[Jul 29, 2023] L4M5 Exam Dumps 100% Same Q&A In Your Real Exam [Q44-Q58]

[Jul 29, 2023] L4M5 Exam Dumps 100% Same Q&A In Your Real Exam [Q44-Q58]

July 29, 2023 latestexam 0 Comments

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[Jul 29, 2023] L4M5 Exam Dumps 100% Same Q&A In Your Real Exam

L4M5 Test Engine Dumps Training With 165 Questions

The CIPS L4M5 exam covers a wide range of topics related to commercial negotiation, including the principles and techniques of negotiation, the legal and ethical considerations of negotiation, and the role of communication in negotiation. It also covers the various stages of the negotiation process, such as preparation, opening, bargaining, and closing. L4M5 exam is designed to test the candidate’s ability to analyze a situation, identify objectives, and develop a negotiation strategy that is in line with the organization’s goals and objectives.

CIPS L4M5 exam is an essential certification for procurement professionals seeking to enhance their negotiation skills. It covers a range of topics, including negotiation planning, power and influence, communication skills, and conflict resolution, making it a practical and relevant qualification. L4M5 exam is recognized globally as a standard of excellence in commercial negotiation, and it is a valuable certification for procurement professionals seeking to improve their career prospects and demonstrate their expertise to potential employers.

Q44. From the principled point of view about negotiation environment, which of the following is a true statement?

Advantage gained from uncomfortable negotiation environment is likely to last long after the negotiation

The room layout can be seen as a source of tactical advantage

Home advantage should not be exploited to win a temporary advantage

There is no ideal negotiation environment in real life

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

Q45. The buyer’s bargaining power tends to berelatively higher than supplier’s bargaining power in which of the following circumstances?

The buyer does not have the option to move to an alternative supplier

The buyer’s spend takes up a small proportion of supplier revenue

The buyer demand isso urgent that it can’t be postponed

The buyer is large in size relative to its suppliers

Buyer power gives customers/consumers (buyers) the ability to squeeze industry margins by pressuring firms (the suppliers) to reduce prices or increase the quality of services or products offered.
There are four major factors to consider when determining the bargaining power of buyers:
1. Number of buyers relative to suppliers: If the number of buyers is small relative to that of suppliers,the buyer’s power will be stronger.
2. Dependence of a buyer’s purchase on a particular supplier: If a buyer is able to get similar products/services from other suppliers, buyers depend less on a particular supplier. Therefore, the power of the buyer would be greater.
3. Switching costs: If there are not many alternative suppliers available, the cost of switching is high.
Therefore, buyer power would be low.
4. Backward Integration: If the buyer is able to integrate or merge suppliers, the buyer has greater bargaining power over the existing suppliers.
When is Bargaining Power of Buyers High/Strong?
There are fewer buyers relative to that of suppliers
The switching costs of the buyer are low
If the buyer is able to backward integrate
The buyer purchases product in bulk (high volume)
The buyer is able to get similar product/services from other suppliers
The buyer purchases the majority of the seller’s products
Several substitutes are available on the market
Product is not differentiated

Q46. Which of the following are types of questions that are useful in opening and testing phases of a negotiation?
Select the TWO that apply.

Closed

Narrow

Probing

Leading

Open

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.

Q47. Which of the following best describes Leverage quadrant in Kraljicmatrix?

Low risk, high importance

High value, high complex

Low risk, low importance

High complex, low importance

Explanation
In 1983, Peter Kraljic devised a means to segment the supplier base in the article in HBR. In this, heargued that supply items should be mapped against two key dimensions: risk and profitability.
Risk relates to the likelihood for an unexpected event in the supply chains to disrupt operations. For instance, in important areas of spend, such as tire suppliers for an automotive are business critical, and should a disruption occur, the auto company is likely itself to face substantial problems.
Profitability describes the impact of a supply item upon the bottom line. For certain areas of spend, such as stationery, supplies have only a negligible effect on profits. In other categories, a single source of supply can make or break a business.
Putting these two dimensions together yields a classic two-by-two matrix.
Diagram Description automatically generated

Source: Peter Kraljic, HBR

Q48. Which of the following is the internal factor that is taken intoprice of a product?

Risk management

Customer tastes

Elasticity

Exchange rate

Explanation
In order to answer this question, you should better consider each option:
‘Exchange rate’ is the value of one nation’s currency versus thecurrency 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-pr This is a question that a student met in her actual exam. The knowledge section is unknown.
LO: Unknown, AC: Unknown

Q49. There are no commitments in hypothetical questions. Is this statement true?

