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

An adversarial negotiation style is more suitable in a market with many alternative sources and substitutes (B). When there are multiple suppliers, buyers have the upper hand and can adopt a competitive stance without risking supply continuity. This aligns with CIPS guidance on the use of adversarial styles in competitive markets with numerous alternatives.

CIPS recognises that agreement can be reached without formal negotiation by using alternative influence-based approaches. Accommodating involves one party yielding to preserve relationships or progress. Persuasion uses communication, reasoning, and influence to shape the other party’s views and decisions. Problem solving focuses on jointly identifying solutions that address both parties’ needs. These approaches are particularly useful where relationships are important or power is balanced. Team management, psychodynamic management, and validation of reporting are not recognised CIPS agreement-reaching approaches within commercial negotiation theory. The ability to choose the correct approach enhances negotiation effectiveness and relationship outcomes.

According to Thomas-Kilmann conflict model instrument, there are 5 conflict management styles:

In this scenario, the buyer's bargaining power is stronger than suppliers', and the relationship is transactional. Therefore, to get the most preferable outcome, the procurement professional can take an assertive approach, while he doesn't need to co-operate closely with these suppliers. Competing will be the most appropriate approach to negotiation in this scenario so that the buying organisation can get a better deal.

CIPS describes a relationship spectrum from arm’s-length/transactional through collaborative/partnership, matched to spend criticality, risk, and strategic importance; analysis helps select the appropriate relationship style before and during negotiation.

In most commercial negotiations with monopolistic organisations, one can expect that in general they will have far greater bargaining power - you will need them more than they need you. There BATNA is stronger in the short run, but over time their power can be challenged effectively.

Ways of dealing with monopoly suppliers include the following:

Making yourself an attractive buyer

Seeking out alternatives / substitutes in a private or public manner

Designing out the requirement that forces you to go to the monopoly suppliers, or seek to make the product, or threaten to make it yourself if feasible

Lobbying government or campaigning, as part of an industry or trade body, for a reduction in barriers to entry that support the monopoly

Zone of Potential Agreement (1) and Walk-away point (3) are key elements in negotiation planning. Establishing a Zone of Potential Agreement helps identify where interests align, whilethe Walk-away point sets the limit of acceptable terms. Both are essential to preparing a negotiation framework that benefits both parties, as per CIPS best practices.

Activity-based costing is an alternative approach to traditional absorption costing. The characteristics of these two methods are illustrated in the graph below:

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A junior team member can effectively contribute as a note taker (1) and observer (3), allowing them to support the meeting without taking on roles that require more experience, like chairing or serving as an expert. This aligns with CIPS’s recommendations for assigning junior roles in negotiations.