L4M5 exam questions for practice in 2026 Updated 373 Questions
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CIPS L4M5 exam covers a range of topics related to commercial negotiation, including the principles of negotiation, negotiation styles and tactics, and the legal and ethical considerations involved in negotiation. L4M5 exam is designed to test candidates' abilities to effectively negotiate contracts, manage stakeholder relationships, and achieve mutually beneficial outcomes in commercial transactions.
NEW QUESTION # 203
At the first stage of CIPS Procurement and Supply Cycle (Understand need), which of the following is the most important duty of procurement professional?
- A. Evaluating the interests from suppliers
- B. Demand management
- C. Deciding whether RFQ or ITT should be used
- D. Undertaking 'reverse marketing'
Answer: B
Explanation:
:
At the first stage of CIPS Procurement and Supply Cycle (Understand need and develop a high-level specification), procurement professional mainly negotiate with internal stakeholders. They have a duty to proportionately and constructively challenge specification if there's genuine doubt over the need or how the need is expressed. This is called demand management. Their first duty is to the organisation's treasury, not to functional managers.
Demand management including: negotiation/challenge between procurement and internal stakeholders over the need/requirement/specification. Remember that in any process or product, the greatest opportunity for cost reduction is at the design stage.
NEW QUESTION # 204
A skilled negotiator will use a range of questioning techniques in a negotiation. If they wished to explore options with the other party without making any formal commitment, which type of question style would they use?
- A. Reflective
- B. Hypothetical
- C. Leading
- D. Multiple
Answer: B
Explanation:
Reference: CIPS L4M5 Study Guide, Section 3.2 - The Negotiation Process
NEW QUESTION # 205
Rose is a senior buyer from a skiing equipment retailer. Rose is concerned about the current ski boot shortage and the number of invoicing problems from a key supplier. She has decided to have a video conference with Victor, CEO of the supplier. Initially, she intends to threaten Victor with contract termination unless he can improve the situation. However, she is a little wary of doing this as the switching costs are high. Eventually, she decides to seek solutions by encouraging the other party to offer their views and ideas. Rose also prepares some ideas to discuss with Victor. Which of the following is the persuasion method that Rose intends to use in the forthcoming conference?
- A. Collaborative (pull)
- B. Directive (push)
- C. Visionary (pull)
- D. Persuasive reasoning (push)
Answer: A
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 result of 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':
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In the scenario, Rose intends to let both parties exchange their views and ideas so that solutions to current problems can be found. This is the typical characteristic of collaborative (pull) method.
NEW QUESTION # 206
Distributive approach in negotiation is typified by which of the following?
- A. Both parties understand each other's goals
- B. Distributive approaches are inherently inferior to integrative approaches in commercial negotiation
- 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 # 207
Which of the following are the most typical characteristics of integrative approach to negotiation? Select TWO that apply.
- A. Creating more value
- B. Positional-based
- C. Interest-based
- D. Claiming value
- E. Short-term wins
Answer: A,C
Explanation:
Integrative approach to negotiation used when the interested parties are attempting to create more of something of value to share, also known as collaborative approach or win-win. Integrative, interest-based negotiation can facilitate constructive, positive relationship and establishes contracts between parties on a foundation of goodwill. In integrative bargaining, both parties seek to 'expand the pie' by creating more value for both the buyer and the seller. Integrative negotiation 'shares the pie' and is interest rather than positional based.
In distributive bargaining, the focus is on claiming value and getting as much of the pie as parties can.
LO 1, AC 1.2
NEW QUESTION # 208
In which of the following scenarios could you adopt a distributive-based negotiation approach?
- A. When your organisation is dependent on a supplier for delivery of a large contract in the future
- B. When determining costs to incorporate a unique product into your design with the patent holder
- C. When procuring a widely available commodity item which is not strategic to your organisation
- D. When asking for changes to the provision of a strategic service provided by a monopoly supplier
Answer: C
Explanation:
Reference: CIPS L4M5 Study Guide, Section 1.2 - Approaches to Negotiation
NEW QUESTION # 209
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.
