Pass the CIPS CIPS Level 4 Diploma in Procurement and Supply L4M5 Questions and answers with CertsForce

The effect of a change of relative exchange rates will be determined by which currency you pay your supplier in.

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LO 2, AC 2.2

Commercial negotiations involve a wider set of stakeholders than procurement, budget holders, and users. Depending on context, directors, IT specialists, legal teams, regulators, or external partners may all be impacted. Ignoring them risks resistance or missed requirements. CIPS stresses stakeholder mapping tools (such as Mendelow’s Matrix) to identify influence and interest levels, ensuring all relevant parties are managed appropriately in negotiation preparation and execution. Narrow stakeholder identification can undermine outcomes.

Developing specific negotiation strategies in areas where risk or spend is high involves analysing a wide range of objectives and variables within the context of the organisation's business requirements. The first stage in any negotiation preparation is to define your overall objectives which may be related to a single variable such as price in the case of a standardised requirement, or many variables in the case of capital equipment. Your negotiating strategies and tactics will all be focused on achieving overall objectives.

In order to answer this question, you should better consider each option:

'Exchange rate' is the value of one nation's currency versus the currency of another nation or economic zone. This is a macroeconomic factor.

'Elasticity' refers to the degree to which individuals, consumers or producers change their demand or the amount supplied in response to price or income changes. This is a microeconomic factor

Consumer tastes refer to the products and services that consumers consciously choose over others. Consumer tastes are so powerful that they can change how businesses conduct their activity. Like elasticity, this is also a microeconomic factor.

Among 4 options, only risk management is the internal factor. Risk pricing is a strategy applied by many companies in the world. To learn how to price the risk, you can read an article from McKinsey: https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/how-to-price-risk-to-win-and-profit

This is a question that a student met in her actual exam. The knowledge section is unknown.

LO: Unknown, AC: Unknown

A negotiating team can be as few as two people, and one person can play one or more of these roles:

As from the scenario, Jasmine will act as an observer and a scribe (or secretary).

While stakeholder feedback is crucial, meetings are not always the most effective review method. Reviews may be better conducted through reports, surveys, or individual debriefs, depending on context. The key is to capture lessons learned, successes, and areas for improvement, and to record them for future negotiations. Forcing all stakeholders into one meeting risks inefficiency or unproductive blame games. CIPS stresses structured reflection and documentation as best practice, ensuring organisational learning and preparation improvements.

Late paymentsdamage trust and strain supplier cash flow, becoming a direct source of conflict. Similarly, when gains, risks, or costs arenot equitably shared, perceptions of unfairness can destabilize the relationship.

“Persistent late payments not only threaten supplier cash flows but can significantly erode trust. Additionally, disproportionate sharing of risks or benefits can create resentment and hinder collaboration.”

(L4M5 Commercial Negotiation, 2nd edition, Section 1.3 - Causes and Management of Conflict in Procurement)

Nonverbal communication is important because it gives us valuable information about a situation including how a person might be feeling, how someone receives information and how to approach a person or group of people.

There are several types of nonverbal communications you should be aware of, including:

1. Body language

Body language is the way someone situates their body naturally depending on the situation, the environment and how they are feeling.

Example: Someone might cross their arms if they are feeling angry or nervous.

2. Movement

The way you move your arms and legs such as walking quickly or slowly, standing, sitting or fidgeting, can all convey different messages to onlookers.

Example: Sitting still and paying attention in a meeting conveys respect and attention.

3. Posture

The way you sit or stand can also communicate your comfort level, professionalism and general disposition towards a person or conversation.

Example: Someone might slouch their shoulders if they feel tired, frustrated or disappointed.

4. Gestures

While gestures vary widely across communities, they are generally used both intentionally and unintentionally to convey information to others.

Example: Someone in the United States might display a “thumbs up” to communicate confirmation or that they feel positively about something.

5. Space

Creating or closing distance between yourself and the people around you can also convey messages about your comfort level, the importance of the conversation, your desire to support or connect with others and more.

Example: You might stand two to three feet away from a new contact to respect their boundaries.

6. Paralanguage:

Paralanguage includes the non-language elements of speech, such as your talking speed, pitch, intonation, volume and more.

Example: You might speak quickly if you are excited about something.

7. Facial expressions

One of the most common forms of nonverbal communication is facial expressions. Using the eyebrows, mouth, eyes and facial muscles to convey can be very effective when communicating both emotion and information.

Example: Someone might raise their eyebrows and open their eyes widely if they feel surprised.

8. Eye contact

Strategically using eye content (or lack of eye contact) is an extremely effective way to communicate your attention and interest.

Example: Looking away from someone and at the ground or your phone may convey disinterest or disrespect.

9. Touch

Some people also use touch as a form of communication. Most commonly, it is used to communicate support or comfort. This form of communication should be used sparingly and only when you know the receiving party is okay with it. It should never be used to convey anger, frustration or any other negative emotions.

Example: Placing your hand on a friend’s shoulder may convey support or empathy.

There are many macro economic factors that could influence procurement in general and commercial negotiation in particular. Below are six factors that are agreed to be fairly significant:

• Economy growth rate

• Inflation rates

• Interest rates

• Currency exchange rate

• Unemployment rate

• Protectionism

LO 2, AC 2.2

In a globalised commercial world characterised by dynamic market and multiple companies competing for business, a positive corporate reputation can be an enormous asset. Reputational strength in one organisation might be based on some or all of the following characteristics:

- Quality of products or services

- Low cost/high value for money

- High ethical standards

- Reliability

- Cutting-edge technology

- Strong customer focus

- Engineering excellence

LO 1, AC 1.4