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CIPS L4M5 Exam (page: 3)
CIPS Commercial Negotiation
Updated on: 25-Dec-2025

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L4M5 PDF 275 Questions

Which of the following stages of the CIPS Procurement Cycle are typically where commercial negotiations take place?

Contract management and improvement
Develop tender documentation
Market sector analysis
Contract award and implementation

  1. 1 and 4
  2. 1 and 3
  3. 3 and 4
  4. 2 and 3

Answer(s): A

Explanation:

Commercial negotiations commonly take place during Contract Management and Improvement (1) and Contract Award and Implementation (4) stages. During these stages:

Contract Management and Improvement (1): Ongoing negotiations may be required to adjust terms and conditions as part of managing the contract lifecycle.

Contract Award and Implementation (4): Initial negotiations finalize terms, setting the foundation for successful contract execution.

These stages are pivotal in ensuring both initial and ongoing alignment, as outlined in the CIPS Procurement Cycle.



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?

  1. 33%
  2. 159%
  3. 50%
  4. 67%

Answer(s): C

Explanation:

The mark-up percentage is calculated as the profit divided by the cost of production, then multiplied by 100 to convert it into a percentage.

Calculation:
(
/
)
×
=
%
(80/160)×100=50%
Thus, the supplier's mark-up percentage is 50%, as per standard pricing calculations used in procurement.



A wide range of factors may be taken into account by suppliers when setting or negotiating prices.
Which of the following are external factors in pricing decisions? Select TWO that apply.

  1. Competition in the market
  2. Cost of production
  3. Where the product is in its lifecycle
  4. Customer perception of value
  5. Costs of sales

Answer(s): A,D

Explanation:

External factors in pricing decisions include Competition in the market (A) and Customer perception of value (D). These factors are outside the supplier's direct control but influence pricing strategies to remain competitive and meet customer expectations:

Competition in the market (A): Market competition dictates how much a supplier can charge without losing business to competitors.

Customer perception of value (D): How customers perceive the product's worth affects its acceptable price range.

These factors are considered external as they relate to market dynamics rather than internal cost structures, according to CIPS's guidance on pricing influences.



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.

  1. The Human Resource (HR) manager
  2. A legal advisor
  3. The procurement manager
  4. The Chief Executive Officer (CEO)
  5. An internal business user

Answer(s): C,E

Explanation:

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.



The stages of commercial negotiation involve which of the following characteristics?

  1. Preparation, proposal, bargain, leave
  2. Open, testing, bargaining, closing, revisiting
  3. Preparing, opening, bargaining, agreement, closure
  4. Opening, debating, promising, testing, disagreeing, closing

Answer(s): C

Explanation:

The typical stages of commercial negotiation are Preparing, opening, bargaining, agreement, and closure. This sequence facilitates a structured approach where negotiators prepare strategies, initiate discussions, engage in bargaining, reach agreements, and formally close the negotiation. This structure is emphasized in CIPS materials as essential for achieving a balanced negotiation process.



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

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