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1. An oil refinery plant imports much of its crude oil from overseas. A procurement manager in the refinery suggests that fixing the crude oil contract price for 36 months would be beneficial for the company.

Would this be a right thing to do?

Yes, financial budgeting task would be a lot easier with fixed pricing arrangement

No, fixed price should be only applied to contracts that last 60 months or longer

No, the refinery would not be able to reap the benefits from falling commodity price and currency rates

Yes, the supplier would bear the risk when the material price increased

2. Jane is planning for a forthcoming negotiation with a key supplier. She has learned what are important to the supplier and what are important to her company from previous contracts between them. In order to avoid negotiation deadlocks, she has set up several concession plans. But Jane has little experience in dealing with suppliers and doesn't know when to trade these concessions.

When is the best time in a negotiation to trade concessions?

In the testing phase

In the proposing phase

At bargaining stage

At opening stage

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

Threat of punishment, costs and damage

Listening to, involving andsupporting others

Argument based on information, logic and reason

Working together to define the problem, the goals and the best solution

Using language and imagery to ‘paint a picture others can see’

4. Which of the following is the internal factor that is taken intoprice of a product?

Risk management

Customer tastes

Elasticity

Exchange rate

5. A procurement professional is negotiating with a supplier on cleaning service. She realises that there are huge cost-saving opportunities if the supplier agrees to reduce its mark-up and unnecessary employee benefits. Supplier's mark-up and employee benefits are examples of which of the following?

Spend waterfall

Spend cube

Spend tree

Addressable spend

6. Which of the following are signs indicating that TOP is using coercive power in commercial negotiation? Select TWO that apply.

Demonstrating fairness and respect

Withdrawal of benefits

Use of guilt

Technical expertise

Positive references

7. Ma Bell was the sole provider of landline telephone service to most of the US in 1980s.

This is an example of...?

Monopsony

Monopoly

Monopolistic competition

Perfect competition

8. One difference between perfect competition and monopolistic competition is that...?

In perfect competition, firms produce slightly differentiated products

A perfectly competitive industry has fewer firms.

Monopolistic competition has no barriers to entry

Firms in monopolistic competition face a downward-sloping demand curve

9. Which of the following should be the final step of a negotiation process if both parties cannot reach an agreement?

Reflecting on performance

Tempting TOP to reopen the negotiation

Asking TOP for another concession

Celebrating publicly about the deal

10. Which of the following are most likely to help buyer become preferred customer in supplier's perspective? Select TWO that apply.

Onerous supplier terms and conditions

Compliance with agreed repair lead time

Shorter payment period

Reduction in delivery errors

Ensuring an increased number of repeat orders

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11. When is the best time in procurement process in which procurement should get involved so that the cost-saving opportunities are the greatest?

Market consult stage

Post-contract stage

Specification stage

Post-tender stage

12. Which of the following are most likely to be direct costs of a steel manufacturer? Select THREE that apply.

Cleaning services

Coal

Seniormanagement salary

Insurance for production lines

Scrap metal

Hourly production wages

13. Which of the following are macroeconomic factors that may have influence to the commercial negotiation? Select TWO that apply

Equilibrium price

Supply curve

Unemployment rate

Bargaining power of supplier

Rising import tariffs

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

Thomas-Kilmann Conflict Resolution model

Intelligence quotient

Mill's RESPECT mnemonic

Myers-Briggs Type Indicator

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

Adopting out-of-date technology

Weak internal coordination

Great gap between reputation and reality

High ethical standards

Strong customer focus

16. In a commercial negotiation, a procurement professional believe that the larger the order quantity from buyer, the lower the supplier's average costs. Is this assumption true?

No, because supplier's average costs will rise as the buyer's demand increases

No, because the supplier may need to invest in new facility to meet buyer's demand

Yes, because larger order quantity will bring a considerable profit to supplier

Yes, because larger order quantity will always enable the supplier to reach its economy of scale

17. Which of the following are behaviours that builds trust between the buyer and the supplier in business relationship? Select TWO that apply.

Conducting transparent procurement process

Over-inflated contingency funds

Allowing supplier to involve in early product development

Commercial espionage

Tendency to blame other party

18. 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?

Engage and keep them satisfied

Engage and consult with them regularly

Keep these people inform through general communication media

Manage them closely

19. 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?

