[Dec-2025] Check your preparation for CIPS L4M5 On-Demand Exam [Q88-Q111]

[Dec-2025] Check your preparation for CIPS L4M5 On-Demand Exam [Q88-Q111]

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[Dec-2025] Check your preparation for CIPS L4M5 On-Demand Exam

Practice Exam L4M5 Realistic Dumps Verified Questions

To earn the CIPS L4M5 Certification, candidates must pass a three-hour written exam that consists of multiple-choice questions, short answer questions, and a case study analysis. L4M5 exam covers several aspects of commercial negotiation, including different negotiation styles, strategies, and tactics, as well as the understanding of cultural differences in negotiations.

CIPS L4M5 (Commercial Negotiation) exam is a professional certification exam that assesses an individual’s knowledge and skills in commercial negotiation. The Certified Institute of Procurement and Supply (CIPS) is the awarding body for L4M5 exam, and it is recognized globally as a leading qualification for procurement and supply chain professionals.

NEW QUESTION 88
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

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 comes from 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

NEW QUESTION 89
Which of the following tactics would be appropriate in an integrative negotiation?

Lowball/Highball

Take it or leave it

Expanding the pie

Mother Hubbard

“Expanding the pie” is a strategy used in integrative negotiations where both parties collaborate to increase the total value available before dividing it. This leads to mutual gains and supports long-term, strategic relationships.
Reference: L4M5 Commercial Negotiation 2nd edition (CORE), Section 3.5 – Integrative and Distributive Bargaining Tactics

NEW QUESTION 90
Which of the following are examples of connected stakeholders in a private organisation? Select TWO that apply.

Customers

Local community

Media

Government

Shareholders

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 91
Jessica Taylor, a senior buyer, is reflecting on her most recent negotiation. She has been asked by her manager to create a written record of performance. Which of the following should Jessica include in this negotiation performance report? Select THREE that apply:

Travel expenses to attend the meeting

Other suppliers that could have been used

A detailed pricing structure

A checklist of for future

Evaluation of the negotiator’s performance

A comparison of actual versus set objectives

NEW QUESTION 92
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?

33%

50%

67%

159%

NEW QUESTION 93
Which of the following are most likely to be fixed costs of an airline? Select TWO that apply.

Purchase of aircraft

Catering services

Advertising and promotion

Flight crew training

Fuel

Fixed costs (FC) are costs that do not vary with volume. To an airline once aircraft are purchased, flight crews trained and departures scheduled, costs are disproportionately fixed.
Variable costs (VC) are those which vary with the amount produced. Fuel, catering services and marketing are examples of variable.
LO 2, AC 2.1

NEW QUESTION 94
Buyers should have the ability to analyse the costs of their purchases not only for determining their impact to their organisation’s cost but also for the purpose of reducing them during commercial negotiations to contribute to the profitability of their organisation. One way of analysing costs is to classify them into direct and indirect costs. Which ONE of the following is an explanation of ‘direct costs’?

Costs that are only related to manufacturing firms where raw materials are directly converted into specific product units

Costs of materials, labour, and other expenses that are directly identified with manufactured units of a product

Costs that are connected with materials and labour, excluding expenses used directly in manufacturing products

Costs of labour and expenses incurred directly whether or not the production fluctuates owing to demand or downtime

NEW QUESTION 95
Which of the following roles would support negotiations with an external supplier when planning a negotiation for a low-value, routine purchase? Select TWO that apply.

The Human Resource (HR) manager

A legal advisor

The procurement manager

The Chief Executive Officer (CEO)

An internal business user

For low-value, routine purchases, the involvement of The procurement manager (C) and An internal business user (E) is appropriate. The procurement manager brings expertise in supplier engagement, while the internal business user provides insights on specific needs for the product or service. Involving high-level roles, like the CEO or a legal advisor, is unnecessary for routine purchases, as per CIPS guidance on resource alignment in procurement.

NEW QUESTION 96
Champion Toys (CT) is negotiating a large order of luxury toys with its supplier. CT has identified that lead times, order quantities, and delivery locations are tradeables that could be used in this negotiation. At which negotiation stage should CT introduce these tradeables?

Bargaining

Opening

Closure

Proposing

Tradeables-alternative offers or concessions-are typically introduced during thebargainingstage of the negotiation. This is when both parties discuss and exchange proposals to reach a mutually acceptable agreement.
Reference: L4M5 Commercial Negotiation 2nd edition (CORE), Section 3.2 – Use of Tradeables in Negotiation Stages

NEW QUESTION 97
A procurement manager is preparing for a negotiation with an important supplier. He plans to withhold some crucial information so that his company gains the upper hand in the negotiation. Is this correct when considering using integrative approach to the negotiation?

