Reference: CIPS L4M5 Study Guide, Section 1.1 - Types of Commercial Relationships

The supplier's perspective model has two axes: Spend value and Attractiveness:
Chart, table Description automatically generated

Exploit is the quadrant where the buyer has high spend but low attractiveness. Overarching supplier objective would be: "Milk this customer and charge a high price to compensate for all the pain they put us through".
The buyer should increase its attractiveness to raise the position to Core customer. To do this, a buyer may:
- Simplify procurement processes
- Simplify contracting processes
- Use clear and concise documentation
- Eliminate onerous supplier terms and conditions
- Make the payment on time
- Use transparent processes
- Promote ethical behaviours
LO 1, AC 1.4

Reference: CIPS L4M5 Study Guide, Section 3.3 - Reviewing Negotiation Outcomes

Lina's question seeksdetailed informationabout the supplier's actions and is aimed at uncovering the root cause or assurance measures. This makes it aprobing question, designed to delve deeper into specifics.
Probing is a key technique in negotiations for uncovering critical insights, particularly duringissue resolution or when seeking complianceon performance terms.
Reference: L4M5 Commercial Negotiation 2nd edition (CORE), Section 3.3 - Questioning Styles: Probing for Clarity and Assurance

Mark-upis calculated as:
Mark-up %=(ProfitCost)×100\text{Mark-up \%} = \left( \frac{\text{Profit}}{\text{Cost}} \right) \times
100Mark-up %=(CostProfit)×100
In this case:
Profit = $240 - $160 = $80
Cost = $160
Mark-up = (80 / 160) × 100 =50%
"Understanding mark-up percentages helps in assessing supplier pricing behaviour and negotiating realistic margins." (L4M5 Commercial Negotiation, 2nd edition, Section 2.1 - Pricing Models and Profit Margins)