No, because the party who makes hypothetical questions cannot withdraw their proposals

No, because hypothetical questions are made explicitly to the other party

Yes, because hypothetical questions generate a specific response

Yes, because hypothetical questions only mention possible situations

Explanation
There are four types of questions that can be used in a commercial negotiation:
Hypothetical questions, where you ask about a possible situation or abstract concept, are very useful at the testing and proposal phases. Hypothetical question does not state any commitment as it is only about ‘if something happens, then …’. This type of question can be useful at giving suggestion.
Text Description automatically generated

LO 3, AC 3.3

Q50. Which of the following are most likely to be abilities of a person with high emotional intelligence? Select TWO that apply.

Complex idea comprehension

Controlling one’s own emotions

Perceiving how others feel

Reasoning and problem solving
Abstract thinking

Explanation
Emotional Quotient is the set of skills that enables us to make our way in a complex world – the personal, social and survival aspects of overall intelligence, the elusive common sense and sensitivity that areessential to effective daily functioning. It has to do with the ability to read the political and social environment, and landscape them; to intuitively grasp what others want and need; what strengths and weaknesses are; to remain unruffled by stress; andto be engaging. The kind of person others want to be around and follow.
EQ seeks to measure emotional intelligence and is centred on abilities such as the following:
– Identifying emotions
– Evaluating how others feel
– Controlling one’s own emotions
– Perceiving how others feel
– Using emotions to facilitate social communication
– Relating to others
On the other hand, cognitive ability is defined as a general mental capability involving reasoning, problem solving, planning, abstract thinking, complex ideacomprehension, and learning from experience (Gottfredson,
1997).
LO 3, AC 3.3

Q51. Neville is a senior procurement specialist in a automaker. He has good relationship with his team mates and other departments because of his amazing purchasing skills and kindness. Which of the following sources of power is Neville likely to possess?

Reward

Referent

Legitimate

Coercive

In 1959, French and Raven described five bases of power:
1. Legitimate – This comes from the belief that a person has the formal right to make demands, and to expect others to be compliant and obedient.
2. Reward – This results from one person’s ability to compensate another for compliance.
3. Expert – This is based on a person’s high levels of skill and knowledge.
4. Referent – This is the result of a person’s perceived attractiveness, worthiness and right to others’ respect.
5. Coercive – This comes from the belief that a person can punish others for noncompliance.
Six years later, Raven added an extra power base:
6. Informational – This results from a person’s ability to control the information that others need to accomplish something.
In the scenario, Neville attracts and keeps good relationship with his colleagues not because of neither position nor reward nor coercion. He has good skills and kindness, which increase his charisma. His source of power is referent power.

Q52. Which of the following types of questions should be used most often in the proposing phase?

Hypothetical questions

Probing questions

Closed questions

Open questions

Explanation
At the proposing phase either side may start making tentative proposals regarding their offering. In the case of negotiation where TOP has already submitted a tender or proposal, this stage may provide an opportunity for them to make proposals to improve on their initial offers in general or in areas highlighted by the buying side in advance.
The word ‘if’ is very useful at this stage andallows you to test tentative proposals without committing yourself.
Skilled negotiators use language very carefully. The questions with ‘if’ are hypothetical ones.
LO 3, AC 3.1

Q53. An oil refinery plant imports much of its crude oil from overseas. A procurement manager in the refinery suggests that fixing the crude oil contract price for 36 monthswould be beneficial for the company. Would this be a right thing to do?

Yes, financial budgeting task would be a lot easier with fixed pricing arrangement

No, fixed price should be only applied to contracts that last 60 months or longer

No, the refinery would not be able to reap the benefits from falling commodity price and currency rates

Yes, the supplier would bear the risk when the material price increased

Explanation
Fixed price contract is the contract in which the price is static throughout the contract period. A fixed-price contract may give certainty to budget and simplify contract management. However, it may lead to other problems since it requires bidders to estimate and bear the financial risks associated with price escalations. If the estimates are too high or events do not materialize, the buyer will pay a steep price that may affect the economy and efficiency of the contract. In the worst case, it may mean that the bid price is then above budget and may lead to a reduction in the requirements or rebidding. If the estimates are too low, it may appear as an abnormally low bid and disrupt contract execution.
On the other hand, price adjustment provisions include formulas designed to address problems, and can protect both theborrower and contractors from price fluctuations. Price adjustment formulas allow contractors to offer more realistic prices at the time of bidding. Despite concerns that they may lead to budget uncertainties, price adjustment formulas will estimate the actual cost implications that will be encountered. They use indexes that can be used for cost projection.
According to Asia Development Bank (ADB), any contract with a delivery or completion period beyond 18 months should contain an appropriate price adjustment clause.
In the scenario, the crude oil contract is planned to last 36 months. This period is pretty long with a fluctuating commodity. Therefore, the company should use price adjustment agreement.

