Commercial Negotiation
Last Update May 18, 2024
Total Questions : 162
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| Exam Name | Commercial Negotiation |
| Exam Code | L4M5 |
| Actual Exam Duration | 90 minutes |
| Official Information | https://www.cips.org/learn/qualifications/diploma-in-procurement-and-supply/commercial-negotiation-l4m5/ |
| See Expected Questions | CIPS L4M5 Expected Questions in Actual Exam |
| Take Self-Assessment | Use CIPS L4M5 Practice Test to Assess your preparation - Save Time and Reduce Chances of Failure |
| Section | Weight | Objectives |
|---|---|---|
| 1.0 Understand key approaches in the negotiation of commercial agreements with external organisations | 1.1 Analyse the application of commercial negotiations in the work of procurement and supply • Definitions of commercial negotiation • Negotiation in relation to the stages of the sourcing process • Sources of conflict that can arise in the work of procurement and supply • Team management and the influence of stakeholders in negotiations 1.2 Differentiate between the types of approaches that can be pursued in commercial negotiations • Collaborative win-win integrative approaches to negotiations • Distributive win-lose, distributive approaches to negotiation • Pragmatic and principled styles of negotiation • Setting targets and creating a best alternative to a negotiated agreement (BATNA) 1.3 Explain how the balance of power in commercial negotiations can affect outcomes • The importance of power in commercial negotiations • Sources of personal power • Organisational power: comparing the relative power of purchasers and suppliers • How suppliers gather information on purchasers • How purchasers can improve leverage with suppliers 1.4 Identify the different types of relationships that impact on commercial negotiations • The relationship spectrum • Building relationships based on reputation, and trust • Repairing a relationship |
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| 2.0 Know how to prepare for negotiations with external organisations | 2.1 Describe the types of costs and prices in commercial negotiations • Types of costs: direct and indirect, variable and fixed • Break-even analysis: cost volume profit formulae • Costing methods such as absorption, marginal or variable and activity based costing • Volumes, margins and mark ups and their impact on pricing • Negotiating prices 2.2 Contrast the economic factors that impact on commercial negotiations • The impact of microeconomics and market types on commercial negotiations • Macroeconomics and its influence on commercial negotiations • Sources of information on micro and macro economics 2.3 Analyse criteria that can be used in a commercial negotiation Criteria such as: • Setting objectives and defining the variables for a commercial negotiation • The bargaining mix • Positions and interests • Openings and presenting issues 2.4 Identify the resources required for a negotiation • Choice of location • Involving appropriate colleagues • Use of telephone, teleconferencing or web based meetings • Room layout and surroundings |
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| 3.0 Understand how commercial negotiations should be undertaken | 3.1 Identify the stages of a commercial negotiation • Defining the stages of a negotiation such as: - preparation, opening, testing, proposing, bargaining, agreement and closure • How behaviours should change during the different stages of a negotiation 3.2 Appraise the key methods that can influence the achievement of desired outcomes • The use of persuasion methods • The use of tactics to influence the other party 3.3 Compare the key communication skills that help achieve desired outcomes • Types of questions • Effective listening • Push and pull behaviours • Nonverbal communication • The influence of culture in commercial negotiations • The use of emotional intelligence in commercial negotiation 3.4 Analyse how to assess the process and outcomes of negotiations to inform future practice • Reflecting on performance • Opportunities for improvement and development • Protecting relationships after the negotiation |
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TESTED 18 May 2024
