New L4M5 Test Materials & Valid L4M5 Test Engine
L4M5 Updated Exam Dumps [2022] Practice Valid Exam Dumps Question
CIPS L4M5 Exam Syllabus Topics:
| Topic | Details |
|---|---|
| Topic 1 |
|
| Topic 2 |
|
| Topic 3 |
|
| Topic 4 |
|
| Topic 5 |
|
| Topic 6 |
|
| Topic 7 |
|
| Topic 8 |
|
| Topic 9 |
|
| Topic 10 |
|
| Topic 11 |
|
NEW QUESTION 97
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?
- A. Price analysis
- B. Spend analysis
- C. Value engineering
- D. Total cost analysis
Answer: B
Explanation:
Explanation
In order to identify opportunities where you can increase your leverage with supplier, you need to understand your spend. Undertaking spend analysis of your accounts payable (AP) data is an essential first step here.
NEW QUESTION 98
In which of the following persuasion methods, the influencer uses logics and objective reasons to persuade the others to buy intoinfluencer's ideas?
- A. Directive (push)
- B. Visionary (pull)
- C. Persuasive reasoning (push)
- D. Collaborative (pull)
Answer: C
Explanation:
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 resultof their reflection and thinking, and not your direct actions.
There are multiple variables to consider when choosing between 'push' and 'pull'. Professor Fiona Dent of Ashridge Business School proposes situations when each style might be most appropriate, breaking down push into 'directive' and 'reasoning' and 'pull' into 'collaborative' and 'visionary':
Table Description automatically generated
Text Description automatically generated
Using logical and objective reasons is one of the typical characteristics of persuasion reasoning method.
NEW QUESTION 99
SBL provides contract bathroom furniture and fittings for a wide variety of domestic and commercial clients.
To some suppliers, SBL spendclaims a large portion of their revenue. But SBL is famous for imposing draconian obligations on these suppliers. Which of the following is most likely to be overarching objective of these suppliers to SBL?
- A. Win and keep business with SBL at any costs, even without profits
- B. Drop the business with SBL immediately
- C. Hold on and keep SBL happy but make sure that the business is profitable
- D. Charge a higher price to compensate for all the pain SBL has put
Answer: D
Explanation:
According to Paul Steele's 'The Seller's Perspective', customer can be classified into 4 categories as below:
Chart, treemap chart Description automatically generated
In this scenario, although SBL's spend claims large portion in suppliers' revenues, their draconian treatment will reduce SBL's attractiveness in supplier's perspective.SBL falls into Exploit quadrant. With exploitable customers, suppliers tend to 'milk' the customer and charge a high price to compensate for all the pain customer put on them.
NEW QUESTION 100
Which of the following is the true statement?
- A. External stakeholders such as suppliers can largely influence an organisation's procurement negotiations
- B. Internal stakeholder support will be important for both negotiation and contract performance
- C. Commercial negotiation objectives should be driven by just the instincts of procurement
- D. All connected stakeholders have a low level of impact on procurement negotiations
Answer: B
Explanation:
Internal stakeholder support will be important not just at the initial negotiation of the contract, but potentially throughout the life of the contract right through to exit.
As a general rule, connected stakeholders (with the exception of suppliers) have a low level of influence on procurement negotiations.
Suppliers are connected stakeholders who have contractual relationships with the organisation.
Commercial negotiation objective should be driven by thebusiness needs of the organisation, and not just the instinct of procurement.
NEW QUESTION 101
Which of the following will help to indicate personality preferences in four dimensions?
- A. Intelligence quotient
- B. Myers-Briggs Type Indicator
- C. Thomas-Kilmann Conflict Resolution model
- D. Mill's RESPECT mnemonic
Answer: B
Explanation:
The Myers-Briggs Type Indicator (MBTI) is an introspective self-report questionnaire indicating differing psychological preferences in how people perceive the world and make decisions. MBTI indicates personality preferences in four dimensions.
The Thomas-Kilmann Conflict Mode Instrument (TKI) is a conflict style inventory, which is a tool developed to measure an individual's response to conflict situations.
