Which of the following is the most appropriate approach to investors or shareholders who have high level of influence but low interest in the running of business? A . Engage and keep them satisfied B . Engage and consult with them regularly C . Keep these people inform through general communication media D . Manage them closely
Investors or shareholders who have high level of influence but low interest belong to ‘Keep satisfied’ quadrant of Mendelow’s Stakeholder Matrix. You may read 2 versions from L4M1 and L4M5 here:
Which of the following are most likely to beindirect costs of a garment manufacturer? Select THREE that apply. A . Packaging material B . Textile C . Zips pads D . Maintenance materials E . Utilities F . Depreciation of machinery
Indirect costs are those cost that are not directly attributable to production.
Examples of indirect costs including the following:
Indirect labour: This covers every person in the factory who does not directly perform a production operation such as managers, supervisors, engineers, store personnel, clerks, maintenance staff, porters, canteen staff, security and cleaners etc.
Expenses: Included in this element is every fixed and variable expenses incurred in operating the factory, such as rent, rates, utilities, insurance, depreciation, maintenance, air conditioning and the various types of energy generation required by a clothing factory. Indirect materials: Also known as consumables, this element contains all the materials not directly connected to the makeup of a garment. Some of the typical items involved are office materials, spare parts, marker paper, maintenance materials, chalk & pins.
Direct costs are those costs of a product/service directly attributable/traceable to its production. Examples of direct costs including the following:
Direct Materials: Direct materials are all the materials and trimmings which go into the construction and finish of the garment. Typically, these materials would include cloth, lining, fusible, zips pads, tapes, labels, tickets, hangers and packaging materials.
Direct Labour: This cover the cost of all the labor directly involved in producing the garment and could include cutting, fusing, regular sewing, special machine operations, pressing, finishing, inspection and packing. Labor of all types and grade has a directoverhead which include holiday pay, sick pay, fringe benefits etc and the statutory payments made by the employer for each employee. This is usually expressed as a percentage of salary and when this percentage is added to the employee’s wage, it becomes the basis for calculating direct labor costs.
Which of the following are examples of push techniques in commercial negotiations? Select TWO that apply. A . Threat of punishment, costs and damage B . Listening to, involving andsupporting others C . Argument based on information, logic and reason D . Working together to define the problem, the goals and the best solution E . Using language and imagery to ‘paint a picture others can see’
There are two major persuasion methods: ‘push’ and ‘pull’.
Persuasion can be defined as encouraging someone to do something that you want them to do for you. Persuasion is reasoning with someone so that they will believe or do something they might not otherwise do. Persuasion can be considered as ‘pushing’ on TOP so that they can accept the change in attitude or behaviour as a result of your actions. Influence is the ability to affect the manner of thinking of another. Influence can be considered as pulling on TOP so that you achieve the same result, but TOP feels they have changed their attitude or behaviour as a result of their reflection and thinking, and not your direct actions.
There are 5 options in this question:
‘Threat of punishment, costs and damage’: The influencertries to ‘push’ the other party to act as he/she wants by using force. This method is effective but short-lived. The influencer also risks to developing reputation for being heavy handed and dictatorial.
‘Argument based on information, logic and reason’: The influencer uses logic and reasons to persuade the other party. This is also known as ‘Persuasive Reasoning’ (Push) ‘Using language and imagery to ‘paint a picture others can see’’: The influencer seeks to influence another by understanding the other’s emotions, and stimulating that party’s imagination to visualise the desired future goal of the influencer. This is also known as ‘visionary (pull)’
‘Working together to define the problem, the goals and the best solution’: In this technique, the person seeking to influence another involves the other party in the decision making process. This is known as ‘collaborative (pull)’
‘Listening to, involving and supporting others’: In this technique, the person seeking to influence another tries to discover the other party’s emotion and aims at mutual understanding. This is also a collaborative approach.
Which of the following is definition of elasticity of demand in microeconomics? A . The percentage change in the quantity demanded divided by the percentage change in income B . The percentage change in price of a good divided by the percentage change in the quantity demanded of that good. C . The percentage change in the quantity demanded of a good divided by the percentage change in the price of that good D . The percentage change in income divided by the percentage change in the quantity demanded
Elasticity refers to the responsiveness of quantity demanded or quantity supplied to a change in price or another factor:
The price of a product can be described as being elastic if a small change in price leads to a big change in demand.
The price of a product can be described as being inelastic if a big change in price leads to a small change in demand.
