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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?

Options:

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

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Question 2

In what circumstances is the bargaining power of suppliers likely to be high, in relation to buyer power? Select the THREE that apply:

Options:

The number of suppliers is limited

The demand is not urgent

The product the buyer requires is undifferentiated

The volume required is low

The supplier has highly specialized machinery

The buying firm is large in comparison to the supplier

Question 3

When is an adversarial style of negotiation appropriate?

Options:

When one party has high bargaining power

When a buyer feels the relationship is important

When both parties want a win/win outcome

When a sustainable partnership is key

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Commercial Negotiation Questions and Answers

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