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 #71
Any commercial negotiation process has only three potential stakeholders: procurement, the budget holders, and the users. Is this TRUE?
- A . Yes, and the budget holder is the most important one because of the finances involved
- B . Yes, the role of procurement is to ensure that the technical specifications are fit for purpose
- C . No, only procurement, the user, and suppliers have an interest in the products negotiated
- D . No, other stakeholders, such as directors, and IT might also be interested in the negotiation outcomes
Correct Answer: D
D
Explanation:
Other stakeholders, including directors, IT, and finance departments, often have an interest in procurement negotiations, particularly when the contract impacts strategic objectives, IT infrastructure, or organizational operations. This broader stakeholder involvement aligns with CIPS’s emphasis on inclusive stakeholder management in procurement to ensure well-rounded decision-making.
D
Explanation:
Other stakeholders, including directors, IT, and finance departments, often have an interest in procurement negotiations, particularly when the contract impacts strategic objectives, IT infrastructure, or organizational operations. This broader stakeholder involvement aligns with CIPS’s emphasis on inclusive stakeholder management in procurement to ensure well-rounded decision-making.
Question #71
Any commercial negotiation process has only three potential stakeholders: procurement, the budget holders, and the users. Is this TRUE?
- A . Yes, and the budget holder is the most important one because of the finances involved
- B . Yes, the role of procurement is to ensure that the technical specifications are fit for purpose
- C . No, only procurement, the user, and suppliers have an interest in the products negotiated
- D . No, other stakeholders, such as directors, and IT might also be interested in the negotiation outcomes
Correct Answer: D
D
Explanation:
Other stakeholders, including directors, IT, and finance departments, often have an interest in procurement negotiations, particularly when the contract impacts strategic objectives, IT infrastructure, or organizational operations. This broader stakeholder involvement aligns with CIPS’s emphasis on inclusive stakeholder management in procurement to ensure well-rounded decision-making.
D
Explanation:
Other stakeholders, including directors, IT, and finance departments, often have an interest in procurement negotiations, particularly when the contract impacts strategic objectives, IT infrastructure, or organizational operations. This broader stakeholder involvement aligns with CIPS’s emphasis on inclusive stakeholder management in procurement to ensure well-rounded decision-making.
Question #73
Ma Bell was the sole provider of landline telephone service to most of the US in 1980s.
This is an example of…?
- A . Monopsony
- B . Monopoly
- C . Monopolistic competition
- D . Perfect competition
Correct Answer: B
B
Explanation:
A monopoly exists when only one company can supply an essential product or service in a given region because of significant barriers to entry for any competitor. The barriers can be legal, regulatory, economic, or geographic. Ma Bell case is an example of monopoly. The company was broken up in 1982.
A monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers.
Pure or perfect competition is a theoretical market structure in which the following criteria are met:
– All firms sell an identical product (the product is a "commodity" or "homogeneous").
– All firms are price takers (they cannot influence the market price of their product).
– Market share has no influence on prices.
– Buyers have complete or "perfect" information―in the past, present and future―about the product being sold and the prices charged by each firm.
– Resources for such a labor are perfectly mobile.
– Firms can enter or exit the market without cost.
Monopolistic competition characterizes an industry in which many firms offer products or services that are similar, but not perfect substitutes. Barriers to entry and exit in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect those of its competitors.
Monopolistic competition is closely related to the business strategy of brand differentiation
Reference: CIPS study guide page 105-110
LO 2, AC 2.2
B
Explanation:
A monopoly exists when only one company can supply an essential product or service in a given region because of significant barriers to entry for any competitor. The barriers can be legal, regulatory, economic, or geographic. Ma Bell case is an example of monopoly. The company was broken up in 1982.
A monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers.
Pure or perfect competition is a theoretical market structure in which the following criteria are met:
– All firms sell an identical product (the product is a "commodity" or "homogeneous").
– All firms are price takers (they cannot influence the market price of their product).
– Market share has no influence on prices.