Yes, because smiling shows supplier's readiness in signing the deal off

No, because nodding and smiling are etiquette of polite rejection

No, because nodding and smiling are not clear signs of neither acceptance nor rejection

Yes, because negotiator should rely on non-verbal communications only

20. Which of the following are recognised techniques in contract negotiation? Select THREE that apply.

Framing and reframing

Ratification

Pacing and leading

Validation

Role ethics

Anchoring

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21. Procurement team is required to improve leverage with their suppliers through spend consolidation.

To check whether there is any opportunity to consolidate spend, which of the following should be priority of procurement team?

Spend analysis

Value engineering

Price analysis

Total cost analysis

22. Which of the following is the area where two or more negotiating parties may find common ground?

Zone of potential agreement

Zone of proximal development

Walk away area

Best alternative to a negotiated agreement

23. What is the most likely outcome when two organisations with adversarial relationship negotiate with each other?

Deadlocked

Lose lose

Win lose

Win win

24. It may be more difficult to buy on a credit from supplier who locates in a country with a hyperinflation?

Is this assumption true?

No, because supplier's bank will take risks from currency fluctuation

Yes, because thesupplier's currency will lose its value overtime

Yes, because buyer has more advantage if they make payment in their own currency

No, because the higher the inflation rate, the stronger the supplier's currency

25. Understanding supplier's mark-up and margin can provide procurement professional a comprehensive insight into supplier's net profits. Is this statement true?

Yes, because supplier’s mark-up and margin are two most valuable sources of information to procurement

No, because mark-up and margin inform little about supplier's net profit

No, because margin is enough to tell procurement about supplier's profitability

Yes, because these are two indicators of supplier's future prospect

26. 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?

More than 5,000 units are sold monthly

Exactly 5,000 units are sold per month

Exactly 1,500 units are sold monthly

More than 1,500 units are sold monthly

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

ABC provides the information required to take action and realise improvements

Limited understanding of true costs incurred

ABC has tended to over cost products on long runs and under cost those on short runs

Costs are allocated based on volume

Variable and all related overhead expenses are specifically assigned to a business activity

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

Identify areas in your skill set where you need to improve

Gloss over areas where you need to improve your skills or performance

Be overly modest about your contribution to the outcomes of negotiation

Use generalised or ambiguous language when describing your strengths and development areas

Be honest and objective about your skills

29. Which of the following is the best description of direct cost?

Direct costs are only variable raw materials that constitute a product

Direct costs include raw materials, labour andoverheads

Direct costs include only raw materials and labour of making the final product

Direct costs include raw materials, labour and other expenses attributable to the final product

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

May shift position quickly

May be too assertive

Focuses on the facts and not the people

Very precise

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31. Which of the following statements about oligopoly is incorrect?

A few firms play an important role in the sale of a product

Oligopolistic firms recognize their interdependence

One firm's behaviour is a function of what its rivals do

Prices in oligopoly are predicted to fluctuate widely and frequently

32. Professional buyer is planning for the next negotiation of a simple one-off contract. This negotiation is typified by which of the following? Select TWO that apply.

Continuous dialogue with supplier

Total cost of ownership is the most important criterion

Vendor ratings will be used

Arm's-length approach

Pricing is the most important criterion

33. During a negotiation, a procurement manager suggests that the two companies should split the difference which would benefit both the supplier and buyer .

Which persuasion method is she using?

Compromise

Threat

Good cop/bad cop

Logic

34. Which of the following is definition of elasticity of demand in microeconomics?

The percentage change in the quantity demanded divided by the percentage change in income

The percentage change in price of a good divided by the percentage change in the quantity demanded of that good.

The percentage change in the quantity demanded of a good divided by the percentage change in the price of that good

The percentage change in income divided by the percentage change in the quantity demanded

35. 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?

Value engineering

Part substitution

Budgetlinkages

Compare total cost of ownership

Volume pooling

36. Influence

3 and 4 only

1 and 3 only

1 and 2 only

2 and 3 only

37. Which of the following are most likely to beindirect costs of a garment manufacturer? Select THREE that apply.

Packaging material

Textile

Zips pads

Maintenance materials

Utilities

Depreciation of machinery

38. Which of the following are most likely to harm trust between buyer and supplier in a commercial relationship? Select TWO that apply.