The formulae of elasticity of demand is known as the following:
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When is the best time to adopt accommodating style according to Thomas-Kilmann conflict mode instrument? 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
According to Thomas-Kilmann conflict model instrument, there are 5 conflict management styles:
Accommodating is an unassertive andcooperative approach to resolving the conflict. Accommodating means conceding to the other party with little debate or fight, not challenging or strongly putting forward your own point of view and generally giving and yielding to the other party’s point of view.
To buying organisation, savings can be achieved from different saving levers or tactics .
Which of the following are means that deliver savings through optimising specifications? A . Value engineering B . Part substitution C . Budgetlinkages D . Compare total cost of ownership E . Volume pooling
If driving greater value and efficiency from your supply base is your end, you should remember that there are many ways to do this without seeking to negotiate lowerprices. Below are 7 types of saving levers:
Which of the following best describes Leverage quadrant in Kraljicmatrix? A . Low risk, high importance B . High value, high complex C . Low risk, low importance D . High complex, low importance
In 1983, Peter Kraljic devised a means to segment the supplier base in the article in HBR. In this, heargued that supply items should be mapped against two key dimensions: risk and profitability.
Risk relates to the likelihood for an unexpected event in the supply chains to disrupt operations. For instance, in important areas of spend, such as tire suppliers for an automotive are business critical, and should a disruption occur, the auto company is likely itself to face substantial problems.
Profitability describes the impact of a supply item upon the bottom line. For certain areas of spend, such as stationery, supplies have only a negligible effect on profits. In other categories, a single source of supply can make or break a business.
Putting these two dimensions together yields a classic two-by-two matrix.
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Source: Peter Kraljic, HBR
– CIPS study guide page 63-73
– What Is The Kraljic Matrix? (forbes.com) LO 1, AC 1.4
Before engaging in a negotiation with a supplier of rechargeable lights, procurement team tries to visualise the breakdown of supplier’s costs to calculate its break-even point. They estimate that total fixed expenses related to rechargeableelectric light are $270,000 per month and variable expenses involved in manufacturing this product are $126 per unit. The supplier charges its customer $180 per unit.
Within its current capacity, this supplier will make a profit at which of the following? A . More than 5,000 units are sold monthly B . Exactly 5,000 units are sold per month C . Exactly 1,500 units are sold monthly D . More than 1,500 units are sold monthly
The analysis of cost into fixed and variable enables organisationsto determine their break-even point (BE) – the point where total revenue from sales and total cost exactly balance. All costs need to be covered by sale revenue in order for a company to make a profit. If you know your fixed costs and your variable costs then you can work out the minimum quantity of goods or services you need to sell to break even. Break even point is measured in volume and can be worked out graphically or via formulae: Price – Variable costs = Contribution
Break even point (volume) = Fixed expenses/Contribution margin per unit In this scenario, the break even point (Q) is: 270,000/(180-126) = 5,000
To make a profit, the supplier needs to sell more than 5,000units per month.
The BE point is thus an important determinant of flexibility of pricing for suppliers. Before BE is achieved there will be much greater reluctance to offer price concessions to customers than after BE is achieved.
A negotiation is coming to the end. Both parties haven’t had any official commitments. Right before leaving the room, the buyer strongly disagrees with supplier’s set up prices and requests a discount. The supplier doesn’t reply but nods and smiles.
Can the buyer consider these actions as an acceptance? A . Yes, because smiling shows supplier’s readiness in signing the deal off 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 negotiator should rely on non-verbal communications only
Good negotiators are attuned to all stimuli and not just the verbal and written information exchanged. Tone of voice, body language, facial expressions and other clues from TOP are noticed, and with experience and knowledge, interpreted correctly. This interpretation may also involve knowledge of culture norms and values. A smile, a ‘yes’ and the type of hospitality received, (in the business context), can mean very different things in different international business cultures.
Trained negotiators will consider non-verbal communication (such as nodding and smiling)
and body language as one source of signal from TOP, but will rarely rely wholly on this as a guide to what TOP is thinking or feeling. Furthermore, international and regional cultural considerations must be included here to avoid errors in interpretation. Emotional intelligence also has an important role in forming a more holistic perspective of what TOP may be thinking or feeling.
Which of the following is the best description of direct cost? A . Direct costs are only variable raw materials that constitute a product B . Direct costs include raw materials, labour andoverheads C . Direct costs include only raw materials and labour of making the final product D . Direct costs include raw materials, labour and other expenses attributable to the final product
Direct costs are those costs of a product/service directly attributable/traceable to its production, for example, the costs of labour and materials directly used to produce the goods/services which the organisation sells.