[Full-Version] 2025 Updated CIPS Study Guide L4M5 Dumps Questions
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NEW QUESTION # 65
XYZ Ltd is importing goods from overseas. They prefer to pay their supplier in their own currency. Which of the following is a true statement?
- A. XYZ is able to pay less if their currency depreciates
- B. Supplier will receive less if XYZ's currency appreciates
- C. XYZ has to pay more if their currency depreciates
- D. XYZ has an advantage in negotiating discounts if their currency appreciates
Answer: D
Explanation:
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
NEW QUESTION # 66
Which of the following are most likely to be indirect costs of a garment manufacturer? Select THREE that apply.
- A. Maintenance materials
- B. Packaging material
- C. Zips pads
- D. Depreciation of machinery
- E. Textile
- F. Utilities
Answer: A,D,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 direct overhead 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 # 67
The purpose of ongoing supplier relationship management following a negotiation and contract award is that it:
- A. 1 and 3 (Enables the buyer to monitor supplier performance and work with the supplier to resolve relationship problems)
- B. 1 and 2 (Enables the buyer to monitor supplier performance and persuade the supplier to renegotiate better terms)
- C. 2 and 3 (Enables the buyer to persuade the supplier to renegotiate better terms and work with the supplier to resolve relationship problems)
- D. 3 and 4 (Enables the buyer to work with the supplier to resolve relationship problems and evaluate unnecessary concessions)
Answer: A
NEW QUESTION # 68
Commercial negotiations on price cover various aspects, including pricing arrangements. A buyer may negotiate a fixed-price agreement. Why is a fixed-price agreement advantageous to the buyer?
- A. The buyer will benefit from any savings the supplier makes from efficient cost management of the contract
- B. The buyer will not need to monitor the supplier's costs relating to the contract
- C. Suppliers calculate prices using fixed costs, which the buyer must counteract by pushing for a fixed- price agreement
- D. Suppliers always seek price agreements that include cost-sharing incentives
Answer: B
Explanation:
In fixed-price agreements, cost-overrun risk is transferred to the supplier, giving the buyer price certainty and reducing the need for ongoing cost scrutiny. Monitoring focuses on delivery to specification and timing, not on the supplier's internal cost build-up (unlike cost-plus).
Reference: CIPS L4M5 (2nd ed.), LO 2.2 - Pricing arrangements and risk allocation (fixed-price vs cost-plus).
NEW QUESTION # 69
When prices of input materials increase, supply curve shifts to the left while demand remains stable. The shift of supply will tend to cause which of the following?
- A. A decrease in the equilibrium price and an increase in the equilibrium quantity
- B. A decrease in the equilibrium price and quantity
- C. An increase in the equilibrium price and a decrease in the equilibrium quantity
- D. An increase in the equilibrium price and quantity
Answer: C
Explanation:
:
The case in the question is illustrated as below:
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The equilibrium price initially at P0 with quantity Q0, when supply curve shifts to the left, it will converge with demand curve at new equilibrium point with price P1 and quantity Q1. As you can see from the graph, P1 is greater than P0 and Q1 is smaller than Q0.
NEW QUESTION # 70
Which of the following are most likely to be abilities of a person with high emotional intelligence? Select TWO that apply.
- A. Perceiving how others feel
- B. Complex idea comprehension
- C. Reasoning and problem solving
Abstract thinking - D. Controlling one's own emotions
Answer: A,D
Explanation:
Explanation
Emotional Quotient is the set of skills that enables us to make our way in a complex world - the personal, social and survival aspects of overall intelligence, the elusive common sense and sensitivity that areessential to effective daily functioning. It has to do with the ability to read the political and social environment, and landscape them; to intuitively grasp what others want and need; what strengths and weaknesses are; to remain unruffled by stress; andto be engaging. The kind of person others want to be around and follow.