Mill's RESPECT mnemonic is set out by Harry A. Mills which describes seven steps to agreements An intelligence quotient (IQ) is a total score derived from a set of standardized tests designed to assess human intelligence.
NEW QUESTION 102
Which of the following can help both parties to break the vicious cycle of blame when a relationship needs repairing? Select TWO that apply.
- A. Both parties understand each other's goals
- B. Emotional-based assessment
- C. Conflict management skills
- D. Constant shadowing and oversights
- E. Focusing onpositions
Answer: A,C
Explanation:
In order to break vicious cycle of blame, procurement will need to use their negotiation and conflict management skills,adopting a collaborative and integrative approach. Your first action should be to establish the facts that led to the situation where the relationship broke down. Most day-to-day relationship between buying organisations and suppliers do not of course involve procurement staff, so you will need to consult with your business partners internally to establish their point of view of where the issue and sources of conflict are. You should also contact the supplier and get their side of the story - this is particularly to when you have previously identified the supplier as critical or otherwise important to your operations. Ideally you will be able to apply principled negotiation here, separating the people from the issue, focusing on interests and not positions,and then looking for options of mutual benefits.
NEW QUESTION 103
Which of the following are most likely to beindirect costs of a garment manufacturer? Select THREE that apply.
- A. Zips pads
- B. Packaging material
- C. Textile
- D. Depreciation of machinery
- E. Utilities
- F. Maintenance materials
Answer: D,E,F
Explanation:
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.
NEW QUESTION 104
Understanding supplier's mark-up and margin can provide procurement professional a comprehensive insight into supplier's net profits. Is this statement true?
- A. No, because mark-up and margin inform little about supplier's net profit
- B. No, because margin is enough to tell procurement about supplier's profitability
- C. Yes,because these are two indicators of supplier's future prospect
- D. Yes, becausesupplier's mark-up and margin are two most valuable sources of information to procurement
Answer: A
Explanation:
Explanation
Mark-up and margin allow supplier to make gross profit. Remember that every supplier operates under different cost structures and some are set up to be most profitableat a particular level of volume, so it is dangerous to assume all suppliers can survive on a lower margin if their volume increases. Intelligent buyers understand that mark-up and margin may define gross profits, but they tell you very little about a supplier's net profits.
LO 2, AC 2.1
NEW QUESTION 105
If a negotiation results in an offer which does not meet the buyer's minimum requirements, which of the following could the buyer pursue?
- A. PESTLE
- B. BATNA
- C. STEEPLE
- D. ZOPA
Answer: B
Explanation:
Explanation
Best alternative to a negotiatedagreement (BATNA) is the plan B or back-up plan in the event of a 'walk away'. In case of no deal, buyer (or supplier) may switch to this option.
The zone of potential agreement (ZOPA) is considered an area where two or more negotiating parties may find common ground. It is this area where parties will often compromise and strike a deal. In order for negotiating parties to find a settlement or reach an agreement, they must work towards a common goal and seek an area that incorporates at least some of each party's ideas.
STEEPLE offers an overview of various external fields. It is an acronym for Social, Technological, Economic, Environmental, Political, Legal and Ethical.
PESTLE is a mnemonic which in its expanded form denotes P for Political, E for Economic,S for Social, T for Technological, L for Legal and E for Environmental. It gives a bird's eye view of the whole environment from many different angles that one wants to check and keep a track of while contemplating on a certain idea/plan.
LO 1, AC 1.2
NEW QUESTION 106
Which of the following are typical characteristics of activity-based costing (ABC) method? Select TWO that apply.
- A. Limited understanding of true costs incurred
- B. Costs are allocated based on volume
- C. Variable and all related overhead expenses are specifically assigned to a business activity
- D. ABC has tended to over cost products on long runs and under cost those on short runs
- E. ABC provides the information required to take action and realise improvements
Answer: C,E
Explanation:
Activity-based costing is an alternative approach to traditional absorption costing. The characteristics of these two methods are illustrated in the graph below:
Graphical user interface, text, chat or text message, website Description automatically generated
NEW QUESTION 107
An experienced procurement professional is developing strategies for forthcoming negotiations with her key supplier. To avoid negotiation deadlocks, she identifies the reasons whynegotiations could fail. Which of the following are most likely to be reasons for negotiation failures? Select TWO that apply.
