Diploma in Procurement &

Supply

COMMERCIAL NEGOTIATION

L4M5

MOCK EXAM QUESTION PAPPER

1.What is another name for a win-win approach to negotiation? Choose two.

A. Adversarial.
B. Collaborative.
C. Distributive.
D. Integrative

2.What element of negotiation can be seen to be often constant irrespective of what is being
purchased?

A. The content of the negotiation.

B. The process of the negotiation
C. The outcome of the negotiation.
D. The parties involved in the negotiation.

3. With which type of relationship from those shown below, might one expect to find an integrative
negotiation approach being undertaken?

A. Strategic.
B. Transactional.
C. Adversarial.
D. Outsourcing.

4. Which of the following does not appear in Donald Trump’s and Tony Schwartz’s 11 step formula in
‘The Art of The Deal”?

A. Enhance your location.

B. Know your objective.
C. Have fun.
D. Get the word out.

5.What is the main objective of commercial negotiations? (Choose 2)

A. Resolve conflict.
B. Improve relationships.
C. Reach an agreement.
D. Always win.

6.A colleague has suggested that the approach your organization should take to establishing an
agreement is to encourage the other party to accept the merits of your case, with no concessions
made on your side. What is your colleague recommending?

A. Persuasion.
B. Coercion
C. Problem solving.
D. Accommodating
7. MIL stands for:

A. Make, in-depth, (no) limits.

B. Maybe, interested, likely.
C. Must, intend, like.
D. More, increased, limited.

8.Which of the factors below will increase the power of the buyer in a negotiation setting? (Choose
two)

A. Many substitutes in the market.

B. High barriers to entry.
C. Low spend in the category.
D. Many suppliers in the market.

9.What conflict management style is the buyer likely to adopt after he/she has just conducted
research and found out that a product that has been purchased over the last year is well under the
market price?

A. Competing.
B. Avoiding.
C. Accommodating.
D. Compromising.

10.Negotiation can arise at many stages of the procurement cycle. There is an internal disagreement
between the procurement manager and the operations manager regarding whether to go straight to
negotiate for a non-urgent requirement that is widely available. At what stage in the procurement
cycle does this internal negotiation arise?

A. Market/ commodity and options research

B. Develop strategy/ plan
C. Understanding the need
D. Pre-procurement market test and engagement

11.Negotiation can arise at many stages of the procurement cycle. There is an internal disagreement
between the procurement manager and the operations manager regarding whether to go straight to
negotiate for a non-urgent requirement that is widely available. At what stage in the procurement
cycle does this internal negotiation arise?

Market/ commodity and options research

Develop strategy/ plan

Pre-procurement market test and engagement

Understanding the need

12.The area between the buyer and seller where a deal may be reached is sometimes called:

A. MOPA
B. ZOPA
C. DOPA
D. HOPA

13.In relation to non-verbal signals, which of the following is a description of kinesics behaviour?

A. Movements such as gestures, facial expressions, eye contact and body posture
B. How near you stand or sit to others.
C. Personal grooming, dress, furniture and symbols
D. Tone of voice, speed, emphasis and other vocal qualities

14.Which of the following is considered a weakness of a ‘dealer style’ negotiator?

A. Focuses on the facts and not the people

B. May be too assertive
C. May shift positions quickly
D. Very precise

15.Which of the following are rules of active listening? Select TWO that apply.

A. Prepare for what to say next.

B. Listen deliberately.
C. Only focus on verbal cues.
D. Do not interrupt when the other party is speaking

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

A. Strong customer focus

B. High ethical standards.
C. Adopting out-of-date technology.
D. Great gap between reputation and reality

17.Which of the following are most likely to be characteristics of a perfectly competitive market?
Select TWO that apply.

A. There are many buyers and sellers in the market.

B. Firms can freely enter or leave the market.
C. Each seller has a large impact on the market price.
D. In a competitive market, both buyers and sellers are price givers.

