If a negotiation results in an offer which does not meet the buyer's minimum requirements, which of the following could the buyer pursue?
Correct Answer: B
Explanation Best alternative to a negotiatedagreement (BATNA) is the plan B or back-up plan in the event of a 'walk away'. In case of no deal, buyer (or supplier) may switch to this option. The zone of potential agreement (ZOPA) is considered an area where two or more negotiating parties may find common ground. It is this area where parties will often compromise and strike a deal. In order for negotiating parties to find a settlement or reach an agreement, they must work towards a common goal and seek an area that incorporates at least some of each party's ideas. STEEPLE offers an overview of various external fields. It is an acronym for Social, Technological, Economic, Environmental, Political, Legal and Ethical. PESTLE is a mnemonic which in its expanded form denotes P for Political, E for Economic,S for Social, T for Technological, L for Legal and E for Environmental. It gives a bird's eye view of the whole environment from many different angles that one wants to check and keep a track of while contemplating on a certain idea/plan. LO 1, AC 1.2
L4M5 Exam Question 32
A new manager has been appointed with responsibility for an organisation's category which has major impact on organisational cost base and there are little competitions in the supply market. They have an objective to improve supplier cost structures over time. Which of the following should they carry out first?
Correct Answer: A
The objective of the buyer here is to improve supplier cost structures over time, which requires them to have insight into supplier's current cost information. Purchase price cost analysis (PPCA) can help here. PPCA is a method for gathering, analysing and using price and cost information in asystematic way. The process allows the identification of future savings and opportunities to improve current costs. STEEPLE analysis is used to analyse the macro environment that may have impact on an organisation. Competitive rivalry is a part ofPorter's Five Forces which is a tool for strategy making. Volume concentration is a way to increase the purchasing quantities in order for a buying organisation to improve its leverage in negotiation.
L4M5 Exam Question 33
Which of the following will shift the supply curve to the right?
Correct Answer: B
Explanation The following graph shows the factors that shift the supply curve to the left and to the right. Diagram Description automatically generated with medium confidence
L4M5 Exam Question 34
At the first stage of CIPSProcurement and Supply Cycle (Understand need), which of the following is the most important duty of procurement professional?
Correct Answer: A
At the first stage of CIPS Procurement and Supply Cycle (Understand need and develop a high-level specification), procurement professional mainly negotiate with internal stakeholders. They have a duty toproportionately and constructively challenge specification if there's genuine doubt over the need or how the need is expressed. This is called demand management. Their first duty is to the organisation's treasury, not to functional managers. Demandmanagement including: negotiation/challenge between procurement and internal stakeholders over the need/requirement/specification. Remember that in any process or product, the greatest opportunity for cost reduction is at the design stage.
L4M5 Exam Question 35
Which of the following are recognised techniques in contract negotiation? Select THREE that apply.
Correct Answer: A,C,F
Explanation The question asks about negotiation techniques which are not present in the book. In this question, there are only 3 recognised techniques: - Framing and reframing: A frame is an assumption, or set of assumptions, that guides our attention and behavior. Reframing is the ability to identify and significantly change assumptions or perspectives. Framing has a significant impact on the effectiveness of negotiation outcomes and negotiator working relationships. You can read more on framing and reframing here. - Anchoring: Anchoring bias is well-known cognitive bias in negotiation and in other contexts. The anchoring bias describes the common tendency to give too much weight to the first number put forth in a discussion and then inadequately adjust from that starting point, or the "anchor." We even fixate on anchors when we know they are irrelevant to the discussion at hand. You can read more on anchoring here. - Pacing and leading: Pacing and leading is a two-step lever of persuasion. First - You "match your pace" to the person you want to influence in as many ways as possible. You can do this by mimicking the way the person talks, stands, their appearance, etc. You can also mimic less tangible aspects like the way they act, or their emotional state.Second - Once you've set your pace with someone, lead them to whatever decision or behavior you want them to take! You can read more on pacing and leading here.