QUESTION: 37

According to Dr. Mari Sako, which of the following is potentially the weakest trust to be built?

Competence trust
Goodwill trust
Charitable trust
Contractual trust

Answer(s): 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.

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QUESTION: 38

Which of the following may help the procurement professional increase expert power in commercial negotiation? Select TWO that apply.

Personality
Official positions
Insights
Ability to compensation
Expertise knowledge

Answer(s): C,E

Explanation:

Expert power is based on a person's high levels of skill and knowledge, formal training, qualifications and experience in a particular procurement category would give someone expert status and mean that in negotiation their voice is listened to as a more objective, informed knowledge leader. Expert power is based on facts, knowledge, research, insight and study. Legitimate power comes from rules, formal authority, organisation rank, staff rate or official position held.
Reward power comes from one person's ability to compensate or reward another for compliance. Referent power stems from their personality, way of engaging with others and habit of acting in a way that is in line with a strong set of values and principles.

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QUESTION: 39

In which of the following persuasion methods, the influencer uses logics and objective reasons to persuade the others to buy into influencer's ideas?

Persuasive reasoning (push)
Collaborative (pull)
Visionary (pull)
Directive (push)

Answer(s): 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':

Using logical and objective reasons is one of the typical characteristics of persuasion reasoning method.

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QUESTION: 40

At the first stage of CIPS Procurement 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

Answer(s): A

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.

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