bell case is an example of monopoly. The company was broken up in 1982.
A monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers.
Pure or perfect competition is a theoretical market structure in which the following criteria are met:
- All firms sell an identical product (the product is a "commodity" or "homogeneous").
- All firms are price takers (they cannot influence the market price of their product).
- Market share has no influence on prices.
- Buyers have complete or "perfect" information-in the past, presentand future-about the product being sold and the prices charged by each firm.
- Resources for such a labor are perfectly mobile.
- Firms can enter or exit the market without cost.
Monopolistic competition characterizes an industry in which many firms offerproducts or services that are similar, but not perfect substitutes. Barriers to entry and exit in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect those of its competitors. Monopolistic competition is closely related to the business strategy of brand differentiation
NEW QUESTION # 156
There are no commitments in hypothetical questions. Is this statement true?
- A. Yes, because hypothetical questions generate a specific response
- B. No, because the party who makes hypothetical questions cannot withdraw their proposals
- C. No, because hypothetical questions are made explicitly to the other party
- D. Yes, because hypothetical questions only mention possible situations
Answer: D
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.
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LO 3, AC 3.3
NEW QUESTION # 157
Leitax is a consumer electronics firm with headquarters in the US and with a global sales presence. The company maintains seven to nine models in its product portfolio, each of which has multiple SKUs. Product life ranges from fifteen to nine months and is getting shorter. The demand planning and master planning processes at the company were ill-defined. Data relevant to forecasting were usually inaccurate, incomplete, or unavailable and the lack of objectives and monitoring mechanisms for the demand planning process meant that process improvement could not be managed. Support for supply management was equally ill-defined, as master production schedules were sporadic and unreliable and suppliers had learned to mistrust them. Leitax's newly appointedSupply chain director, Jessica realises that the "buy-in" of different functional groups was critical to the improvement of demand planning. She invites relevant stakeholders to a meeting so that they can express their opinions openly. What tactic is Jessica using?
- A. Coalition
- B. Consultation
- C. Pressure
- D. Persuasion
Answer: A
Explanation:
There are nine commonly used influence tactic:
1. Rational persuasion includes using facts, data, and logical arguments to try to convince others that your point ofview is the best alternative. This is the most commonly applied influence tactic.
2. Legitimating
3. Personal appeals
4. Exchange
5. Ingratiation
6. Pressure refers to exerting undue influence on someone to do what you want or else something undesirable will occur.
7. Coalitions refer to a group of individuals working together toward a common goal to influence others.
8. Inspirational appeals
9. Consultation refers to the influence agent's asking others for help in directly influencing or planning to influence another person or group.
In the scenario, there is a problem with demand forecasting and supply chain planning in Leitax. The new Supply chain director invites the stakeholders to a meeting to find the solution. She is using coalition tactics.
NEW QUESTION # 158
Which of the following occur in the planning and preparation stage of negotiation? Select THREE.
- A. Making as few concessions as possible
- B. Using questions to elicit information
- C. Narrowing the range of solutions
- D. Defining the constituents
- E. Understanding the other party
- F. Analysing the bargaining power
Answer: D,E,F
Explanation:
Planning and preparation involve analysing bargaining power, understanding the counterpart's needs, and defining the constituents (parties involved). Questioning and concessions come later during bargaining.
Narrowing solutions occurs during closure. Proper planning ensures negotiators enter with clear objectives, strategies, and knowledge, reducing surprises. CIPS highlights preparation as the most critical determinant of negotiation success, aligning with the saying: "Failing to prepare is preparing to fail." Reference: CIPS L4M5 (2nd ed.), LO 2.2 - Planning and preparation activities in negotiation.
NEW QUESTION # 159
Which of the following are most likely to be fundamentals of Fisher & Ury's principled negotiation?
1. Depersonalise the argument
2. Focuson positions
3. Generate creative options
4. Using subjective criteria
- A. 1 and 3 only
- B. 2 and 3 only
- C. 2 and 4 only
- D. 1 and 4 only
Answer: A
Explanation:
Explanation
Principled negotiation is based on four fundamentals: people, interest, options andcriteria:
Diagram Description automatically generated
1st Principle: separate the people from the problem: Negotiator should depersonalise the situation and accepting that the subject matter of the negotiation. This can be difficult for untrained negotiators, but this is a key skill to develop
2ndprinciple: focus on interests, not positions: It is important in principled negotiations not to focus on their parties' positions (what are expressed during negotiations), but on the interests (underlying needs) behind them
3rd principle: invent options for mutual gains: this principle aims to help the parties find a solution that both would benefit from. The more options - or tradeables - that can be brought to the table the better.
4th principle: insist on using objective criteria: is about making sure that the negotiation stays focused on outcomes based on objective criteria and that it is productive.
LO 1, AC 1.2
NEW QUESTION # 160
Which of the following are typical characteristics of activity-based costing (ABC) method? Select TWO that apply.
- A. Variable and all related overhead expenses are specifically assigned to a business activity
- B. ABC provides the information required to take action and realise improvements
- C. Limited understanding of true costs incurred
- D. Costs are allocated based on volume
- E. ABC has tended to over cost products on long runs and under cost those on short runs
Answer: A,B
Explanation:
Activity-based costing is an alternative approach to traditional absorption costing. The characteristics of these two methods are illustrated in the graph below:
Graphical user interface, text, chat or text message, website Description automatically generated
NEW QUESTION # 161
Which of the following are most likely to be sources of conflict that can emerge from the process of commercial negotiations? Select TWO that apply.
- A. Types of purchase
- B. Line of the best fits
- C. Differences in culture
- D. Standard terms and conditions
- E. Differences in conflict management style
Answer: C,E
Explanation:
There are multiple sources of divergent positions that can arise in situations where money is exchange for goods and services. There are 2 different types of sources. Those that arise from the content or subject matter of the negotiation (what is being negotiated) and those that arise from the process of negotiation (how it is being negotiated).
Sources of divergent positions - the process of negotiation:
Table Description automatically generated
Line of best fits is the line that goes approximately through the middle of the data points with an equal number of data points above and below it. Line of best fits is a method of calculating medium value in statistics.
Standard terms and conditions are basic terms and conditions of business governing transactions that do not have a definitive contract, usually designed to be included in form documents such as orders. While there may be conflicts regarding standard terms and conditions, they are about the content of negotiation, not the process.
Type of purchase: when buying organisation makes an decision to purchase an item, a buyer is faced with three possible scenarios. The item to be bought could be a straight re-buy, a modified re-buy or a new purchase. Decision on type of purchase is purely an internal decision.
NEW QUESTION # 162
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CIPS L4M5 Commercial Negotiation exam is designed to test the knowledge and skills of procurement professionals in commercial negotiations. L4M5 exam is part of the Chartered Institute of Procurement and Supply (CIPS) Level 4 diploma in procurement and supply. Commercial negotiation is a critical skill that procurement professionals must have to be successful in their roles. L4M5 exam assesses the candidate's understanding of the negotiation process, tactics, and strategies, among other essential skills.
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