18.Which of the following will help to indicate personality preferences in four dimensions?

A. Thomas-Kilmann Conflict resolution Model

B. Myers-Briggs Type Indicator
C. Intelligent quotient
D. Mill’s RESPECT mnemonic
19.According to Dr Mari Sako, which of the following is potentially the weakest trust to be built?

A. Charitable trust
B. Goodwill trust
C. Contractual trust
D. Competence trust

20.When implementing Value analysis or Value engineering, which of the following acronyms
reminds both buyer and supplier of ideas on removal, substitution and design-out of cost elements?

A. STOPS WASTE
B. SMART
C. SAMOA
D. OWN-IT

21.Which of the following is an objective of proposing phase?

A. Create atmosphere conducive to agreement.

B. Check hypothesis and assumptions
C. Trade concessions
D. Start making tentative offers.

22. Distributive negotiations are most typically associated with which type of items?

A. Bottleneck
B. Leverage
C. Routine
D. Strategic

23.Which of the following are most likely to turn buying organizations into an unattractive customer
in supplier’s perspective? Select TWO that apply.

A. Demand for kickbacks

B. Adopting clear and concise CSR policies.
C. Unclear tender award criteria
D. Reduced paperwork in procurement processes

24.Which of the following are recognized forms of non-verbal communications.? Select 3 that apply.

A. Informal communications
B. Hand gestures
C. Facial expression
D. Body Posture

25Which of the following are most likely to be fixed costs for a manufacturing business? Select the
THREE that apply.

A. Insurance premiums
B. Factory rent
C. Casual Labour
D. Full-time staff salaries
 26.A buyer always makes a point of acknowledging every concession they are offered by a
supplier and will attempt to gain a little extra at the very end of the negotiation meeting when
the deal is being concluded.Which tactics are they using? Choose TWO that apply.

A. Good cop-bad cop

B. Add-on.
C. Broken record.
D. Thanks and bank.

27.What is opportunity cost?

A. Choice made.
B. It explains the law of scarcity.
C. The cost of opportunity forgone by making a choice of one option over another
D. Benefit of opportunity forgone.

28. In contract management, payments and use of incentive ensures which of the following? Select
TWO that apply.

A. Competitive benchmarking
B. Improved performance
C. Customer loyalty
D. Supplier motivation

29. When undertaking high risk and high value negotiation, a high skilled and experienced
negotiation team is required for which of the following reasons. Select TWO that apply.

A. Reduction of negotiating time and effort

B. The need to balance with the number of the supplier team
C. All areas of expertise will be covered and available when required
D. Good governance due to the availability of witnesses

30. Which ONE of the following conditions is typical of a collaborative negotiation?

A. One party is prepared to accommodate the other

B. All parties must have the same goals
C. Both parties must understand each other’s goals
D. The buyer must allow the supplier to achieve their goals

31. During a negotiation, unethical use of power to squeeze the supplier’s profit may, in the long-
term, affect which of the following?

A. Sustainability
B. Competitor pricing
C. Immediate lead times
D. Continuity of supply
32.Can closed questions be useful in a negotiation?

A. Yes, because they can encourage detailed responses

B. Yes, because they are good to check understanding
C. No, because open questions should always be asked
D. No, because closed questions only gather opinions

33.A situation in the market where there are no shortages or surplus is known as...

A. Equilibrium point
B. Break-even point
C. Profitability point
D. Satisfaction level

34. Clever negotiators are always looking for something that is __

A. Valuable to trade but is very easy for TOP.

B. Easy or cheap to trade, but is very valuable to TOP
C. Not valuable to trade for something that is not important.
D. Valuable to trade for something not important.

35.Of all the market types, which is the one where procurement professionals can probably add
most value through market insight, careful negotiations, planning and executions.

A. Perfect competition
B. Oligopoly
C. Monopolistic competition
D. Monopoly

36.Negotiation on price will be less important with which market structure?