No, this approach requires honest and open discussion

Yes, the supplier must know what buyer wants and how to provide that even when the buyer is silent on these matters

Yes, the buying organisation must maximise its gain, even at the detriment of the other party

No, holding back information will prompt the supplier gain higher negotiation power

Integrative negotiation is a negotiation strategy in which the involved parties work together to find a solution that satisfies the needs and concerns of each. This process often involves group brainstorming and creative thinking for individuals to suggest different ideas that benefit both parties.
Compromising is often common in integrative negotiation, and both sides may need to give up certain needs to reach a solution. Honesty can also promote successful integrative negotiation because it can lead to a comprehensive understanding of the issue and what each party needs to be satisfied with the result.
Reference:
CIPS study guide page 29-31
Integrative Negotiation: Definition, Tips and Examples | Indeed.com

NEW QUESTION 98
Absorption costing is when the total cost per each unit of output:

Includes an allocation towards the activity cost of its creation

Includes an allocation towards indirect costs used in its creation

Includes an allocation for a proportion of total production costs

Includes an allocation of producing an additional unit

NEW QUESTION 99
Cost and price analysis is very important for buyers when they are preparing for a negotiation with supplier.
Which of the following is a benefit of knowing supplier’s fixed costs?

The buyer would be able to know the right volume to reach break-even point

The buyer would be able to know the point at which the supplier would reject the offer

With the sole understanding of supplier’s fixed cost, the buyer would be able to know the volume at which supplier maximises their profit in short-run

The buyer would be able to get a comprehensive picture of supplier’s efficiency

Explanation
Knowing supplier’s fixed and variable costs is beneficial for the buyer in a negotiation. With these insights, the buyer would know the volume atwhich the supplier reaches break-even points and then offers significant discount due to economies of scale.

NEW QUESTION 100
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 and testing stages.

NEW QUESTION 101
When planning a negotiation for sourcing internationally, which of the following divergent positions, and therefore potential conflict areas, should be prepared for? Select TWO that apply:

Team size

Team makeup

Cultural differences

Timing and location

How the negotiation will be closed out

Reference: CIPS L4M5 Study Guide, Section 3.1 – Planning and Preparation for Negotiation

NEW QUESTION 102
The buyer’s bargaining power tends to be relatively 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 is so 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
Reference:
CIPS study guide page 54-56
What is the Bargaining Power of Buyers?

NEW QUESTION 103
Which of thefollowing is an objective of proposing phase?

Check hypothesis and assumptions

Trade concessions

Create atmosphere conducive to agreement

Start making tentative offers

In the study guide, CIPS lists 5 stages of an negotiation:
The opening phase: confirm understanding and get the issues on the table. At this stage, both parties should check agenda, authority and create atmosphere conducive to agreement The testing phase is an information gathering stage where the hypothesis and assumptions you have made in the planning stage can be tested and confirmed or disconfirmed The proposing phase: Both sides may start making tentative proposals regarding their offering.
The bargaining phase: Both parties trade concessions; the preliminary stages are over and proposals move from being tentative and general to being more definite and specific.
The agreement and closing phase: both parties should seek agreement or if TOP does not have the final authority, some sort of acknowledgement of what key terms are should be sought.

NEW QUESTION 104
Which of the following is considered a strength of a ‘logical’ style negotiator?

Interrelate issues easily and make quick decisions

Assertive

Methodical

Friendly and accessible

NEW QUESTION 105
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.

NEW QUESTION 106
Where can we find the data on macroeconomics?
1. From trade journal
2. From supplier’s marketing catalogue
3. From stock exchange market
4. From government’s statistics

