CIPS L4M5 Exam Questions Instant Access - No Installation Required

Question 1

Logibox Ltd is releasing a new range of stackable storage boxes. It has adopted a pricing strategy that aims to sell at a price the consumer is prepared to pay.

Which of the following is it using?

ASkimming pricing

BPenetration pricing

CMarket pricing

DPremium pricing

Answer : C

Question 2

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

AThe buyer spend is a low proportion of the supplier's revenue

BThe buyer does not have the option to make as an alternative to buy

CThe buyer demand is urgent and cannot be postponed

DThe buyer is large in size relative to the supplier

Answer : D

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.

Question 3

'What specific tests do you carry out to ensure quality is achieved?' This is an example of which type of negotiation question?

ALeading

BProbing

CReflective

DClosed

Answer : B

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 the open 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

Question 4

Should a buyer use closed questions in a negotiation?

AYes, because closed questions help to reconfirm certain facts

BYes, because they urge the supplier to provide more :

CNo, the buyer should maximise the use of open questions

DNo, supplier will consider closed questions as provocation

Answer : A

Asking questions the right way is both an art and a science. Ask the question the wrong way, and the other negotiator might act like a turtle, becoming defensive and withdrawing into their shell. Ask the question the right way, and the other negotiator might ''spill the beans.''.

Closed Questions: How and when to use them?

Closed questions are those that require a short and focused answer, and are especially helpful in the beginning stages of the negotiation to encourage interaction. They can be used to clarify a point, or to reconfirm certain facts. For example, you can use a closed question to confirm the amount of units the company can produce in a week, or to clarify that what they are really saying is that they don't feel comfortable outsourcing their accounts to India. Most closed questions only require a simple ''yes'' or ''no'' response, so there really isn't much room for misinterpretation -- great for finding out where both you and they stand.

CIPS study guide page 169

What Questions Can We Ask In Negotiations?

Question 5

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

A3 and 4 only

B4 and 2 only

C1 and 3 only

D1 and 2 only

Answer : C

A shift in demand occurs when an influencing factor other than price changes. Those factors are:

- The income of buyers

- 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 to quantity 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 for that consumer good will decrease and the demand curve shifts to the left.

LO 2, AC 2.2

Question 6

An organization should develop different relationships which are appropriate to each supplier situation. Which ONE of the following analysis methods could help to identify these?

AResources and cost spectrum

BThe relationship spectrum

CThe color spectrum

DA spectrum of non-critical items

Answer : B

The relationship spectrum categorizes supplier relationships based on factors like strategic importance, allowing organizations to tailor their approach to each supplier relationship. CIPS emphasizes the relationship spectrum as a valuable tool for assessing and managing supplier interactions based on strategic relevance.

Question 7

XYZ Ltd is importing goods from overseas. They prefer to pay their supplier in their own currency. Which of the following is a true statement?

ASupplier will receive less if XYZ's currency appreciates

BXYZ has an advantage in negotiating discounts if their currency appreciates

CXYZ is able to pay less if their currency depreciates

DXYZ has to pay more if their currency depreciates

Answer : B

The effect of a change of relative exchange rates will be determined by which currency you pay your supplier in.

LO 2, AC 2.2

CIPS Commercial Negotiation L4M5 Exam Questions