Full L4M5 Practice Test and 165 Unique Questions, Get it Now!
The Best L4M5 Exam Study Material Premium Files and Preparation Tool
NEW QUESTION # 73
When is the best time in procurement process in which procurement should get involved so that the cost-saving opportunities are the greatest?
- A. Specification stage
- B. Post-tender stage
- C. Post-contract stage
- D. Market consult stage
Answer: A
Explanation:
Explanation
The earlier procurement get involved in the procurement processes, the better. If procurement are involved in design at the specification stage they can feed in prices and costs to designer so they know the likely budget implication of choices made. Sending in a procurement team to negotiate at or close to the end ofthe procurement process effectively ties their hands and limits their negotiation leverage. This is illustrated in the graph below:
Chart Description automatically generated
LO 2, AC 2.1
NEW QUESTION # 74
Which of the following is the first step in the development of negotiation strategies?
- A. Recognising TOP'sneeds and wants
- B. Defining overarching objectives
- C. Developing scenarios around possible options
- D. Determining your BATNA
Answer: B
Explanation:
Developing specific negotiation strategies in areas where risk or spend is high involves analysing a wide range of objectives and variables within the context of the organisation'sbusiness requirements. The first stage in any negotiation preparation is to define your overall objectives which may be related to a single variable such as price in the case of a standardised requirement, or many variables in the case of capital equipment. Your negotiating strategies and tactics will all be focused on achieving overall objectives.
NEW QUESTION # 75
According to Dr. Mari Sako, which of the following is potentially the weakest trust to be built?
- A. Goodwill trust
- B. Charitable trust
- C. Contractual trust
- D. Competence trust
Answer: C
Explanation:
Trust is the expectation that the other party will behave in a predictable and mutually acceptable way. In inter-firm relationships, the presence and absence of trust can affect the level of cost in a relationship. The existence of trust is taught to lower the transaction cost in a relationship. Dr. Mari Sako identified taxonomy of
3 types of trust in commercial relationship, whichis very useful from the perspective of procurement.
Contractual trust: Trust based on the contract with TOP. This is potentially the weakest source of trust if there is nothing else to base the trust on, but it is the quickest to establish.
Competence trust: Trust based on TOP's professional qualifications or proven or certified technical capability or experience.
Goodwill trust: Trust based on knowing TOP has your interest at heart and will not behave opportunistically.
This is potentially the strongest type of trust, but it takes the longest time to build.
Otherwise, trust also has legal meaning. A trust is a legal document that can be created during a person's lifetime and survive the person's death. A trust can also be created by a will and formed afterdeath. Charitable trusts are trusts which benefit a particular charity or the public in general.
NEW QUESTION # 76
Which of the following are examples of connected stakeholders in a private organisation? Select TWO that apply.
- A. Government
- B. Customers
- C. Shareholders
- D. Media
- E. Local community
Answer: B,C
Explanation:
Connected stakeholders are those who, by contractual or commercial relationships, have a significant stake in organisation activity. As a general rule, connectedstakeholder (with the exception of suppliers) have a low level of influence on procurement negotiations.
Examples of connected stakeholders are: suppliers, customers, bank where the organisation opens its account, shareholders.
NEW QUESTION # 77
'What specific tests do you carry out to ensure quality is achieved?' This is an example of which type of negotiation question?
- A. Reflective
- B. Leading
- C. Probing
- D. Closed
Answer: C
Explanation:
Explanation
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 theopen 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
NEW QUESTION # 78
Which of the following are most likely to be fundamentals of Fisher & Ury's principled negotiation?
1. Depersonalise the argument
2. Focuson positions
3. Generate creative options
4. Using subjective criteria
- A. 2 and 4 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1 and 4 only
Answer: C
Explanation:
Explanation
Principled negotiation is based on four fundamentals: people, interest, options andcriteria:
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
2ndprinciple: 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
NEW QUESTION # 79
Which of thefollowing should be the final step of a negotiation process if both parties cannot reach an agreement?
- A. Tempting TOP to reopen the negotiation
- B. Celebrating publicly about the deal
- C. Reflecting on performance
- D. Asking TOP for another concession
Answer: C
Explanation:
Explanation
Reflecting on performance should become a natural final step in the negotiation process.
'Celebrating publicly about the deal': Public gloating, even in success or failure, if it gets back to the supplier via the press or social media, will likely damage the relationship
'Tempting TOP to reopen the negotiation': whether TOP agrees to reopen the negotiation, procurement should reflect on their achievement and what can be improved.
'Asking TOP for another concession': TOP can agree or rejectthis concession. Eventually, reflecting should be the final step. Procurement can learn a lot from reflection on performance.
LO 3, AC 3.4
NEW QUESTION # 80
Which of the following are types of questions that are useful in opening and testing phases of a negotiation?
Select the TWO that apply.
- A. Narrow
- B. Leading
- C. Probing
- D. Open
- E. Closed
Answer: C,D
Explanation:
In the opening phase, parties should confirm understanding and get the issues on the table.
The testing phase is an information gathering stage where the hypothesis and assumption you have made in the planning stage can be tested or confirmed or disproved.
Opening questions (those that start with 'what', 'how', 'why') are used at the opening and testing stages to uncover needs and underlying motives, and to allow the buyer to get a feel of what is in store in the negotiation.
Probing questions are also useful to check that the supplier fully understand their offering, as well as your needs, and can also be used to communicate to the supplier that you know this category well. These questions are typically useful at the opening andtesting stages.
NEW QUESTION # 81
Ma Bell was the sole provider of landline telephoneservice to most of the US in 1980s. This is an example of...?