- A. Buyer helps to create a co-operative atmosphere
- B. Unachievable objectives were set up
- C. MIL objectives are well established
- D. Both parties focus on common interests
- E. Underlying interests of TOP are overlooked
Answer: B,E
Explanation:
It has been said that most negotiations are won (or lost) at the preparation stage. Success in a negotiation cannot be claimed unless you can refer back to your objectives and show how you have achieve them. In broad terms, negotiation plans/strategies involve 4 key activities:
1. Developing and prioritising your objectives and limits
2. Seeking to understand TOP's objectives
3. Developing concession plans
4. Planning the resources and logistics required and agreeing team roles.
Questions to gain an understanding of why a negotiation failed
Did we collect and make effective use of all information available when preparing for the negotiation?
Did we set objectives for the negotiation that were stretching and achievable and established MIL objectives?
Did we determine a strategy for the negotiation?
Did the other party understand our needs correctly?
Were we aware of the underlying interests of the other party?
Were our proposals convincing enough for acceptance by the other party?
Did we explore different variables in the negotiation?
Did we fully understand all proposals?
Did we give any unplanned concessions and did we check the importance of these?
Did we focus on common interests?
Did we ask a range of questions?
Did we get answers to all our questions?
Could we answer all the questions addressed to us in a proper and positive way?
Did we summarise effectively?
Did we use different methods of persuasion in the negotiations?
Which tactics did we use and what effect did they have?
Did our negotiating team work well as a team?
Did we help to create a co-operative atmosphere
NEW QUESTION 108
A purchasing manager is having a negotiation with a supplier to extend the duration of the contract. In order topersuade the supplier to cut the cost by 10%, she promises to shorten the payment period from
45 days to 30 days for each delivery. The supplier's representative does not agree the offer and clearly states that his proposed price is already lower than the market price. The purchasing manager has used which type of power?
- A. Coercive
- B. Expertise
- C. Reward
- D. Informational
Answer: C
Explanation:
In the scenario, to exchange cost cutting, the purchasing manager promises to 'reward' supplier shorter payment period. This is an example of reward power, which results from one person's ability to compensate or reward another for compliance.
The reward does not need to be money, but could be introduction to other buyers in the group, positive references, agreement to trial new product, quicker payment or indeed any other variable that the buyer knows is attractive and valued by the supplier.
NEW QUESTION 109
Distributive approach in negotiation is typified by which of the following?
- A. Distributive approaches are inherently inferior tointegrative approaches in commercial negotiation
- B. Both parties understand each other's goals
- C. Both parties share 50:50 of the 'pie'
- D. Each party attempts to maximise the value obtained at other's expense
Answer: D
Explanation:
Distributive approach to negotiation used when the interested parties are attempting to divide something up or distribute something of value, also known as zero-sum approach or win-lose. Commercial situations often demand a distributive bargaining approach, if the 'pie' is inherently of a fixed size. In this case, any conflicts must be resolved by sharing it.
In win-lose approach, a negotiator wants to maximise the value obtained in a single deal, the relationship with the other party is not important. Therefore, a strong party may win more than 50% of the metaphorical 'pie'.
It should not be assumed that win-win can be applied to all commercial negotiations, or that win-lose approaches are inherently inferior.
NEW QUESTION 110
In a commercial negotiation, a procurement professional negotiates on his company's behalf. The power of buying organisation is the only factor that influences the behaviours of the other party. Is this assumption true?
- A. Yes, because buyer's brand, reputation and purchasing spend largely determine the outcomes
- B. Yes, because the outcomes of negotiation are attributable to the buying organisation
- C. No, because personal power of negotiators also attributes tothe outcomes
- D. No, because power of supplier is the only factor that influences the other party
Answer: C
Explanation:
The assumption is false, because when aprocurement professional negotiates on behalf of his employer, he brings the power of his organisation (its brand, reputation and purchasing spend) as well his own personal power (that which is embedded within him) to the negotiation.