A. Monopoly
B. Perfect competition
C. Oligopoly
D. Monopolistic

37. When is it advisable not to use PPCA?

A. On big spend items, relating to total purchasing spend

B. On bottleneck items planned to move into strategic
C. On items that have a major impact in your cost.
D. On categories that ‘strategic’ or planned to move into strategic from leverage

38 __________Is when the supplier is determined to charge a very high price, not connected with
cost structures, usually based on the reputation that the product/service is of superior quality. This is
typically found in the early part of the product life cycle when demand exceeds supply.

A. Marginal cost pricing

B. Cost-plus pricing
C. Premium pricing
D. Procure to pay
39_________States that if one keeps on adding a variable factor of production (such as labour) to
fixed factors ( such as land), you will get proportional less output from each additional units of
labour added until, eventually overall output will start to decrease each addition unit of factor
added.

A. The law of demand

B. The law of supply
C. The law of elasticity
D. The law of diminishing return

40.Which conflict management style in the Thomas- Killman conflict management instrument is
‘expanding the pie” instead of fighting over?

A. Collaborating
B. Compromise
C. Accommodating
D. Competing

41.In which of the following situations is a position-based negotiation suitable to be used by the
parties in a negotiation? Select 2 that apply. 3. Supplier is ahead of others in terms of technical
expertise 4. The supply contract is a one-off requirement of insignificant value

A. Low-value product with an ease of switching

B. Critical product with high market complexity
C. The supply contract is a one-off requirement of insignificant value
D. The supply contract is a one-off requirement of insignificant value

42.Which of the following are sources of conflict that are likely to arise in a negotiation process?
Select THREE that apply.

A. Payment terms
B. Volumes and commitment
C. Contract terms and conditions
D. Clear processes

43.Providing training and preparation in the pre-negotiation phase is an important step to achieving
a positive negotiation outcome. Training and preparation should encompass which of the following
elements? Select THREE that apply.

A. Understanding the role of team members as well as their expected contribution

B. Providing a brief to the team about the objective of the negotiation
C. Checking the supplier’s negotiation history and track record
D. Providing insight on the tactics to be used by the team
44.A category manager is having an unsuccessful negotiation with a supplier, and it has decided to
adopt a different approach to the negotiation. The category manager reminds the supplier of its
contractual obligations and says ‘if we cannot reach agreement here today’ do not forget that i can
serve notice to terminate the contract. This is an example of which type of power?

A. Reward
B. Coercive
C. Reciprocity
D. Expertise

45. Which of the following are characteristics of fixed costs that are incurred by an organisation?
Select the TWO that apply.

A. They never increase for the entire organisational life

B. They are not affected by the level of output
C. They must be paid even if there in zero activity
D. They are affected by the activity of the organisations assets

46.The supplier’s break -even point is reached when its revenues exceed which of the following?

1. Opportunity costs
2. Total fixed costs
3. Variable production costs
4. Equity costs

A. 2 and 3 only
B. 1 and 3 only
C. 1 and 2 only
D. 3 and 4 only

47Which of the following are examples of macroeconomic factors that the buyer must take into
account when negotiating with a supplier?

1. Competitor prices
2. Inflation rates
3. Industrial activity
4. Unemployment rate

A. 2 and 4 only
B. 3 and 4 only
C. 2 and 3 only
D. 1 and 2 only
48. After a successful negotiation, the lead negotiator and his superior agree on having a pre-
negotiation evaluation as they both believe this will be a perfect approach to measure their
negotiation performance and achievement of intended objectives. Will this be necessary?

