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Commercial Negotiation Questions and Answers

Question 1

Which of the following is the area where two or more negotiating parties may find common ground?

Options:

A.

Zone of potential agreement

B.

Zone of proximal development

C.

Walk away area

D.

Best alternative to a negotiated agreement

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Question 2

XYZ Ltd needs to purchase a bundle of IT products from suppliers. The procurement manager requests details of costs regarding designing and managing those products. After receiving reports from suppliers, she realises that they have charged up to a 1,095% mark-up on IT products. In order to ensure value for money, which of the following should be a priority pricing arrangement of the procurement manager in the negotiation with these IT suppliers?

Options:

A.

Premium pricing

B.

Cost plus arrangement

C.

Market skimming

D.

Market penetration pricing

Question 3

Which of the following are recognised techniques in contract negotiation? Select THREE that apply.

Options:

A.

Framing and reframing

B.

Ratification

C.

Pacing and leading

D.

Validation

E.

Role ethics

F.

Anchoring

Question 4

Which of the following will positively affect reputational strength of an organisation? Select TWO that apply.

Options:

A.

Adopting out-of-date technology

B.

Weak internal coordination

C.

Great gap between reputation and reality

D.

High ethical standards

E.

Strong customer focus

Question 5

Which of the following is most likely a consequence of falling interest rate?

Options:

A.

Increase aggregate demand

B.

Decrease investment

C.

Increase savings

D.

Decreaseconsumption

Question 6

Which of thefollowing is the purpose of using stakeholder support level scale?

Options:

A.

To identify stakeholder level of influence and interest and plot them on stakeholder map

B.

To identify stakeholder's needs and expectations

C.

To estimate the gap and the progress towards desired levels of support

D.

To identify key stakeholders

Question 7

Which of the following are most likely to be direct costs of a steel manufacturer? Select THREE that apply.

Options:

A.

Cleaning services

B.

Coal

C.

Seniormanagement salary

D.

Insurance for production lines

E.

Scrap metal

F.

Hourly production wages

Question 8

What is the most likely outcome when two organisations with adversarial relationship negotiate with each other?

Options:

A.

Deadlocked

B.

Lose lose

C.

Win lose

D.

Win win

Question 9

Sally is negotiating with an oversea supplier on the price and payment period. Her company and the supplying organisation are equal in bargaining power.The supplier says that they are investing in new facilities and machinery so the payment period should not be longer than 30 days. Sally knows that her company often pays the suppliers after 45 days from the delivery, but at the moment the company has positive cash flow and it is able to pay immediately. Which of the following should be Sally's concession plan?

Options:

A.

Contend on the normal payment period

B.

Shorten payment period but ask for a discount

C.

Agree with supplier's payment period without anyfurther demand

D.

Demand for a discount without any other concessions

Question 10

Which of thefollowing are most likely to be sources of conflict that can emerge from the content of commercial negotiations? Select TWO that apply.

Options:

A.

Framework arrangement

B.

Payment terms

C.

Contract governing law

D.

Requisition

E.

Cultural differences

Question 11

Personal power is only used in distributive approach. Is this statement true?

Options:

A.

Yes, because only distributive approach to negotiation requires strong personal power

B.

No, because personal power can be veryhelpful in integrative approach

C.

No, because only organisational power will optimise the negotiation outcomes

D.

Yes, because one party will abuse coercive power to maximise the gain

Question 12

A purchasing manager is having a negotiation with a supplier to extend the duration of the contract. In order topersuade the supplier to cut the cost by 10%, she promises to shorten the payment period from

45 days to 30 days for each delivery. The supplier's representative does not agree the offer and clearly states that his proposed price is already lower than the market price. The purchasing manager has

used which type of power?

Options:

A.

Reward

B.

Expertise

C.

Coercive

D.

Informational

Question 13

Which of the following should be adopted to minimise the conflict between parties in commercial negotiation?

Options:

A.

The rule of law

B.

Ground zero

C.

Ground beam

D.