EQ seeks to measure emotional intelligence and is centred on abilities such as the following:
- Identifying emotions
- Evaluating how others feel
- Controlling one's own emotions
- Perceiving how others feel
- Using emotions to facilitate social communication
- Relating to others
On the other hand, cognitive ability is defined as a general mental capability involving reasoning, problem solving, planning, abstract thinking, complex ideacomprehension, and learning from experience (Gottfredson,
1997).
LO 3, AC 3.3
NEW QUESTION # 71
During a negotiation, the supplier requests for payment term shortened to 45 days from 60 days. Seeing that this proposal lies within the concession plan, the procurement manager asks for 5% discount in return. Is that right thing to do?
- A. Yes, the procurement manager should keep that 5% for himself because that amount is a fair compensation for his effort
- B. Yes, since procurement manager has his own cost savings target to achieve and he should make use of supplier's financial status
- C. No, procurement should insist the payment term remains 60 days
- D. No, it is unethical to exploit the weakness of the other party
Answer: B
Explanation:
When preparing for a negotiation, negotiator should establish a list of tradeables and a concession plan. Good negotiators never give anything away that has not already been planned as part of the bargaining mix in the concession planning stage.
In the above scenario, the procurement manager has planned his own concession, so he can trade with supplier. The answer should be "Yes, since procurement manager has his own cost savings target to achieve and he should make use of supplier's financial status" Table Description automatically generated
LO 2, AC 2.3
NEW QUESTION # 72
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. No, because nodding and smiling are not clear signs of neither acceptance nor rejection
- B. No, because nodding and smiling are etiquette of polite rejection
- C. Yes, because smiling shows supplier's readiness in signing the deal off
- D. Yes, because negotiator should rely on non-verbal communications only
Answer: A
Explanation:
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 thebusiness 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.
NEW QUESTION # 73
Which of the following are typical characteristics of activity-based costing (ABC) method? Select TWO that apply.
- A. ABC provides the information required to take action and realise improvements
- B. Costs are allocated based on volume
- C. Variable and all related overhead expenses are specifically assigned to a business activity
- D. Limited understanding of true costs incurred
- E. ABC has tended to over cost products on long runs and under cost those on short runs
Answer: A,C
Explanation:
:
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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NEW QUESTION # 74
End users are the only stakeholders that are involved in the preparation of a negotiation. Is this statement true?
- A. No, because end-users are external stakeholders
- B. Yes, because end-users have greater expert power
- C. No, because budget holders also play an important role
- D. Yes, because only end-users understand their demand
Answer: C
Explanation:
Commercial negotiation objectives should be driven by the business needs of the organisation. Organisations are made up of different stakeholder groups, some of whom may have different, even conflicting objectives.
From a negotiation perspective, stakeholders can be defined as persons or groups that have interest (or stake) in the outcome of the negotiation you are leading or participating in.
CIPS distinguishes between 3 sets of stakeholders:
- Internal stakeholders
- Connected stakeholders
- External stakeholders
End-users are examples of internal stakeholders. They are the people who will benefit from the purchase of a product or service. However, their interest may conflict with other groups, i.e. the budget controllers whose objective is minimising the expense. In negotiation perspective, procurement should involve different groups of stakeholder.
LO 1, AC 1.1
NEW QUESTION # 75
Neville is a senior procurement specialist in a automaker. He has good relationship with his team mates and other departments because of his amazing purchasing skills and kindness. Which of the following sources of power is Neville likely to possess?
- A. Coercive
- B. Reward
- C. Referent
- D. Legitimate
Answer: C
Explanation:
:
In 1959, French and Raven described five bases of power:
1. Legitimate - This comes from the belief that a person has the formal right to make demands, and to expect others to be compliant and obedient.
2. Reward - This results from one person's ability to compensate another for compliance.
3. Expert - This is based on a person's high levels of skill and knowledge.
4. Referent - This is the result of a person's perceived attractiveness, worthiness and right to others' respect.
5. Coercive - This comes from the belief that a person can punish others for noncompliance.
Six years later, Raven added an extra power base:
6. Informational - This results from a person's ability to control the information that others need to accomplish something.