- A. Vendor ratings will be used
- B. Continuous dialogue with supplier
- C. Total cost of ownership is the most important criterion
- D. Pricing is the most important criterion
- E. Arm's-length approach
Answer: D,E
Explanation:
Professional buyers, when planning or engaging in negotiation with suppliers, should always be aware of where the intended and actual relationship with this supplier is positioned on the 'spectrum' or 'continuum' of commercial relationships. The relationship spectrum describes the range of commercial relationships between a buyer and supplier based on richness of communication, longevity and mutual dependence.
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In the question, the contract is simple one-off (or spot buy), which means the relationship will likely to be more transactional. In such relationship, price is the most important criteria and buyer may adopt arm's-length approach.
NEW QUESTION # 210
Which of the following is a disadvantage of absorption costing method?
- A. Fixed cost allocated to products on the basis of the cost of activities used in producing them
- B. Variable costs are not taken into product final costs
- C. Using marginal cost of producing addition units
- D. Limited understanding of true costs incurred
Answer: D
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 # 211
Which of the following is categorised as fixed cost?
- A. Land rental paid in advance
- B. Governments taxes
- C. Raw materials for next year production
- D. Additional pallet hires due to higher demand in year-end season
Answer: A
Explanation:
:
An organisation's expense can be categorised into three groups:
Fixed Costs - costs that do not change with output.
Variable Costs - costs that vary in direct proportion to output.
Semi-variable costs - costs that are a combination of the above, with both a fixed and variable element.
Among the four options:
"Land rental paid in advance": This is fixed cost. The rental won't increase when the production increases.
"Additional pallet hires due to higher demand in year-end season": This can be identified as semi-variable cost (or step cost).
"Governments taxes": The taxes are often levied by a percentage of income or revenue. Therefore, it is variable
"Raw materials for next year production": This is obviously variable cost.
NEW QUESTION # 212
The National Schools Purchasing Forum (NSPF) is a procurement organisation that purchases goods and services on behalf of schools on a national scale. NSPF is close to concluding negotiations in a meeting with Hygienics For All (HFA) for the supply of consumables to school washrooms. Both parties have reached an agreeable position, and NSPF feels it is important that they conclude the negotiation at this point. What type of questions should NSPF ask HFA to achieve this?
- A. Probing questions
- B. Hypothetical questions
- C. Open questions
- D. Closed questions
Answer: D
Explanation:
Closed questions are effective for concluding negotiations, as they often elicit straightforward yes-or-no responses, helping to finalize terms and confirm agreement on specific points. This approach facilitates a clear and concise close to discussions, ensuring that both parties confirm their commitment to the agreed terms, as recommended by CIPS negotiation strategies.
NEW QUESTION # 213
According to Dr. Mari Sako, which of the following is potentially the weakest trust to be built?
- A. Goodwill trust
- B. Contractual trust
- C. Competence trust
- D. Charitable trust
Answer: B
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 # 214
Which of the following is an advantage of consultation as an influencing tactic?
- A. Enhances decision-making and encourages communication
- B. Encourages commitment and enhances low-position power
- C. Secures swift compliance and wears down resistance
- D. Suits values-based cultures and addresses motivating factors
Answer: B
Explanation:
Consultation involves actively involving stakeholders or counterparties in decision-making. By seeking input, it fosters a sense of ownership, increasing commitment to negotiated outcomes. It is particularly effective when the negotiator has low positional power, as it shifts dynamics from authority to collaboration. Unlike coercion or compliance tactics, consultation builds engagement and long-term trust, which is critical in complex procurement where buy-in is essential for contract success. CIPS stresses its role in building influence where direct authority is limited.
Reference: CIPS L4M5 (2nd ed.), LO 3.2 - Persuasion through consultation, collaboration, and influence.
NEW QUESTION # 215
Which of the following are the most typical characteristics of integrative approach to negotiation? Select TWO that apply.
- A. Creating more value
- B. Positional-based
- C. Interest-based
- D. Claiming value
- E. Short-term wins
Answer: A,C
Explanation:
Integrative approach to negotiation used when the interested parties are attempting to create more of something of value to share, also known as collaborative approach or win-win. Integrative, interest-based negotiation can facilitate constructive, positive relationship and establishes contracts between parties on a foundation of goodwill. In integrative bargaining, both parties seek to 'expand the pie' by creating more value for both the buyer and the seller. Integrative negotiation 'shares thepie' and is interest rather than positional based.
