QUESTION: 29

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?

Yes, because the outcomes of negotiation are attributable to the buying organisation
No, because personal power of negotiators also attributes to the outcomes
No, because power of supplier is the only factor that influences the other party
Yes, because buyer's brand, reputation and purchasing spend largely determine the outcomes

Answer(s): B

Explanation:

The assumption is false, because when a procurement 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.

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QUESTION: 30

Jasmine and the IHL sales team have a negotiation scheduled with one of AB's lead buyers, Samuel, at AB's premises. This is one of the biggest negotiations that Jasmine has been involved in and is eager not to make any mistakes. Jasmine has heard from a colleague that Samuel tends to adopt an integrative negotiation style. IHL senior management decides to send a team of three members to the negotiation. Jasmine is among the team and she is assigned to check body language, reactions, feeds insight to her leader and to record important comments and information from the meeting for minutes.
Which of the following are roles of Jasmine in the forthcoming negotiation? Select TWO that apply.

Secretary
(Correct)
Commercial expert
Technical expert
Chief negotiator
Observer

Answer(s): A,E

Explanation:

A negotiating team can be as few as two people, and one person can play one or more of these roles:

As from the scenario, Jasmine will act as an observer and a scribe (or secretary).

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QUESTION: 31

When implementing value analysis or value engineering, which of the following acronyms reminds both buyer and supplier of ideas on removal, substitution and design-out of cost elements?

SMART
STOPS WASTE
OWN-IT
SAMOA

Answer(s): B

Explanation:

Ray Carter coined the mnemonic STOPS WASTE to remind buyers of 10 cost-reduction ideas they can ask for themselves and their suppliers in any situation when considering a key purchase input. Stop Waste by:
Standardisation - is there a standard specification?
Transportation - is the inbound transport classification appropriate Over-engineered - is the specification too tight?
Packaging - can packaging be reduced or eliminated?
Substitutes - is there a cheaper substitute material
Weight - is there opportunity to reduce weight of the product? Any unnecessary processing - is there any unnecessary design or feature? Supplier's input - are suppliers able to assist with the cost reduction To make - is it more economical to make or buy?
Eliminate - if no one uses the feature, can it be eliminated? SAMOA is a useful acronym for checking and testing the information gathered from the Internet:
Source
Audience
Methodology
Objectivity
Accuracy
OWN-IT is acronym for 5 steps in the process of collecting and analysing the data and information needed in any field:
Outline
Wide search
Narrow search
Increase your stockpile of information
Transform your stockpile into new knowledge
A SMART goal is used to help guide goal setting. SMART is an acronym that stands for Specific, Measurable, Achievable, Realistic, and Time-bound.

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QUESTION: 32

Which of the following is the first step in the development of negotiation strategies?

Determining your BATNA
Developing scenarios around possible options
Recognising TOP's needs and wants
Defining overarching objectives

Answer(s): D

Explanation:

Developing specific negotiation strategies in areas where risk or spend is high involves analysing a wide range of objectives and variables within the context of the organisation's business requirements. The first stage in any negotiation preparation is to define your overall objectives which may be related to a single variable such as price in the case of a standardised requirement, or many variables in the case of capital equipment. Your negotiating strategies and tactics will all be focused on achieving overall objectives.

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