Ground rules

Question 14

In airline industry, suppliers prefer to adopt dynamic pricing in order to constantly monitor and change their fares inresponse to market conditions. Dynamics pricing is based on which costing method?

Options:

A.

Activity-based costing

B.

Cost plus costing

C.

Absorption costing

D.

Marginal costing

Question 15

A senior buyer analyses the supply market and he realises that his organisation is treated asExploit according to supplier's perspective model. What does he need to do?

Options:

A.

Adopt opaque processes

B.

Increase the spend value

C.

Raise the transactional costs to do business

D.

Pay the suppliers on time

Question 16

When is the best time to adopt accommodating style according to Thomas-Kilmann conflict mode instrument?

Options:

A.

When both buyer and supplier want to find anintegrative solution as their concerns are too important to be compromised

B.

When buyer needs to gather more information to gain more advantages in later negotiations

C.

When preserving harmony and avoiding disruption with supplier are especially important

D.

When buyer and supplier have equal power but are strongly committed to mutually exclusive goals

Question 17

Rose is a senior buyer from a skiing equipment retailer. Rose is concerned about the current ski boot shortage and the number of invoicing problems from a key supplier. Shehas decided to have a video conference with Victor, CEO of the supplier. Initially, she intends to threaten Victor with contract termination unless he can improve the situation. However, she is a little wary of doing this as the switching costs are high. Eventually, she decides to seek solutions by encouraging the other party to offer their views and ideas. Rose also prepares some ideas to discuss with Victor. Which of the following is the persuasion method that Rose intends to use in the forthcoming conference?

Options:

A.

Directive (push)

B.

Persuasive reasoning (push)

C.

Collaborative (pull)

D.

Visionary (pull)

Question 18

Which of the following are factors that might shift the demand curve for a consumer good to the right?

1. Prices of complementary goods decrease

2. Price of the consumer good decreases

3. Customers' expectation of higher prices in the future

4. Consumer tastes shift toward substitute products

Options:

A.

3 and 4 only

B.

4 and 2 only

C.

1 and 3 only

D.

1 and 2 only

Question 19

It may be more difficult to buy on a credit from supplier who locates in a country with a hyperinflation? Is this assumption true?

Options:

A.

No, because supplier's bank will take risks from currency fluctuation

B.

Yes, because thesupplier's currency will lose its value overtime

C.

Yes, because buyer has more advantage if they make payment in their own currency

D.

No, because the higher the inflation rate, the stronger the supplier's currency

Question 20

Which of the following are typical characteristics of activity-based costing (ABC) method? Select TWO that apply.

Options:

A.

ABC provides the information required to take action and realise improvements

B.

Limited understanding of true costs incurred

C.

ABC has tended to over cost products on long runs and under cost those on short runs

D.

Costs are allocated based on volume

E.

Variable and all related overhead expenses are specifically assigned to a business activity

Question 21

Which of the following are examples ofnon-verbal negotiation? Select THREE that apply.

Options:

A.

Asking the supplier to repeat their proposal

B.

Getting messages across with facial expressions

C.

/ Speaking softly with long pauses

D.

Communicating with the other party by using gestures

E.

Explaining to the supplier about the scope of the project

F.

Using the body language

Question 22

Which of the following are most likely to be macro factorsthat may influence the balance of power in commercial negotiation? Select THREE that apply.

Options:

A.

Economic growth rates

B.

Disruptive technologies

C.

Purchasing spend volume

D.

Sustainability of natural resources

E.

Intensity of competition in a industry

F.

Number of substitute products or services

Question 23

Which of the following are signs indicating that the trust between buyer and supplier has improved? Select TWO that apply.

Options:

A.

Cost overruns

B.

Decreasing percentage of missed delivery overtime

C.

Transparent decision makingprocess

D.

Less frequent communication on business requests

Duplication of effort

Question 24

During a negotiation, a procurement manager suggests that the two companies should split the difference which would benefit both the supplier and buyer. Which persuasion method is she using?

Options:

A.

Compromise

B.

Threat

C.

Good cop/bad cop

D.

Logic

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Total 223 questions