CIPS Commercial Negotiation - L4M5 Exam Practice Test

A garden furniture supplier currently in negotiations for a high-value contract has offered the procurement manager a visit to their site. The supplier suggests that during this visit, they can undertake the contract negotiation. What would be an appropriate response from the procurement manager?

A supplier can produce a product for $160 and sells it for $240, making $80 profit. What is the mark-up profit percentage?

A buyer is leading a negotiation with a supplier for plumbing parts for a large construction project with a five-year term. The buyer knows copper pipe costs will reduce after year two, while plastic component costs are forecast to rise significantly. In the negotiation, the buyer should seek to...

Which of the following can help both parties to break the vicious cycle of blame when a relationship needs repairing? Select TWO that apply.

IHL has been supplying to XYZ Ltd for months. XYZ Ltd procurement manager Diana realises that the IHL's input prices are dropping and this is a good time to re-negotiate the price of the contract. She invites IHL representative to XYZ headquarter to make a bargain on the current price. At the opening stage of the negotiation, Diana requests a 10% reduction in price with an increase in volume purchased.
Is Diana's action appropriate in the opening phase?

Before engaging in a negotiation with a supplier of rechargeable lights, procurement team tries to visualise the breakdown of supplier's costs to calculate its break-even point. They estimate that total fixed expenses related to rechargeable electric light are $270,000 per month and variable expenses involved in manufacturing this product are $126 per unit. The supplier charges its customer $180 per unit. Within its current capacity, this supplier will make a profit at which of the following?

Which of the following is an advantage of consultation as an influencing tactic?

A procurement team has discussed, in advance of a negotiation, what they will do if there is no agreement with the current supplier. They have decided that they will perform the services themselves in-house on a trial basis if no deal is made. Which of the following describes what they have prepared here?

A building firm has been awarded a contract to construct an office block. Which is a direct cost?

Commercial negotiations on prices cover a range of aspects including pricing arrangements. A buyer may negotiate for a 'fixed price agreement'. Why is a fixed price agreement advantageous to the buyer?

Which of the following constitutes a key element to developing high-trust supplier relationships?

A procurement manager is considering negotiating variable pricing for a contract duration of 12 months.
Would this be the right thing to do?

Sunita's supplier states: "Meeting your needs is meeting my needs because we are in this together." What type of negotiation is being undertaken?