CIPS L4M5 Practice Exams
Last updated on Oct 22,2026- Exam Code: L4M5
- Exam Name: Commercial Negotiation
- Certification Provider: CIPS
- Latest update: Oct 22,2026
Question #61
Spend waterfall
- A . 2 and 4 only
- B . 3 and 4 only
- C . 1 and 2 only
- D . 1 and 3 only
Correct Answer: A
A
Explanation:
Understanding where and with whom your supplier spends their money, or understanding the ‘cost breakdowns’ or ‘price build-up’ of the goods and services you purchase from the supplier, will help you know where and when they can offer price concessions.
Cost information can be expressed with more impact through graphs that can be created using Excel and PowerPoint or other softwares. There are two commonly used models known as ‘spend waterfall’ and ‘spend tree’. Spend waterfall shows the build-up of costs, while the spend tree shows all the spends that an organisation makes.
There is no graph known as ‘spend candlesticks’. Candlestick chart is a style of financial chart used to describe price movements of a security, derivative, or currency.
The aggregate expenditure model is a method of calculating GDP. The aggregate expenditure model focuses on the relationships between production (GDP) and planned spending: GDP = planned spending = consumption + investment + government purchases + net exports.
A
Explanation:
Understanding where and with whom your supplier spends their money, or understanding the ‘cost breakdowns’ or ‘price build-up’ of the goods and services you purchase from the supplier, will help you know where and when they can offer price concessions.
Cost information can be expressed with more impact through graphs that can be created using Excel and PowerPoint or other softwares. There are two commonly used models known as ‘spend waterfall’ and ‘spend tree’. Spend waterfall shows the build-up of costs, while the spend tree shows all the spends that an organisation makes.
There is no graph known as ‘spend candlesticks’. Candlestick chart is a style of financial chart used to describe price movements of a security, derivative, or currency.
The aggregate expenditure model is a method of calculating GDP. The aggregate expenditure model focuses on the relationships between production (GDP) and planned spending: GDP = planned spending = consumption + investment + government purchases + net exports.
Question #62
Effective listening is important in integrative negotiations. Is this statement correct?
- A . Yes, as it allows issues to be shared and understood between all parties
- B . Yes, as it means the supplier’s attempts at negotiation can be stopped quickly with reasoning
- C . No, as what the other party has to say is not important
- D . No, as effective listening is important only in a distributive negotiation
Correct Answer: A
A
Explanation:
Effective listening is crucial in integrative negotiations because it promotes understanding and collaboration. By actively listening, parties can identify shared interests and address concerns, which supports the goal of reaching mutually beneficial solutions. This is a key component in CIPS guidelines on successful integrative negotiation practices.
A
Explanation:
Effective listening is crucial in integrative negotiations because it promotes understanding and collaboration. By actively listening, parties can identify shared interests and address concerns, which supports the goal of reaching mutually beneficial solutions. This is a key component in CIPS guidelines on successful integrative negotiation practices.
Question #63
Mike is a junior buyer who has been working for a manufacturing organisation for two years, specializing in purchasing research. Over this time, he has built good relationships within his team and with other departments.
Which of the following sources of power is Mike most likely to possess?
- A . Referent
- B . Reward
- C . Position
- D . Coercive
Correct Answer: A
A
Explanation:
Referent power is based on personal relationships and the respect or admiration one earns within an organization. Given Mike’s positive relationships and his rapport with team members and other
departments, he is most likely to have referent power. This power type is influential in negotiation as people are more willing to work with someone they respect, as outlined in CIPS power dynamics in negotiation.
A
Explanation:
Referent power is based on personal relationships and the respect or admiration one earns within an organization. Given Mike’s positive relationships and his rapport with team members and other
departments, he is most likely to have referent power. This power type is influential in negotiation as people are more willing to work with someone they respect, as outlined in CIPS power dynamics in negotiation.
Question #64
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?
- A . Yes, because the negotiation should be done as quick as possible
- B . Yes, because Diana’s proposal is a fair trade for both parties
- C . No, because Diana should state exactly the increasing quantity
- D . No, because Diana has put the markers down too soon
Correct Answer: D
D
Explanation:
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’s
Be punctual and well presented (welcome theirarrival)
Break the ice with small talks
Start the conditioning process
Check authority
Check agenda
Consider using visual aid to set out key objectives or make key points Don’ts
Use strong, pushy, cold or tough style at the opening Put down marker at this stage
Criticise 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.
D
Explanation:
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’s
Be punctual and well presented (welcome theirarrival)
Break the ice with small talks
Start the conditioning process
Check authority
Check agenda
Consider using visual aid to set out key objectives or make key points Don’ts
Use strong, pushy, cold or tough style at the opening Put down marker at this stage
Criticise 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.
Question #65
Which of the following are examples of non-verbal negotiation? Select THREE that apply.
- A . Asking the supplier to repeat their proposal
- B . Getting messages across with facial expressions
- C . / Speaking softly with long pauses
- D . Communicating with the other party by using gestures
- E . Explaining to the supplier about the scope of the project
- F . Using the body language
Correct Answer: B, D, F
B, D, F
Explanation:
Nonverbal communication is important because it gives us valuable information about a situation including how a person might be feeling, how someone receives information and how to approach a person or group of people.