2 and 4 only

3 and 4 only

1 and 2 only

1 and 3 only

Macroeconomic indicators are statistics or data readings that reflect the economic circumstances of a particular country, region or sector. They are used by analysts and governments to assess the current and future health of the economy and financial markets.
Macroeconomic indicators will vary in their meaning and the impact that they have on the economy, but broadly speaking there are two main types of indicator.
– Leading indicators, which forecast where an economy might be heading. They are often used by governments to implement policies because they represent the first phase of a new economic cycle. These include the yield curve, interest rates and share prices.
– Lagging indicators, which reflect an economy’s historical performance and only change after a trend has been established. They are used to confirm a trend is underway. These include gross domestic product (GDP), inflation and employment figures.
There is also the category of coincident indicators, but these are generally grouped in with lagging indicators as they either happen at the same time or after an economic shift.
The best macroeconomic indicator to watch will heavily depend on your personal preferences, what positions you are taking and which country your portfolio is focused on. However, there are some very common indicators that most traders and investors will keep an eye on.
For simplicity’s sake, we have split these out into leading and lagging indicators.
Top leading indicators:
1. The stock market
2. House prices
3. Bond yields
4. Production and manufacturing statistics
5. Retail sales
6. Interest rates
Top lagging indicators:
1. GDP growth rates
2. The Consumer Price Index (CPI) and inflation
3. Currency strength and stability
4. Labour market statistics
5. Commodity prices
A procurement professional may find stock market data from the security exchange, while most lagging indicators (such as GDP, CPI, unemployment rate, currency and inflation rate, etc) can be found from government statistics data.
Reference:
– CIPS study guide page 117-118
– What Are the Key Macroeconomic Indicators?| IG EN
LO 2, AC 2.2

NEW QUESTION 107
Which of the following is the internal factor that is taken into price of a product?

Risk management

Customer tastes

Elasticity

Exchange rate

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

NEW QUESTION 108
Professional buyer is planning for the next negotiation of a simple one-off contract. This negotiation is typified by which of the following? Select TWO that apply.

Continuous dialogue with supplier

Total cost of ownership is the most important criterion

Vendor ratings will be used

Arm’s-length approach

Pricing is the most important criterion

Professional buyers, when planning or engaging in negotiation with suppliers, should always be aware of where the intended and actual relationship with this supplier is positioned on the ‘spectrum’ or ‘continuum’ of commercial relationships. The relationship spectrum describes the range of commercial relationships between a buyer and supplier based on richness of communication, longevity and mutual dependence.
Timeline Description automatically generated

In the question, the contract is simple one-off (or spot buy), which means the relationship will likely to be more transactional. In such relationship, price is the most important criteria and buyer may adopt arm’s-length approach.

NEW QUESTION 109
Which of the following is important during the proposing stage of a negotiation?

Not making concessions to the other party

Narrowing the range of options

Attempting to close down any discussions

Forcing the other party to accept your proposal

During the proposing stage, parties move toward agreement by narrowing down a wide range of potential options. This helps focus the negotiation and aligns both parties toward practical, mutual outcomes. It’s an essential step to keep the process structured and productive.
Reference: L4M5 Commercial Negotiation 2nd edition (CORE), Section 3.2 – Stages of the Negotiation Process

NEW QUESTION 110
Macroeconomics can have an impact on commercial negotiations. Is this statement correct?

Yes, because factors such as inflation might influence pricing decisions

No, because these considerations only affect the buyer

Yes, because sales volumes are a key factor in the discussions

No, because these macroeconomics can be discussed and addressed with a WIN/WIN (integrative) strategy

Macroeconomic factors like inflation, interest rates, and currency fluctuations can significantly affect pricing and contractual terms. Buyers and suppliers must account for these factors during negotiations, particularly in long-term or high-value contracts.
Reference: L4M5 Commercial Negotiation 2nd edition (CORE), Section 2.2 – Economic Environment in Commercial Negotiation

NEW QUESTION 111
Before engaging in a negotiation with a supplier of rechargeable lights, procurement team tries to visualise the breakdown of supplier’s costs to calculate its break-even point. They estimate that total fixed expenses related to rechargeable electric light are $270,000 per month and variable expenses involved in manufacturing this product are $126 per unit. The supplier charges its customer $180 per unit. Within its current capacity, this supplier will make a profit at which of the following?

More than 5,000 units are sold monthly

Exactly 5,000 units are sold per month

Exactly 1,500 units are sold monthly

More than 1,500 units are sold monthly

The analysis of cost into fixed and variable enables organisations to determine their break-even point (BE) – the point where total revenue from sales and total cost exactly balance. All costs need to be covered by sale revenue in order for a company to make a profit. If you know your fixed costs and your variable costs then you can work out the minimum quantity of goods or services you need to sell to break even. Break even point is measured in volume and can be worked out graphically or via formulae:
Price – Variable costs = Contribution
Break even point (volume) = Fixed expenses/Contribution margin per unit In this scenario, the break even point (Q) is: 270,000/(180-126) = 5,000 To make a profit, the supplier needs to sell more than 5,000 units per month.
The BE point is thus an important determinant of flexibility of pricing for suppliers. Before BE is achieved there will be much greater reluctance to offer price concessions to customers than after BE is achieved.
LO 2, AC 2.1

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