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CIPS L4M5 Exam (page: 10)
CIPS Commercial Negotiation
Updated on: 25-Dec-2025

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L4M5 PDF 275 Questions

Langham Industries is seeking to expand its operations globally. The CEO has asked the procurement department to engage in a macroeconomic analysis for its potential new supply chain to meet organisational objectives and outcomes.
Which of the following would be a source of macroeconomic data?

  1. Competitor analysis
  2. Attending trade conferences
  3. Published market indices
  4. Online supplier forums

Answer(s): C

Explanation:

Published market indices are a source of macroeconomic data, as they reflect broader economic trends and provide insights into the overall market environment, which is essential for global expansion planning. Macroeconomic analysis focuses on high-level economic indicators, as recommended in CIPS's guidelines on sourcing macroeconomic data.



Tony is undertaking a negotiation with a strategic supplier and is frustrated by the lack of progress. He proposes using threats to get what he wants from the negotiations. Is this the correct course of action?

  1. Yes, Tony will get what he requires from the negotiations
  2. Yes, a long-term relationship is not required with the supplier
  3. No, a long-term relationship built on trust is required with the supplier
  4. No, it does not guarantee Tony will get what he requires from the negotiations

Answer(s): C

Explanation:

Using threats is generally inappropriate in strategic supplier negotiations where a long-term, trust- based relationship is required (C). Threatening tactics can damage the relationship and may result in resistance from the supplier. CIPS advocates for collaborative approaches in strategic relationships to foster mutual trust and achieve sustainable agreements.



During a negotiation, Jose Gomez, the salesperson for a strategic supplier, states that his sales director will not approve discounts against initial purchases. However, Jose offers a 5% discount on the aftercare package, which will provide the same monetary saving. Sally Pampas requires both the product and the aftercare package and has an objective to achieve a 5% discount off the purchase price. To achieve a win-win (integrative) negotiation, Sally should...

  1. Ask Jose to apply a 15% discount against the purchase price
  2. Accept the offer of a 5% discount against the aftercare package
  3. Decline the offer and walk away from the negotiation
  4. Ask Jose to apply the 5% discount against the purchase price

Answer(s): B

Explanation:

To achieve a win-win (integrative) negotiation, Sally should accept the 5% discount on the aftercare package (B), as it meets her objective for a total discount while respecting the supplier's limitations. This approach demonstrates flexibility and is in line with CIPS principles on integrative negotiations,

where both parties achieve value in different forms.



Any commercial negotiation process has only three potential stakeholders: procurement, the budget holders, and the users. Is this TRUE?

  1. Yes, and the budget holder is the most important one because of the finances involved
  2. Yes, the role of procurement is to ensure that the technical specifications are fit for purpose
  3. No, only procurement, the user, and suppliers have an interest in the products negotiated
  4. No, other stakeholders, such as directors, and IT might also be interested in the negotiation outcomes

Answer(s): D

Explanation:

Other stakeholders, including directors, IT, and finance departments, often have an interest in procurement negotiations, particularly when the contract impacts strategic objectives, IT infrastructure, or organizational operations. This broader stakeholder involvement aligns with CIPS's emphasis on inclusive stakeholder management in procurement to ensure well-rounded decision- making.



John Browne, a junior buyer for a corporation, is analyzing the global supply market before undertaking negotiations and is wondering whether foreign exchange rates are important to factor into his research. Should John consider the foreign exchange rates?

  1. No, as they only affect the bank's interest rates for loans
  2. Yes, only if the organization can handle foreign currencies in their accounts
  3. Yes, as they can affect profit and turnover
  4. No, exchange rates only apply to the national economy

Answer(s): C

Explanation:

Foreign exchange rates impact import costs, profit margins, and overall turnover when transactions are conducted in foreign currencies. Understanding these fluctuations allows buyers to anticipate changes in purchasing costs, supporting informed decision-making, as highlighted in CIPS guidance on global procurement considerations.



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Katiso Lehasa 9/15/2025 11:21:52 PM

Thanks for the practice questions they helped me a lot.
Anonymous