A. No because the negotiation has already been done and dusted it can only be used for the
next negotiation
B. Yes because it allows them to know what went wrong in the negotiation for future lessons.
C. No , because pre-negotiation can only be used before the negotiation to assess the
approaches and preparedness of the negotiating team
D. Yes, because pre-negotiation evaluation will allow them to assess how far they have been
successful

49.From the list below, pick the five that make up the stakeholder support level scale

1. Resistant/ unaware
2. Neutral
3. Aggressive
4. Opportunistic
5. Positive aware
6. Collaborative
7. Positive advocate

A. 1,2,3,4 and 5
B. 2,3,4,5 and 6
C. 1,2,5,6 and 7
D. 3,4,5,6 and 7

50.The role of the scribe in a negotiation team is to __

A. Responsible for outcome

B. Is to provide specialist knowledge
C. Take record
D. Speak, lead the negotiation team

51.The four fundamentals of principled negotiation are

1. People: Separate people from problems

2. People: Integrate people with the problem
3. Interest: Focus on interest not position
4. Interest: Focus on position not interest
5. Options: Generate options from mutual benefits
6. Options: Generate options that benefit your party
7. Criteria: Use objective criteria
8. Criteria: Use subjective criteria

A. 2,4,6 and 8
B. 1,3,5 and 7
C. 5,6,7 and 8
D. 1,2,3 and 4
52.In distributive bargaining, what do buyer and seller do

A. They both move along the arc, claiming value

B. They avoid each other
C. They both stay out of the negotiation
D. They both push the value curve outward.

53.In the list below choose the four distributive views a buyer will take in negotiation.

1. Get as much of the pie as you can.

2. Position-keep interest confidential as many expose weakness.
3. One at a time, thank and bank.
4. Conformance based; bring yes/no, you’re with us or against us.
5. Expand the pie so both parties can get more.
6. Interest-move away from positive ASAP to create movement.
7. Discussion of several issues at a time get all the issues on the table.
8. Performance-based, creative solution that satisfies most of both side interest.

A. 1,2,5 and 8
B. 3,4,5 and 8
C. 1,2,3 and 4
D. 5,6,7 and 8

54_____Is another source of information which means gathering data illegally through hacking into
confidential company databases and files, or by bribing employees to provide useful information,
This is unethical and illegal but sadly it does happen.

A. Intellection property right violation

B. Cyber crime
C. Industrial espionage
D. Industrial hard doing

55.Which of the following is the best description of direct costs?

A. Direct costs are only variable raw materials that constitute a product.
B. Direct costs include only raw materials and labour of making the final product.
C. Direct costs include raw materials, labour and other expenses attributable to the final
product.
D. Direct costs include raw materials, labour and overheads.

56.Which of the following are common forms of collaborating approach in Thomas-Kilmann conflict
resolution model? Select THREE that apply.

A. Exploring a disagreement to learn from each other’s insights.

B. Resolving some conditions that would otherwise have them competing for resources.
C. Find solutions to current problems
D. Trying to win at all cost.
57.Which of the following are most likely to be sources of conflict that can emerge from the process
of commercial negotiations? Select TWO that apply.

A. Line of the best fits.

B. Types of purchase.
C. Differences in conflict management style.
D. Differences in culture.

58.Which of the following is considered a strength of a “logical” style negotiator?

A. Assertive
B. Methodical
C. Friendly and accessible
D. Interrelate issues easily and makes quick decisions.

59.Premium pricing strategies used by suppliers are characterized by which of the following? select
TWO that apply.

A. Products are charged at a price based on supplier’s reputation.

B. Price is based on cost structures.
C. Premium price is determined by variable costs only.
D. Typically found in the early part of the product life cycle

60.Which of the following can help both parties break the vicious cycle of blame when a relationship
needs repairing? Select TWO that apply.

A. Both parties understand each other’s goals.

B. Conflict management skills
C. Constant shadowing and oversights
D. Emotional-based assessment

61.Which of the following should be done when undertaking a reflection activity on negotiation?
Select TWO that apply.