In the scenario, Neville attracts and keeps good relationship with his colleagues not because of neither position nor reward nor coercion. He has good skills and kindness, which increase his charisma. His source of power is referent power.
NEW QUESTION # 76
Which of the following is a disadvantage of absorption costing method?
- A. Using marginal cost of producing addition units
- B. Variable costs are not taken into product final costs
- C. Limited understanding of true costs incurred
- D. Fixed cost allocated to products on the basis of the cost of activities used in producing them
Answer: C
Explanation:
:
Absorption costing is an approach to allocating overheads in which indirect costs are loaded or absorbed into direct costs related to specific jobs, processes or outputs, using an estimated basis of allocation.
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NEW QUESTION # 77
A procurement manager is considering negotiating variable pricing for a contract duration of 12 months.
Would this be the right thing to do?
- A. No, because it will prove difficult to budget for the duration of the contract and provide financial uncertainty
- B. No, because this will not enhance the buyer-supplier relationship
- C. Yes, because this method of pricing will always provide value for money
- D. Yes, because it will build relationships with the supplier and provide a stronger platform for the next contract renewal
Answer: A
Explanation:
Variable pricing can lead to budgeting challenges and financial uncertainty over a 12-month period. While variable pricing may allow flexibility, it complicates financial planning and forecasting. For predictable budgeting and reduced financial risk, fixed pricing is typically preferred in such contract durations, aligning with CIPS recommendations on pricing models in contract management.
NEW QUESTION # 78
Which of the following are most likely to harm trust between buyer and supplier in a commercial relationship?
Select TWO that apply.
- A. Reduced response time during contract performance
- B. Avoidance of submitting important documentations
- C. Resolving some conditions that would otherwise have them competing for resources
- D. Exploring a disagreement to learn from each other's insights
- E. Subjective assessment of performance
Answer: B,E
Explanation:
Explanation
Trust-destroying behaviours:
- Rumours of partnership or relationship breaking down
- Emotion-based assessment of performance
- Avoiding accountability, passing the blame to others
- General mood - resentment, distrust,frustration, etc
LO 1, AC 1.4
NEW QUESTION # 79
Ranjit is sourcing security clothing and PPE from overseas suppliers. He wants to remove foreign-exchange fluctuation risk and has asked suppliers to quote in GBP. Will this remove the fluctuation risk for the hospital?
- A. No, as the value of the supplier's currency may decrease
- B. Yes, as the risk will sit with the supplier
- C. No, as the risk will sit with the buyer
- D. Yes, as the value of GBP may increase
Answer: B
Explanation:
Setting the contract currency to the buyer's currency transfers FX exposure to the supplier. The buyer gains price certainty in GBP, although the supplier may price in a risk premium-a common application decision when negotiating internationally.
Reference: CIPS L4M5 (2nd ed.), LO 1.2 - Application issues in commercial negotiation (international sourcing, payment/contract currency, risk allocation).
NEW QUESTION # 80
According to Dr. Mari Sako, which of the following is potentially the weakest trust to be built?
- A. Charitable trust
- B. Goodwill trust
- C. Competence trust
- D. Contractual trust
Answer: D
Explanation:
Trust is the expectation that the other party will behave in a predictable and mutually acceptable way. In inter- firm relationships, the presence and absence of trust can affect the level of cost in a relationship. The existence of trust is taught to lower the transaction cost in a relationship. Dr. Mari Sako identified taxonomy of 3 types of trust in commercial relationship, which is very useful from the perspective of procurement.
Contractual trust: Trust based on the contract with TOP. This is potentially the weakest source of trust if there is nothing else to base the trust on, but it is the quickest to establish.
Competence trust: Trust based on TOP's professional qualifications or proven or certified technical capability or experience.
Goodwill trust: Trust based on knowing TOP has your interest at heart and will not behave opportunistically.
This is potentially the strongest type of trust, but it takes the longest time to build.