– Buyers have complete or "perfect" information―in the past, present and future―about the product being sold and the prices charged by each firm.
– Resources for such a labor are perfectly mobile.
– Firms can enter or exit the market without cost.
Monopolistic competition characterizes an industry in which many firms offer products or services that are similar, but not perfect substitutes. Barriers to entry and exit in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect those of its competitors.
Monopolistic competition is closely related to the business strategy of brand differentiation
Reference: CIPS study guide page 105-110
LO 2, AC 2.2
Question #73
Ma Bell was the sole provider of landline telephone service to most of the US in 1980s.
This is an example of…?
- A . Monopsony
- B . Monopoly
- C . Monopolistic competition
- D . Perfect competition
Correct Answer: B
B
Explanation:
A monopoly exists when only one company can supply an essential product or service in a given region because of significant barriers to entry for any competitor. The barriers can be legal, regulatory, economic, or geographic. Ma Bell case is an example of monopoly. The company was broken up in 1982.
A monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers.
Pure or perfect competition is a theoretical market structure in which the following criteria are met:
– All firms sell an identical product (the product is a "commodity" or "homogeneous").
– All firms are price takers (they cannot influence the market price of their product).
– Market share has no influence on prices.
– Buyers have complete or "perfect" information―in the past, present and future―about the product being sold and the prices charged by each firm.
– Resources for such a labor are perfectly mobile.
– Firms can enter or exit the market without cost.
Monopolistic competition characterizes an industry in which many firms offer products or services that are similar, but not perfect substitutes. Barriers to entry and exit in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect those of its competitors.
Monopolistic competition is closely related to the business strategy of brand differentiation
Reference: CIPS study guide page 105-110
LO 2, AC 2.2
B
Explanation:
A monopoly exists when only one company can supply an essential product or service in a given region because of significant barriers to entry for any competitor. The barriers can be legal, regulatory, economic, or geographic. Ma Bell case is an example of monopoly. The company was broken up in 1982.
A monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers.
Pure or perfect competition is a theoretical market structure in which the following criteria are met:
– All firms sell an identical product (the product is a "commodity" or "homogeneous").
– All firms are price takers (they cannot influence the market price of their product).
– Market share has no influence on prices.
– Buyers have complete or "perfect" information―in the past, present and future―about the product being sold and the prices charged by each firm.
– Resources for such a labor are perfectly mobile.
– Firms can enter or exit the market without cost.
Monopolistic competition characterizes an industry in which many firms offer products or services that are similar, but not perfect substitutes. Barriers to entry and exit in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect those of its competitors.
Monopolistic competition is closely related to the business strategy of brand differentiation
Reference: CIPS study guide page 105-110
LO 2, AC 2.2
Question #75
Which of the following is most likely a consequence of falling interest rate?
- A . Increase aggregate demand
- B . Decrease investment
- C . Increase savings
- D . Decrease consumption
Correct Answer: A
A
Explanation:
If interest rate are too low and credit is too, cheap rates can fund a spending boom with consumers and businesses buying (investment) more than they can afford to pay back.
A
Explanation:
If interest rate are too low and credit is too, cheap rates can fund a spending boom with consumers and businesses buying (investment) more than they can afford to pay back.
Question #76
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?
- A . SMART
- B . STOPS WASTE
- C . OWN-IT
- D . SAMOA
Correct Answer: B
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.
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.
Question #76
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?
- A . SMART
- B . STOPS WASTE
- C . OWN-IT
- D . SAMOA
Correct Answer: B
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.
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.
Question #76
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?
- A . SMART
- B . STOPS WASTE
- C . OWN-IT
- D . SAMOA
Correct Answer: B
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.
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.
Question #76
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?
- A . SMART
- B . STOPS WASTE
- C . OWN-IT
- D . SAMOA
Correct Answer: B
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.
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.
Question #76
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?
- A . SMART
- B . STOPS WASTE
- C . OWN-IT
- D . SAMOA
Correct Answer: B
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.
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.