From a negotiation perspective, both organisational and personal power have the ability to influence the behaviours of other or the cause of event. This power is clearly core to negotiation, and of enormous important in seeking to achieve the objectives.
NEW QUESTION 111
Which of the following are most likely to be fundamentals of Fisher & Ury's principled negotiation?
1. Depersonalise the argument
2. Focuson positions
3. Generate creative options
4. Using subjective criteria
- A. 2 and 3 only
- B. 1 and 3 only
- C. 1 and 4 only
- D. 2 and 4 only
Answer: B
Explanation:
Explanation
Principled negotiation is based on four fundamentals: people, interest, options andcriteria:
Diagram Description automatically generated
1st Principle: separate the people from the problem: Negotiator should depersonalise the situation and accepting that the subject matter of the negotiation. This can be difficult for untrained negotiators, but this is a key skill to develop
2ndprinciple: focus on interests, not positions: It is important in principled negotiations not to focus on their parties' positions (what are expressed during negotiations), but on the interests (underlying needs) behind them
3rd principle: invent options for mutual gains: this principle aims to help the parties find a solution that both would benefit from. The more options - or tradeables - that can be brought to the table the better.
4th principle: insist on using objective criteria: is about making sure that the negotiation stays focused on outcomes based on objective criteria and that it is productive.
LO 1, AC 1.2
NEW QUESTION 112
Should a buyer use closed questions in a negotiation?
- A. No, supplier will consider closed questions as provocation
- B. Yes, because closed questions help to reconfirm certain facts
- C. No, the buyer should maximise the use of open questions
- D. Yes, because they urge the supplier to provide more detailedExplanation::
Answer: B
Explanation:
Asking questions the right way is both an art and a science. Ask the question the wrong way, and the other negotiator might act like a turtle, becoming defensive and withdrawing into their shell. Ask the question the right way, and the other negotiator might "spill the beans.".
Closed Questions: How and when to use them?
Closed questions are those thatrequire a short and focused answer, and are especially helpful in the beginning stages of the negotiation to encourage interaction. They can be used to clarify a point, or to reconfirm certain facts. For example, you can use a closed question to confirm the amount of units the company can produce in a week, or to clarify that what they are really saying is that they don't feel comfortable outsourcing their accounts to India. Most closed questions only require a simple "yes" or "no" response, so there reallyisn't much room for misinterpretation - great for finding out where both you and they stand.
NEW QUESTION 113
The buyer's bargaining power tends to berelatively higher than supplier's bargaining power in which of the following circumstances?
- A. The buyer's spend takes up a small proportion of supplier revenue
- B. The buyer does not have the option to move to an alternative supplier
- C. The buyer demand isso urgent that it can't be postponed
- D. The buyer is large in size relative to its suppliers
Answer: D
Explanation:
Buyer power gives customers/consumers (buyers) the ability to squeeze industry margins by pressuring firms (the suppliers) to reduce prices or increase the quality of services or products offered.
There are four major factors to consider when determining the bargaining power of buyers:
1. Number of buyers relative to suppliers: If the number of buyers is small relative to that of suppliers,the buyer's power will be stronger.
2. Dependence of a buyer's purchase on a particular supplier: If a buyer is able to get similar products/services from other suppliers, buyers depend less on a particular supplier. Therefore, the power of the buyer would be greater.
3. Switching costs: If there are not many alternative suppliers available, the cost of switching is high.
Therefore, buyer power would be low.
4. Backward Integration: If the buyer is able to integrate or merge suppliers, the buyer has greater bargaining power over the existing suppliers.
When is Bargaining Power of Buyers High/Strong?
There are fewer buyers relative to that of suppliers
The switching costs of the buyer are low
If the buyer is able to backward integrate
The buyer purchases product in bulk (high volume)
The buyer is able to get similar product/services from other suppliers
The buyer purchases the majority of the seller's products
Several substitutes are available on the market
Product is not differentiated
NEW QUESTION 114
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?
