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CIPS Commercial Negotiation Sample Questions (Q288-Q293):

NEW QUESTION # 288
Which of the following are effective approaches when procurement professionals negotiate with monopoly suppliers?
1. Delaying payment with monopoly suppliers as long as possible to increase bargaining power
2. Setting up stronger BATNA
3. Engaging in the negotiation with a distributive approach
4. Eliminating requirements in the specification that prioritises monopoly suppliers

A. 1 and 4 only
B. 2 and 3 only
C. 2 and 4 only
D. 3 and 4 only

Answer: C

Explanation:
:
In most commercial negotiations with monopolistic organisations, one can expect that in general they will have far greater bargaining power - you will need them more than they need you. There BATNA is stronger in the short run, but over time their power can be challenged effectively.
Ways of dealing with monopoly suppliers include the following:
Making yourself an attractive buyer
Seeking out alternatives / substitutes in a private or public manner
Designing out the requirement that forces you to go to the monopoly suppliers, or seek to make the product, or threaten to make it yourself if feasible Lobbying government or campaigning, as part of an industry or trade body, for a reduction in barriers to entry that support the monopoly

NEW QUESTION # 289
A supplier can produce a product for $160. The supplier sells the product to their client for $240, making a profit before tax of $80 on the transaction. What is the mark-up profit percentage earned by the supplier on this transaction?

A. 33%
B. 159%
C. 67%
D. 50%

Answer: D

NEW QUESTION # 290
Which of the following are most likely to be macro factorsthat may influence the balance of power in commercial negotiation? Select THREE that apply.

A. Disruptive technologies
B. Sustainability of natural resources
C. Economic growth rates
D. Purchasing spend volume
E. Intensity of competition in a industry
F. Number of substitute products or services

Answer: A,B,C

Explanation:
Explanation
All one-to-one commercial negotiations between a specific purchaser and a specific supplier take place within an industrial market and a larger business environment characterised by multiple forces which both parties typically have little control over. STEEPLE framework highlights the 6 main external influences on a business:
Table Description automatically generated

LO 1, AC 1.3

NEW QUESTION # 291
A supplier has offered international football tickets to the procurement manager while they are in the middle of a contract negotiation. What should the procurement manager do?

A. Accept the offer as this will not affect the relationship with the supplier
B. Accept the offer of the tickets as this will enhance the relationship between both parties
C. Reject the offer as this may be seen as a conflict of interest during the negotiation
D. Reject the offer as the procurement manager will have to repay the gesture

Answer: C

NEW QUESTION # 292
Representatives from South African Department of Health is negotiating the price of hospital drugs with US pharmaceutical companies. Which of the following are most likely to be macro factors that influence the outcomes of the negotiation? Select TWO that apply.

A. Regulations on health and safety Switching costs of buyer
B. Forward integration
C. Digitalisation of medicine
D. Order quantity

Answer: A,C

Explanation:
All one-to-one commercial negotiations between a specific purchaser and a specific supplier take place within an industrial market and a larger business environment characterised by multiple forces which both parties typically have little control over. STEEPLE framework highlights the 6 main external influences on a business:
Table Description automatically generated

Particularly, pharmaceutical industry is a heavily regulated sector, therefore, legal and regulatory matters in the industry is highly important. Otherwise, technological trends also permeate into pharmaceutical companies, technologies like digitalisation may transform the balance of power in such negotiation.
LO 1, AC 1.3

NEW QUESTION # 293
......

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