In distributive bargaining, the focus is on claiming value and getting as much of the pie as parties can.
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LO 1, AC 1.2
NEW QUESTION # 216
During a negotiation, Jose Gomez, the salesperson for a strategic supplier, states that his sales director will not approve discounts against initial purchases. However, Jose offers a 5% discount against the aftercare package, which will provide the same monetary saving. Sally Pampas requires both the product and the aftercare package and has an objective to achieve a 5% discount off the purchase price. To achieve a win-win (integrative) negotiation, Sally should:
- A. Ask Jose to apply a discount against the price
- B. Accept the offer of a discount against the aftercare package
- C. Ask Jose to apply the 5% discount against the purchase price
- D. Decline the offer and walk away from the negotiation
Answer: B
Explanation:
Reference: CIPS L4M5 Study Guide, Section 1.2 - Approaches to Negotiation
NEW QUESTION # 217
JCB is a large manufacturer of heavy machinery. The CPO is going to a negotiation with a Chinese supplier about procuring some major components. He is wondering about balance of power in the negotiation. Which of the following micro factors are most likely to shift the balance of power towards the buying organisation in this commercial negotiation? Select TWO that apply
- A. Suppliers are more concentrated than buyer
- B. JCB's switching costs are low
- C. Buyers purchase in small volumes
- D. Eruption of epidemic in supply market
- E. These components are highly standardised
Answer: B,E
Explanation:
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:
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- One-to-one buyer-supplier dynamics.
The question asks about the micro factors that increases buyer's bargaining power. Among 5 answers, only 2 are likely to increase buyer'spower:
- JCB's switching costs are low: Buyer may easily switch its suppliers anytime
- These components are highly standardised: The products are not different any more, buyer may choose to buy from any supplier available.
Other answers cannot be correctbecause:
- Suppliers are more concentrated than buyer: Suppliers are forming oligopoly market, their bargaining power tend to be greater.
- Eruption of epidemic in supply market: this is a macro factor. Eruption of epidemic may cause factories closed and disruptions on supply chain.
- Buyers purchase in small volumes: Buyer will be seen as less potential to suppliers. Buying organisation may have difficulties to deal better price with suppliers.
LO 1, AC 1.3
NEW QUESTION # 218
Which of the following are most likely to beindirect costs of a garment manufacturer? Select THREE that apply.
- A. Textile
- B. Maintenance materials
- C. Depreciation of machinery
- D. Zips pads
- E. Utilities
- F. Packaging material
Answer: B,C,E
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 # 219
According to Fiona Dent and Mike Brent, which of the following are characteristics of Push approach? Select TWO that apply.
- A. Inspirational
- B. Persuasion
- C. Seeking commitment
- D. Directive
- E. Collaborative
Answer: B,D
Explanation:
:
According to the book 'Influencing: Skills and techniques for business success' by Fiona Dent and Mike Brent, there are two major influencing styles. Push tends to be directive. It tells, and is clear and resolute, but needs to be employed in situations where firmness is required because of difficulties that exist or weakness is evident. Pull is more participatory and collaborative. It seeks to incorporate everyone's perspective. It can appear wishy-washy if not skilfully employed. That approach should be followed which is most likely to secure commitment and not mere compliance.
The two divisions can be further divided into four style categories: directive; persuasive reasoning; collaborative - team oriented, people oriented to inspire them with a vision. The directive style relies on your expertise and reputation being respected by others, and where there really does seem to be one answer. It is
"I" driven whereas persuasive reasoning is more "we" and issue driven. Directive styles can make the user appear as "a bull in a china shop"; persuasive reasoning can be portrayed as tough guy.
Collaborative influencing takes the "we" element further and seeks to mobilise everyone's ideas in a journey of discovery. It may have the flavour of "I'm your best friend", which may not go down too well. Visioning style is concerned to stir people's emotions in support of achieving an objective. This last one has been used by demagogues to stir people's hearts and minds for evil purposes as well as good.