A. Identify areas in your skill set where you need to improve.

B. Be overly modest about your contribution to the outcomes of the negotiation.
C. Be honest about your skills.
D. Use generalized or ambiguous language when describing your strengths and development
areas.
62.Jasmine and the IHL sales team have a negotiation scheduled with one of AB’s lead buyers, Sam
at AB’s premises. This is one of the biggest negotiations that Jasmine has ever been involved in and
is eager not to make any mistakes. Jasmine has heard from a colleague that Sam tends to adopt an
integrative negotiation style. IHL senior management decides to send a team of three members to
the negotiation. Jasmine is among the team and she is assigned to check body language, reactions,
feed insights to her leader and to record important comments and information from the meeting for
minutes. Which of the following are roles of Jasmine in the forthcoming negotiation? Select TWO
that apply.

A. Observer
B. Technical expert.
C. Commercial expert
D. Secretary

63.To buying organizations, savings can be achieved from different saving levers or tactics. Which of
the following are means that deliver savings through optimizing specifications?

A. Value engineering.
B. Compare total cost of ownership.
C. Volume pooling.
D. Part substitution

64.Which of the following is the first step in the development of negotiation strategies?

A. Defining overarching objectives.

B. Determining your BATNA.
C. Developing scenarios around possible options
D. Recognizing TOP’s needs and wants

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

A. ABC has tended to over cost products on long runs and under cost those on short runs.
B. Variable and all related overhead expenses are specifically assigned to a business activity.
C. Costs are allocated based on volume.
D. ABC provides the information required to take action and realize improvements.

66.Which of the following are examples of push techniques in commercial negotiations? Select TWO
that apply.

A. Working together to define the problem, the goals, and the best solution
B. Threat of punishment, costs, and damage
C. Argument based on information, logic, and reason.
D. Using language and imagery to “paint a picture others can see”.
67.In addition to organizational power, personal power of each negotiator can influence the
outcome of a negotiation. A good negotiator can leverage different sources of power. is this
statement true?

A. No, because each person has only one superior source of personal power.
B. Yes, because the good negotiator recognizes his own power in a negotiation.
C. No, because only organizational power can be leveraged during negotiation
D. Yes, because all sources of power have similar effectiveness in every situation.

68.There are no commitments in hypothetical questions. Is this statement true?

A. No, because the party who makes hypothetical questions cannot withdraw their proposals
B. Yes, because hypothetical questions only mention possible situations.
C. No, because hypothetical questions are made explicitly to the other party
D. No, because hypothetical questions generate a specific response.

69.Under the EU Public Procurement directives, which of the following are procedures in which
there is no commercial negotiation allowed?

A. Innovation Partnerships
B. Open procedure
C. Restricted Procedure
D. Competitive Procedure with Negotiation

70.Which of the following are behaviours that build trust between the buyer and the supplier in
business relationships? Select TWO that apply.

A. Allowing supplier to be involved in early product development.

B. Conducting transparent procurement process
C. Tendency to blame the other party
D. Commercial espionage.

71.In a negotiation of a new contract, the supplier suggests that the buyer shorten payment period
from 45 days to 15 days because they are investing in new facilities to expand the supply capacity.
The buyer replies that she can only sign off the deal if the payment period is 30 days or more since it
often takes at least 30 days for her company to collect the payment from customers. A permission
from senior management is required to for this suggestion. To ensure that the supplier understands
the matter, she reiterates it throughout the meeting. Which tactic is she using?

1. outrageous initial demand.

2. 2-salami slicing.
3. 3-lack of authority.
4. 4-Broken record

A. 1 and 2 only
B. 3 and 4 only
C. 2 and 4 only
D. 1 and 3 only
72.A negotiation is coming to an end. Both parties have not had any official commitments. Right
before leaving the room, the buyer strongly disagrees with the supplier’s set up prices and requests
a discount. The supplier does not reply but nods and smiles. Can the buyer consider these actions as
an acceptance?

A. Yes, because negotiator should rely on non-verbal communication only.

B. No, because nodding and smiling are etiquette of polite rejection.
C. No, because nodding and smiling are not clear signs of neither acceptance nor rejection.
D. Yes, because smiling shows supplier’s readiness in signing the deal off.