There are 5 key phases of negotiation:
The opening phase: confirm understanding and get the issue on the table The testing phase: check assumption and confirm understanding The proposing phase: asking 'if' The bargaining phase: using tradeables The agreement and closing phase The testing could take the form of questions following a presentation by either side or questions on a tender or proposal document received by the buyer from the potential supplier. The testing phase is necessary to confirm that your approach and objectives are appropriate for the negotiation situation you now find yourself in. Careful listening, observation and interpretation of TOP's responses may give indication of the following:
Areas where TOP is willing and unwilling to make concessions
What factors or issues TOP places a high value on
If there are any non-commercial or emotional factors that may be pertinent TOP's underlying interests - why they are taking the position they are.

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

Principled negotiation is based on four fundamentals: people, interest, options and criteria:

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
2nd principle: 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

Coercive powerstems from the ability to apply pressure or sanctions, whilereferent powercomes from reputation, charisma, or respect. These are both recognised power sources in negotiations. "Intruded" and
"tactical" power are not classified within the standard power framework used in CIPS materials.
"Sources of power include coercive (based on threats or penalties), referent (based on personal appeal or influence), and others such as reward, expert, and legitimate power." (L4M5 Commercial Negotiation, 2nd edition, Section 3.1 - Power in Negotiation)

Integrative negotiation emphasises maximising joint outcomes and pursuing shared goals, moving beyond narrow self-interest. Unlike distributive negotiations, it does not focus on short-term wins or zero-sum positions. Instead, integrative strategies build sustainable value and strengthen partnerships. Maximising the other party's outcome alone is more accommodative than integrative. Therefore, true integrative practice balances both parties' interests for long-term gain.
Reference: CIPS L4M5 (2nd ed.), LO 1.1 - Features of integrative negotiation.