A useful table offers the benefits, problems, words and body language associated with each style along with advice on when to use and when to avoid each. Cases and exercises illustrate these styles.
Empathy comes in for extended treatment with the definition of "standing in the other's shoes". This does not necessarily happen just intuitively, and therefore before a specific influencing effort there should be an intense effort to think about the other person or persons and to sense what it might feel like to be them - their hopes, fears, concerns, what turns them on, what turns them off, where are they coming from.
NEW QUESTION # 220
Commercial negotiation ends at the award of a contract. Is this statement true?
- A. Yes, because there are no rooms for negotiation after the contract is awarded
- B. No, because real commercial negotiation begins after the contract is awarded
- C. No, because improvements can be achieved through post-award negotiation
- D. Yes, because the supplier will comply with legally binding obligations
Answer: C
Explanation:
Negotiation doesn't end after the contract is awarded. The needs for negotiation can arise in any post-award stages. For example, at supplier development and relationship management stage, improvement in supplier capability, capacity, and product/service range can be negotiated. Negotiations with long-term strategic critical suppliers should be carried out in a partnering style, with a win-win starting point assumed.
In some sectors such as transport, utilities and infrastructure, tenderers may 'bid low' or even make a loss to win major contracts with a view to negotiating lucrative changes, variations and 'add-ons' over the life of the contract when the supplier is bedded in and the buyer is in the weaker position to push back or challenge.
Even in less complex contract, it is very likely that there will be a need to negotiate with that supplier again after the awarding of the contract.
LO 1, AC 1.1
NEW QUESTION # 221
Jessica Taylor, a senior buyer, is reflecting on her most recent negotiation. She has been asked by her manager to create a written record of performance.
Which of the following should Jessica include in this negotiation performance report? Select THREE that apply.
- A. A detailed pricing structure
- B. Other suppliers that could have been used
- C. Travel expenses to attend the meeting
- D. A checklist of points learned for the future
- E. A comparison of actual versus set objectives
- F. Evaluation of the negotiator's performance
Answer: D,E,F
Explanation:
Post-negotiation analysis should include performance evaluation, learning outcomes, and a comparison of achieved results versus original objectives. These elements contribute to continuous improvement and future strategy development.
Reference: L4M5 Commercial Negotiation 2nd edition (CORE), Section 4.3 - Post-Negotiation Review and Performance Reporting
NEW QUESTION # 222
Which of thefollowing is the purpose of using stakeholder support level scale?
- A. To estimate the gap and the progress towards desired levels of support
- B. To identify stakeholder's needs and expectations
- C. To identify stakeholder level of influence and interest and plot them on stakeholder map
- D. To identify key stakeholders
Answer: A
Explanation:
Explanation
In order to estimate the gap and the progress towards desired level of support, a stakeholder support scale can be used by the procurement internally. The support level scale measures stakeholder commitment. Current support level for the procurement/negotiation objectives should be gained from engagement with key stakeholders. The following is an example of stakeholder support level scale:
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LO 1, AC 1.1
NEW QUESTION # 223
Which of the following are sources of personal power?
* Legitimate power
* Strategic power
* Expert power
* Leverage power
- A. 1 and 3 only
- B. 1 and 2 only
- C. 2 and 4 only
- D. 2 and 3 only
Answer: A
Explanation:
Personal poweris derived from an individual's unique qualities or expertise. It differs from positional power, which is based on job title or authority.Legitimate powerstems from an official position of authority, whileexpert poweris based on skills, knowledge, and credibility. These are both commonly used by procurement professionals to influence outcomes in negotiations.
"Expert power arises from experience, qualifications, or specialist knowledge that is recognised and respected by others. Legitimate power stems from a formal position or role within an organisation." (L4M5 Commercial Negotiation, 2nd edition, Section 3.1 - Sources of Power in Negotiation) Note: Strategic and leverage power are more aligned with organisational positioning and external factors, not personal influence.
NEW QUESTION # 224
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CIPS L4M5 certification exam consists of a series of multiple-choice questions that test the candidate's knowledge and understanding of commercial negotiations. L4M5 exam is computer-based and is available at various testing centers around the world. Candidates are required to achieve a passing score in order to receive the certification.
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