IHL has been supplying to XYZ Ltd for months. XYZ Ltd procurement manager Diana realises that the IHL's input prices are dropping and this is a good time to re-negotiate the price of the contract. She invites IHL representative to XYZ headquarter to make a bargain on the current price. At the opening stage of the negotiation, Diana requests a 10% reduction in price with an increase in volume purchased.Is Diana's action appropriate in the opening phase?
Answer(s): D
The opening stage of the negotiation covers the very first few minutes when the parties meet and greet each other and are seated in the negotiation room in preparation for the main event. Typical behaviours at the opening stage: 'dos' and 'don'ts' Do'sBe punctual and well presented (welcome their arrival) Break the ice with small talksStart the conditioning processCheck authorityCheck agendaConsider using visual aid to set out key objectives or make key points Don'tsUse strong, pushy, cold or tough style at the openingPut down marker at this stageCriticise other organisations/TOP's previous contacts/third parties. In this scenario, Diana has made her proposal right at the opening stage. This is an example of 'don'ts'. Good negotiators are very careful about 'red lines'. If she puts such barrier up too early, the supplier may not try to look for more creative solutions later in the negotiation.
Distributive approach in negotiation is typified by which of the following?
Answer(s): C
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.
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?
Answer(s): B
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.
CIPS study guide page 47-50French and Raven's Five Forms of Power
Which of the following are most likely to be direct costs of a steel manufacturer? Select THREE that apply.
Answer(s): B,E,F
:Direct costs are those costs of a product/service directly attributable/traceable to its production.Examples of direct costs including the following:Materials and services bought-in: In steel manufacturer, raw materials are iron ores, scrap metal, coals, etcLabour or wages: money paid to staff for the work involved in producing the product. Other expenses: other charges incurred that can be specifically attributed to a particular product, batch or service
An organisation is developing the specification for a capital purchase project. An important stakeholder has doubt on the draft specification. The buyer invites him to the product function meetings. In these meeting the attendees can raise their concerns, the specification development team takes in all the concerns and adjusts the specification accordingly. What kind of technique is the specification development team using?
In the scenario, anyone who has concerns can join a meeting to raise their thoughts. The project team takes the stakeholders' ideas into account. This is known as coalition: A group of people or organisations come together and work collaboratively to achieve some goals. Specifically in this scenario, the goal is creating a high-quality and unified specification for an important project.
CIPS study guide page 164-165What Is a Coalition Anyway?
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