- A. Monopsony
- B. Monopoly
- C. Perfect competition
- D. Monopolistic competition
Answer: B
Explanation:
Explanation
A monopoly exists when only one company can supply an essential product or service in a givenregion because of significant barriers to entry for any competitor. The barriers can be legal, regulatory, economic, or geographic. Ma Bell case is an example of monopoly. The company was broken up in 1982.
A monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers.
Pure or perfect competition is a theoretical market structure in which the following criteria are met:
- All firms sell an identical product (the product is a "commodity" or "homogeneous").
- All firms are price takers (they cannot influence the market price of their product).
- Market share has no influence on prices.
- Buyers have complete or "perfect" information-in the past, presentand future-about the product being sold and the prices charged by each firm.
- Resources for such a labor are perfectly mobile.
- Firms can enter or exit the market without cost.
Monopolistic competition characterizes an industry in which many firms offerproducts or services that are similar, but not perfect substitutes. Barriers to entry and exit in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect those of its competitors. Monopolistic competition is closely related to the business strategy of brand differentiation
NEW QUESTION # 82
According to Professor Gavin Kennedy, in which of the following forms of dispute resolution, both parties will voluntarily exchange their ideas and beliefs?
- A. Litigation
- B. Negotiation
- C. Persuasion
- D. Gambling
Answer: B
Explanation:
Professor Gavin Kennedy highlights that we need to distinguish negotiation from other forms of decision-making by focusing on what is unique about it (the voluntary exchange) and not shared by other techniques such as persuasion, gambling (e.g., coin tossing), command decision, instruction, litigation and coercion.
NEW QUESTION # 83
Stalemate is morelikely to happen if both parties trade more variables in a commercial negotiation. Is this assumption true?
- A. No, because more variables will facilitate more possible negotiated outcomes
- B. No, because the party who offers more variables will have lower bargaining power
- C. Yes, because more variables will cause more conflicts of interest
- D. Yes, because the negotiation will last endlessly if there aretoo many variables
Answer: A
Explanation:
Explanation
Negotiation variables such as price or contract length, etc arethat can be traded with TOP in a negotiation. The more variables you can identify, the better. The more variables you can identify and articulate, the lower the chances of the negotiation reaching deadlock as more possibilities are facilitated regarding more creative solutions.
Below are examples of negotiation tradeables in buying professional services:
Table Description automatically generated
Table Description automatically generated
LO 2, AC 2.3
NEW QUESTION # 84
In a negotiation for a new contract, the supplier suggests the buyer to shorten payment period from 45 days to
15 days because they are investing in new facilitiesto expand the supply capacity. The buyer replies that she can only sign off the deal if the payment period is 30 days or more since it often takes at least 30 days for her company to collect the payment from customers. A permission from senior managementis required for this suggestion. In order to ensure that supplier understands the matter, she reiterates it throughout the meeting.
Which tactics is she using?
1. Outrageous initial demand
2. Salami slicing
3. Lack of authority
4. Broken record
- A. 2 and 4 only
- B. 1 and 2 only
- C. 1 and 3only
- D. 3 and 4 only
Answer: D
Explanation:
In the scenario, the buyer states that permission from senior management is required to shorten payment period and she only has authority to sign off a deal in which thepayment period lasts at least 30 days. The buyer is using lack of authority. The buyer also repeats the matter again throughout the negotiation. This is a common tactic known as broken record.
NEW QUESTION # 85
From the principled point of view about negotiation environment, which of the following is a true statement?
- A. Home advantage should not be exploited to win a temporary advantage
- B. The room layout can be seen as a source of tactical advantage
- C. Advantage gained from uncomfortable negotiation environment is likely to last long after the negotiation
- D. There is no ideal negotiation environment in real life
Answer: A
Explanation:
Explanation
From a principled point of view, the focus of negotiation is on resolving the issue and not on winning temporary advantage over TOPthrough exploiting home advantage. From the principled point of view, the location and room layout should not be viewed as a source of tactical advantage and should not be used to try to gain advantage over TOP or unfairly influence them in the meeting room.
From a pragmatic point of view, not all of these elements in the ideal negotiation environment may be feasible, so the host may have to make compromises and explain these to TOP.
From a distributive point of view, the host will seek to create an advantage for themselves either explicitly or more subtly. It is arguable that any advantage gained through intentionally creating an uncomfortable environment to put short-term pressure on TOP is likely to be short-lived as TOP will likely reflect on this laterand seek means to get even.
LO 2, AC 2.4
NEW QUESTION # 86
How contribution is calculated in break-even analysis?
- A. Variable costs subtracted from fixed costs
- B. Price minus fixed costs
- C. Variable costs subtracted from price
- D. Fixed costs divided by variable costs
Answer: C
Explanation:
Contribution = Price - Variable cost
Break-evenpoint (volume) = Fixed cost/Contribution
NEW QUESTION # 87
An organisation is developing the specification for a capital purchase project. An important stakeholder has doubt on the draft specification. The buyer invites him to the product function meetings. In these meeting the attendees can raise their concerns, the specification development team takes in all the concerns and adjusts the specification accordingly. What kind of technique is the specification development team using?
- A. Coalition
- B. Directive
- C. Visionary
- D. Persuasive reasoning
Answer: A
Explanation:
In the scenario, anyone who has concerns can join a meeting to raise their thoughts. The project team takes the stakeholders' ideas into account. This isknown as coalition: A group of people or organisations come together and work collaboratively to achieve some goals. Specifically in this scenario, the goal is creating a high-quality and unified specification for an important project.
NEW QUESTION # 88
......
Get Instant Access to L4M5 Practice Exam Questions: https://www.examdumpsvce.com/L4M5-valid-exam-dumps.html
Reliable Study Materials & Testing Engine for L4M5 Exam Success!: https://drive.google.com/open?id=1fxP1IZQL0UMi2CLbZElW3X99UfDfqRpc
