CIPS L4M5 Commercial Negotiation Online Training
CIPS L4M5 Online Training
The questions for L4M5 were last updated at Feb 05,2025.
- Exam Code: L4M5
- Exam Name: Commercial Negotiation
- Certification Provider: CIPS
- Latest update: Feb 05,2025
Which of the following statements about oligopoly is incorrect?
- A . A few firms play an important role in the sale of a product
- B . Oligopolistic firms recognize their interdependence
- C . One firm’s behaviour is a function of what its rivals do
- D . Prices in oligopoly are predicted to fluctuate widely and frequently
D
Explanation:
An oligopoly exists when there are small number of producers that exert a significant influence in the market. Oligopoly’s main characteristics are discussed as follows: – Interdependence
The most important feature of oligopoly is the interdependence in decision¬-making of the few firms which comprise the industry. This is because when the number of competitors is few, any change in price, output, product etc. by a firm will have a direct effect on the fortune of its rivals, which will then retaliate in changing their own prices, output or products as the case may be.
– Importance of advertising and selling costs
A direct effect of interdependence of oligopolists is that the various firms have to employ variousaggressive and defensive marketing weapons to gain a greater share in the market or to prevent a fall in their market share. For this various firms have to incur a good deal of costs on advertising and on other measures of sales promotion. Therefore, there is a great importance of advertising and selling costs under conditions of market situation characterised by oligopoly – Group behaviour
Another important feature of oligopoly is that for the proper solution to the problem of determination of price and output under, it analysis of group behaviour is impor-tant. – Indeterminateness of demand curve facing an oligopolist
In this question, ‘Prices in oligopoly are predicted to fluctuate widely and frequently’ is an incorrect statement as producers in oligopoly often try to set up price. Prices fluctuate more frequently in perfect competition.
LO 2, AC 2.2
Professional buyer is planning for the next negotiation of a simple one-off contract. This negotiation is typified by which of the following? Select TWO that apply.
- A . Continuous dialogue with supplier
- B . Total cost of ownership is the most important criterion
- C . Vendor ratings will be used
- D . Arm’s-length approach
- E . Pricing is the most important criterion
D,E
Explanation:
Professional buyers, when planning or engaging in negotiation with suppliers, should always be aware of where the intended and actual relationship with this supplier is positioned on the ‘spectrum’ or ‘continuum’ of commercial relationships. The relationship spectrum describes the range of commercial relationships between a buyer and supplier based on richness of communication, longevity and mutual dependence.
Timeline
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In the question, the contract is simple one-off (or spot buy), which means the relationship will likely to be more transactional. In such relationship, price is the most important criteria and buyer may adopt arm’s-length approach.
During a negotiation, a procurement manager suggests that the two companies should split the difference which would benefit both the supplier and buyer .
Which persuasion method is she using?
- A . Compromise
- B . Threat
- C . Good cop/bad cop
- D . Logic
A
Explanation:
In the scenario, the manager propose to ‘split the difference’, which means each party will accept some of their demands and concede some. This is known as ‘Compromise’. Reference: CIPS study guide page 163-165
Which of the following is definition of elasticity of demand in microeconomics?
- A . The percentage change in the quantity demanded divided by the percentage change in income
- B . The percentage change in price of a good divided by the percentage change in the quantity demanded of that good.
- C . The percentage change in the quantity demanded of a good divided by the percentage change in the price of that good
- D . The percentage change in income divided by the percentage change in the quantity demanded
C
Explanation:
Elasticity refers to the responsiveness of quantity demanded or quantity supplied to a change in price or another factor:
The price of a product can be described as being elastic if a small change in price leads to a big change in demand.
The price of a product can be described as being inelastic if a big change in price leads to a small change in demand.
The formulae of elasticity of demand is known as the following:
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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 . Value engineering
- B . Part substitution
- C . Budgetlinkages
- D . Compare total cost of ownership
- E . Volume pooling
A,B
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
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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 . Value engineering
- B . Part substitution
- C . Budgetlinkages
- D . Compare total cost of ownership
- E . Volume pooling
A,B
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
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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 . Value engineering
- B . Part substitution
- C . Budgetlinkages
- D . Compare total cost of ownership
- E . Volume pooling
A,B
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
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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 . Value engineering
- B . Part substitution
- C . Budgetlinkages
- D . Compare total cost of ownership
- E . Volume pooling
A,B
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
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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 . Value engineering
- B . Part substitution
- C . Budgetlinkages
- D . Compare total cost of ownership
- E . Volume pooling
A,B
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
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Influence
- A . 3 and 4 only
- B . 1 and 3 only
- C . 1 and 2 only
- D . 2 and 3 only
C
Explanation:
Listening is a hugely important skill in the world of work. It’s a key part of effective communication […].
Regarding active listening, there is a model called ‘The SIER Hierarchy of Active Listening’. It details four key stages required for effective listening. As with all models associated with active listening, its purpose is to help the listener be a better, more effective listener who really hears what is being said, connects with the individual with whom they are communicating andbuilds effective relationships.
The model is a hierarchical model meaning that each stage builds on the stage before it. While the model is sometimes used for training in the sales arena, it is helpful in all walks of life. The stages of the model are: Sensing (including hearing and watching body language), Interpreting, Evaluating and Responding.
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Reference:
– CIPS study guide page 171-173
– The SIER Hierarchy of Active Listening: Become a Better Listener LO 3, AC 3.3
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