Otherwise, trust also has legal meaning. A trust is a legal document that can be created during a person's lifetime and survive the person's death. A trust can also be created by a will and formed after death. Charitable trusts are trusts which benefit a particular charity or the public in general.
NEW QUESTION # 81
Stalemate is morelikely to happen if both parties trade more variables in a commercial negotiation. Is this assumption true?
- A. No, because more variables will facilitate more possible negotiated outcomes
- B. No, because the party who offers more variables will have lower bargaining power
- C. Yes, because the negotiation will last endlessly if there aretoo many variables
- D. Yes, because more variables will cause more conflicts of interest
Answer: A
Explanation:
Explanation
Negotiation variables such as price or contract length, etc arethat can be traded with TOP in a negotiation. The more variables you can identify, the better. The more variables you can identify and articulate, the lower the chances of the negotiation reaching deadlock as more possibilities are facilitated regarding more creative solutions.
Below are examples of negotiation tradeables in buying professional services:
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LO 2, AC 2.3
NEW QUESTION # 82
Which of the following types of questions are likely to be the most effective to check facts in negotiations?
- A. Open
- B. Closed
- C. Leading
- D. Hypothetical
Answer: B
Explanation:
Closed questions are useful for verifying facts, as they prompt specific, concise responses. These questions allow the negotiator to confirm details without ambiguity, which is crucial for clarity in negotiation settings, as highlighted in CIPS's guidelines on questioning techniques.
NEW QUESTION # 83
According French and Raven's base model, which of the following are sources of personal power that can be used in commercial negotiation? Select THREE that apply.
- A. Legitimate power
- B. Expert power
- C. Purchasing spend power
- D. Trademark power
- E. Coercive power
- F. Competitive power
Answer: A,B,E
Explanation:
:
A useful model of personal power that has survived the test of time and provide a simple way to analyse negotiation in French and Raven's Power Base Model, which describes six bases of power:
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NEW QUESTION # 84
A negotiation process ends once the negotiating meeting has finished. Is this statement true?
- A. Yes, because both parties have all of the emotional intelligence they need to proceed
- B. No, best practice would include a period of reflection after the meeting as part of the process
- C. Yes, provided that the meeting results in a win-win for both parties
- D. No, the negotiation of terms should always continue after the meeting and until signed by the supplier only
Answer: B
NEW QUESTION # 85
Which of the following are macroeconomic factors that may have influence to the commercial negotiation?
Select TWO that apply
- A. Equilibrium price
- B. Supply curve
- C. Unemployment rate
- D. Rising import tariffs
- E. Bargaining power of supplier
Answer: C,D
Explanation:
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
NEW QUESTION # 86
Any commercial negotiation process has only three stakeholders: procurement, budget holders, and users. Is this TRUE?
- A. Yes, procurement ensures technical specifications are fit for purpose
- B. No, only procurement, the user and suppliers have interest in negotiations
- C. No, other stakeholders, such as directors and IT, may also be interested
- D. Yes, and the budget holder is the most important due to finances
Answer: C
Explanation:
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.
Reference: CIPS L4M5 (2nd ed.), LO 3.1 - Stakeholder identification and management in negotiations.
NEW QUESTION # 87
A supplier's mark-up on all products is 25%. Supplier's profit margin is...?
- A. 20%
- B. 30%
- C. 15%
- D. 75%
Answer: A
Explanation:
Explanation
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LO 2, AC 2.1
NEW QUESTION # 88
Which of the following will help to indicate personality preferences in four dimensions?
- A. Myers-Briggs Type Indicator
- B. Intelligence quotient
- C. Mill's RESPECT mnemonic
- D. Thomas-Kilmann Conflict Resolution model
Answer: A
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 # 89
Which of the following will shift the supply curve to the right?
- A. Increased customers' disposable income
- B. New disruptive technology
- C. Decreased market price of substitute products
- D. Changes in customer taste
Answer: B
Explanation:
The following graph shows the factors that shift the supply curve to the left and to the right.
NEW QUESTION # 90
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