Avoidance of submitting important documentations

Reduced response time during contract performance

Resolving some conditions that would otherwise have them competing for resources

Subjective assessment of performance

Exploring a disagreement to learn from each other's insights

39. When is the best time to adopt accommodating style according to Thomas-Kilmann conflict mode instrument?

When both buyer and supplier want to find anintegrative solution as their concerns are too important to be compromised

When buyer needs to gather more information to gain more advantages in later negotiations

When preserving harmony and avoiding disruption with supplier are especially important

When buyer and supplier have equal power but are strongly committed to mutually exclusive goals

40. Which of the following is categorised as fixed cost?

Additional pallet hires due to higher demand in year-end season

Land rental paid in advance

Governments taxes

Raw materials for next year production

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41. A procurement professional is preparing for anegotiation with supplier. She is setting targets for price which her company is seeking to achieve .

Which of the following acronyms can help her identify limits before engaging in the negotiation?

MIL

RAQSCI

TIMWOOD

PPCA

42. After studying Thomas-Kilmann conflict resolution model and considering different approaches carefully, the procurement team of XYZ Ltd. decides to adopt an avoiding approach to the upcoming negotiation with one of their suppliers.

Which of the following will be the objective of XYZ procurement team in this negotiation?

Yielding the supplier's point of view

Postponing the issue

Seeking a quick middle-ground position

Confronting and trying to find a creative solution immediately

43. Which of the following are most likely to be abilities of a person with high emotional intelligence? Select TWO that apply.

Complex idea comprehension

Controlling one's own emotions

Perceiving how others feel

Reasoning and problem solving Abstract thinking

44. A supplier’s mark-up on all products is 25%. Supplier's profit margin is...?

20%

30%

75%

15%

45. Broken record

1 and 3only

2 and 4 only

3 and 4 only

1 and 2 only

46. A procurement professional is sourcing low value items. He conducts market analysis and realise that these items can be provided by many suppliers and switching cost between suppliersis relatively low. He also assume that the relationship between buyer and supplier will be transactional rather than long-term.

According to Thomas-Kilmann conflict model instrument, which of the following is the most appropriate style that the procurement professional should adopt when negotiating with these suppliers?

Avoiding

Compromising

Competing

Collaborating

47. Which of the following method should be used in negotiation if both parties want to communicate verbally and non-verbally without having to meet face-to-face?

Web conferencing

Telephone

Teleconferencing

In-person meeting

48. Which of the following is the process enabling the buyer to share with the supplier their purposes and needs to focus on some specific areas such as quality, cost, social and environmental standards, etc in the supplier's bids?

Supplier selection

Supply positioning

Supplier appraisal

Supplier conditioning

49. Which of the following is NOT a barrier to entry in amonopolized market?

The costs of production make a single producer more efficient than a large number of producers

A single firm is very large

The government gives a single firm the exclusive right to produce some good

A key resource is owned by a single firm

50. Which of the following are the most typical characteristics of integrative approach to

negotiation? Select TWO that apply.

Positional-based

Claiming value

Interest-based

Short-term wins

Creating more value

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51. Premium pricing strategies used by suppliers are characterised by which of the following? Select TWO that apply.

Products are charged at a price based on supplier's reputation

This strategy is often used when supplier attempts to enter new market

Price is based on cost structures

Typically found in the early part of the product life cycle

Premium price is determined by variable costs only

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

Exploring a disagreement to learn from each other’s insights

Yielding to another’s point of view

Resolving some conditions that would otherwise have them competing for resources

Trying to win at any cost

Trying to find a creative solution to current problem

Seeking a quick middle-ground position

53. At the first stage of CIPSP rocurement and Supply Cycle (Understand need), which of the following is the most important duty of procurement professional?

Demand management

Evaluating the interests from suppliers

Undertaking 'reverse marketing'

Deciding whether RFQ or ITT should be used

54. At which stage in a negotiation would questions be asked to obtain missing information?

The bargaining stage

The proposing stage

The opening stage

The testing stage

55. Which of these personal power bases stems from the manager's position in the organisation and the authority that lies in that position?

Coercive power

Legitimate power

Expert power

Reward power

56. Which of the following are most likely to be fixed costs of an airline? Select TWO that apply.

Purchase of aircraft

Catering services

Advertising and promotion

Flightcrew training

Fuel

57. Which of the following best describes Leverage quadrant in Kraljicmatrix?

Low risk, high importance

High value, high complex

Low risk, low importance

High complex, low importance

58. Spendwaterfall

2 and 4 only

3 and 4 only

1 and 2 only

1 and 3 only

59. How contribution is calculated in break-even analysis?

Fixed costs divided by variable costs

Variable costs subtracted from price

Price minus fixed costs

Variable costs subtracted from fixed costs

60. Which of the following would cause a demand curve for a good to be price inelastic?

There are a great number of substitutes for the good

The consultancy service

The luxury goods

The necessary goods