Q54. After studying Thomas-Kilmann conflict resolution model and considering different approaches carefully, the procurement team of XYZ Ltd. decides to adopt an avoiding approach to the upcoming negotiation with one of their suppliers.Which of the following will be the objective of XYZ procurement team in this negotiation?

Yielding the supplier’s point of view

Postponing the issue

Seeking a quick middle-ground position

Confronting and trying to find a creative solution immediately

Explanation
Avoiding is unassertive and uncooperative. When avoiding, an individual does not immediately pursue his or her own concerns or those of the other person. He or she does not address the conflict. Avoiding might take the form of diplomatically sidestepping an issue, postponing an issue until a better time, or simply withdrawing from a threatening situation.
LO 1, AC 1.1

Q55. Which of these personal power bases stems from the manager’s position in the organisation and the authority that lies in that position?

Coercive power

Legitimate power

Expert power

Reward power

Explanation
Legitimate power comes from the belief that a person has the formal right to make demands, and to expect others to be compliant and obedient. Legitimate power comesfrom rules, formal authority, organisation rank, staff grade or official position held. In commercial negotiation, legitimate power can be demonstrated by job title and rank.
LO 1, AC 1.3

Q56. Information generated through Purchase Price Cost Analysis can be useful to the purchaser, by helping to identify which of the following costs relating to the supplier? Select the THREE that apply.

External costs

Profit

Material costs

Market costs

Budgeted costs

Depreciation on equipment

Explanation
Below aresome examples of cost input that can be analysed in PPCA process:
– Material costs
– Process and labour costs
– Employment costs
– Overhead costs
– Distribution costs
– Depreciation on equipment
– Profit
If you want to learn more on PPCA, you can studyfrom OGC document here:
https://webarchive.nationalarchives.gov.uk/20100609100650/www.ogc.gov.uk/documents/Cost_Price_analysis(1 LO 2, AC 2.1

Q57. Which of the following is the most appropriate approach to investors or shareholders who have high level of influence but low interest in the running of business?

Engage and keep them satisfied

Engage and consult with them regularly

Keep these people inform through general communication media

Manage them closely

Explanation
Investors or shareholders who have high level of influence but low interest belong to ‘Keep satisfied’ quadrant of Mendelow’s Stakeholder Matrix.
You may read 2 versions from L4M1 and L4M5 here:

Table Description automatically generated

LO 1, AC 1.1

Q58. Whenimplementing value analysis or value engineering, which of the following acronyms reminds both buyer and supplier of ideas on removal, substitution and design-out of cost elements?

SMART

STOPS WASTE

OWN-IT

SAMOA

Ray Carter coined the mnemonic STOPS WASTE to remind buyers of 10 cost-reduction ideas they can ask for themselves and their suppliers in any situation when considering a key purchase input. Stop Waste by:
Standardisation – is there a standard specification?
Transportation – is the inbound transport classification appropriate
Over-engineered – is the specification too tight?
Packaging – can packaging be reduced or eliminated?
Substitutes – is there a cheaper substitute material
Weight – is there opportunity to reduce weight of the product?
Any unnecessary processing – is there any unnecessary design or feature?
Supplier’s input – are suppliers able to assist with the cost reduction To make – is it more economical to make or buy?
Eliminate – if no one uses the feature, can it be eliminated?
SAMOA is a useful acronym for checking and testing the information gathered from the Internet:
Source
Audience
Methodology
Objectivity
Accuracy
OWN-IT is acronym for 5 steps in the process of collecting and analysing the data andinformation needed in any field:
Outline
Wide search
Narrow search
Increase your stockpile of information
Transform your stockpile into new knowledge
A SMART goal is used to help guide goal setting. SMART is an acronym that stands for Specific,Measurable, Achievable, Realistic, and Time-bound.

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