There are several types of nonverbal communications you should be aware of, including:
B, D, F
Explanation:
Nonverbal communication is important because it gives us valuable information about a situation including how a person might be feeling, how someone receives information and how to approach a person or group of people.
There are several types of nonverbal communications you should be aware of, including:
Question #66
Venue for the negotiation talks
- A . 1 and 2
- B . 1 and 3
- C . 3 and 4
- D . 2 and 3
Correct Answer: B
B
Explanation:
Zone of Potential Agreement (1) and Walk-away point (3) are key elements in negotiation planning. Establishing a Zone of Potential Agreement helps identify where interests align, while the Walk-away point sets the limit of acceptable terms. Both are essential to preparing a negotiation framework that benefits both parties, as per CIPS best practices.
B
Explanation:
Zone of Potential Agreement (1) and Walk-away point (3) are key elements in negotiation planning. Establishing a Zone of Potential Agreement helps identify where interests align, while the Walk-away point sets the limit of acceptable terms. Both are essential to preparing a negotiation framework that benefits both parties, as per CIPS best practices.
Question #67
Which of the following are examples of variable costs?
Building and site rent
Annual insurance premium
Raw materials expenditure
Delivery costs for materials
- A . 1 and 3
- B . 2 and 3
- C . 1 and 4
- D . 3 and 4
Correct Answer: D
D
Explanation:
Raw materials expenditure (3) and delivery costs for materials (4) are variable costs as they fluctuate with production levels. Variable costs vary directly with the volume of production, unlike fixed costs such as rent or insurance, in line with CIPS’s classifications of cost types in procurement.
D
Explanation:
Raw materials expenditure (3) and delivery costs for materials (4) are variable costs as they fluctuate with production levels. Variable costs vary directly with the volume of production, unlike fixed costs such as rent or insurance, in line with CIPS’s classifications of cost types in procurement.
Question #67
Which of the following are examples of variable costs?
Building and site rent
Annual insurance premium
Raw materials expenditure
Delivery costs for materials
- A . 1 and 3
- B . 2 and 3
- C . 1 and 4
- D . 3 and 4
Correct Answer: D
D
Explanation:
Raw materials expenditure (3) and delivery costs for materials (4) are variable costs as they fluctuate with production levels. Variable costs vary directly with the volume of production, unlike fixed costs such as rent or insurance, in line with CIPS’s classifications of cost types in procurement.
D
Explanation:
Raw materials expenditure (3) and delivery costs for materials (4) are variable costs as they fluctuate with production levels. Variable costs vary directly with the volume of production, unlike fixed costs such as rent or insurance, in line with CIPS’s classifications of cost types in procurement.
Question #67
Which of the following are examples of variable costs?
Building and site rent
Annual insurance premium
Raw materials expenditure
Delivery costs for materials
- A . 1 and 3
- B . 2 and 3
- C . 1 and 4
- D . 3 and 4
Correct Answer: D
D
Explanation:
Raw materials expenditure (3) and delivery costs for materials (4) are variable costs as they fluctuate with production levels. Variable costs vary directly with the volume of production, unlike fixed costs such as rent or insurance, in line with CIPS’s classifications of cost types in procurement.
D
Explanation:
Raw materials expenditure (3) and delivery costs for materials (4) are variable costs as they fluctuate with production levels. Variable costs vary directly with the volume of production, unlike fixed costs such as rent or insurance, in line with CIPS’s classifications of cost types in procurement.
Question #70
Which of the following are most likely to turn buying organisation into an unattractive customer in supplier’s perspective? Select TWO that apply.
- A . Demands for kickback
- B . Reduced paperwork in procurement processes
- C . Adopting clear and concise CSR policies
- D . Unclear tender award criteria
- E . Using SRM technology
Correct Answer: A, D
A, D
Explanation:
Becoming a preferred customer to supplier’s perspective can increase the purchaser’s leverage in negotiation. Beside the size of buying organisation or its spend, the following may be sufficient to differentiate the buyer from other buying organisations:
Simple procurement processes: Using SRM technology may help to simplify the process Simple contracting processes
Clear and concise documentation: Reduced paperwork helps both supplier and buyer save their time and resources.
Absence of onerous supplier terms and conditions
On-time payment
Transparent processes: Unclear tender award criteria can be seen as opaque. Suppliers who attended the tendering processes cannot know the reasons why their bids are rejected and hesitate to attend other tendering.
Ethical behaviour: Suppliers may prefer a buyer who adopts CSR policy because they can predict potential customer’s behaviour. Demands for kickback are unethical behaviours.
A, D
Explanation:
Becoming a preferred customer to supplier’s perspective can increase the purchaser’s leverage in negotiation. Beside the size of buying organisation or its spend, the following may be sufficient to differentiate the buyer from other buying organisations:
Simple procurement processes: Using SRM technology may help to simplify the process Simple contracting processes
Clear and concise documentation: Reduced paperwork helps both supplier and buyer save their time and resources.
Absence of onerous supplier terms and conditions
On-time payment
Transparent processes: Unclear tender award criteria can be seen as opaque. Suppliers who attended the tendering processes cannot know the reasons why their bids are rejected and hesitate to attend other tendering.
Ethical behaviour: Suppliers may prefer a buyer who adopts CSR policy because they can predict potential customer’s behaviour. Demands for kickback are unethical behaviours.