- A. Avoiding
- B. Competing
- C. Collaborating
- D. Compromising
Answer: B
Explanation:
According to Thomas-Kilmann conflict model instrument, there are 5 conflict management styles:
Graphical user interface, text, application, email Description automatically generated
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.
NEW QUESTION 115
When is the best time in procurement process in which procurement should get involved so that the cost-saving opportunities are the greatest?
- A. Market consult stage
- B. Post-contract stage
- C. Post-tender stage
- D. Specification stage
Answer: D
Explanation:
Explanation
The earlier procurement get involved in the procurement processes, the better. If procurement are involved in design at the specification stage they can feed in prices and costs to designer so they know the likely budget implication of choices made. Sending in a procurement team to negotiate at or close to the end ofthe procurement process effectively ties their hands and limits their negotiation leverage. This is illustrated in the graph below:
Chart Description automatically generated
LO 2, AC 2.1
NEW QUESTION 116
In which of the following costing methods, overhead costs are applied in proportion to production volume?
- A. Mark-up costing
- B. Absorption costing
- C. Marginal costing
- D. Activity-based costing
Answer: B
Explanation:
There are 3 major costing methods:
Marginal costing
* Uses marginal cost of producing addition units
* Uses variable cost to derived a unit cost (does not include fixed cost)
* Fixed cost treated as a 'period cost' and deducted, as a total amount, from total contribution to profit for the period, in the firm's profit and loss account Absorption costing
* Calculates total cost of producing product
* In addition to variable cost, a fair proportion of fixed cost is allocated to (absorbed) eachunit of output, as a fixed cost per unit Activity based costing
* Similar to absorption costing but with fixed cost allocated to products on the basis of the cost of activities used in producing them LO 2, AC 2.1
NEW QUESTION 117
Sumitomo Rubber Industries (SRI) is a Japan-based tyre manufacturer. In order to increase production, SRI is sourcing rubber from Southeast Asian firms. Which of the following micro factors are most likely to shift the balance of power to supplier? Select TWO that apply
- A. Costs of changing suppliers are high
- B. SRI's purchase amount makes significant proportion of supplier revenue
- C. SRI sets up its own rubber plantation
- D. Rubber from different suppliers is virtually similar
- E. There are no close substitutes for rubber
Answer: A,E
Explanation:
There are many factors that can influence the balance of power in a negotiation. These factors are classified into 3 levels:
Macro level: STEEPLE framework: social, technological, economic, environment, political, legal and ethical Micro level: Porter's five forces:
Diagram Description automatically generated
One-to-one buyer-supplier dynamics.
The question asks about the micro factors that increases supplier's bargaining power. Among 5 answers, only 2 are likely to increase buyer's power:
There are no close substitutes for rubber: the buyer has to buy rubber, not any other material.
Costs of changing suppliers are high: buyer entails a large barrier if they want to switch supplier.
Other answers cannot be correct because:
SRI sets up its own rubber plantation: Buyer secures its own supply
SRI's purchase amount makes significant proportion of supplier revenue: Suppliers are reliant on buyer. If the buyer stops buying from them, they can face serious cash flow problems Rubber from different suppliers is virtually similar: undifferentiated product would shift the power balance towards buyer.
NEW QUESTION 118
Which of the following are intangible values created by trust in business relationships? Select TWO that apply.
- A. Increasing response time to request
- B. Higher revenues
- C. More focus oncore business
- D. Positive feedbacks from customers
- E. Frequent conflict escalation
Answer: C,D
Explanation:
Explanation
Trust may create value as following:
Text Description automatically generated with low confidence
LO 1, AC 1.4
NEW QUESTION 119
......
L4M5 Sample with Accurate & Updated Questions: https://www.suretorrent.com/L4M5-exam-guide-torrent.html
L4M5 Exam Info and Free Practice Test | SureTorrent: https://drive.google.com/open?id=1GlihNePvXvKPToBXY8L3WHylBqcF1O8T