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Download Commercial Negotiation Exam Dumps
NEW QUESTION 29
Which of the following is the first step in the development of negotiation strategies?
- A. Developing scenarios around possible options
- B. Determining your BATNA
- C. Defining overarching objectives
- D. Recognising TOP’sneeds and wants
Answer: C
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’sbusiness 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.
NEW QUESTION 30
How contribution is calculated in break-even analysis?
- A. Price minus fixed costs
- B. Variable costs subtracted from fixed costs
- C. Fixed costs divided by variable costs
- D. Variable costs subtracted from price
Answer: D
Explanation:
Contribution = Price – Variable cost
Break-evenpoint (volume) = Fixed cost/Contribution
NEW QUESTION 31
Which of the following are most likely to be fixed costs of an airline? Select TWO that apply.
- A. Advertising and promotion
- B. Catering services
- C. Fuel
- D. Purchase of aircraft
- E. Flightcrew training
Answer: D,E
Explanation:
Explanation
Fixed costs (FC) are costs that do not vary with volume. To an airline once aircraft are purchased, flight crews trained and departures scheduled, costs are disproportionately fixed.
Variable costs (VC) arethose which vary with the amount produced. Fuel, catering services and marketing are examples of variable.
LO 2, AC 2.1
NEW QUESTION 32
Understanding supplier’s mark-up and margin can provide procurement professional a comprehensive insight into supplier’s net profits. Is this statement true?
- A. Yes, becausesupplier’s mark-up and margin are two most valuable sources of information to procurement
- B. Yes,because these are two indicators of supplier’s future prospect
- C. No, because mark-up and margin inform little about supplier’s net profit
- D. No, because margin is enough to tell procurement about supplier’s profitability
Answer: C
Explanation:
Explanation
Mark-up and margin allow supplier to make gross profit. Remember that every supplier operates under different cost structures and some are set up to be most profitableat a particular level of volume, so it is dangerous to assume all suppliers can survive on a lower margin if their volume increases. Intelligent buyers understand that mark-up and margin may define gross profits, but they tell you very little about a supplier’s net profits.
LO 2, AC 2.1
NEW QUESTION 33
Sally is negotiating with an oversea supplier on the price and payment period. Her company and the supplying organisation are equal in bargaining power.The supplier says that they are investing in new facilities and machinery so the payment period should not be longer than 30 days. Sally knows that her company often pays the suppliers after 45 days from the delivery, but at the moment the company has positive cash flow and it is able to pay immediately. Which of the following should be Sally’s concession plan?
- A. Agree with supplier’s payment period without anyfurther demand
- B. Shorten payment period but ask for a discount
- C. Demand for a discount without any other concessions
- D. Contend on the normal payment period
Answer: B
Explanation:
Explanation
In the scenario, the length of payment period is particularly important to the supplier as they are investing new facilities. Otherwise, the buyer’s company has apositive cash flow position and budget is available for a shorter payment terms. So this tradeable (payment period) is important to supplier but it is not a significant problem with the buyer. This tradeable will fall within ‘Easy concession to trade’ quadrant in the following matrix:
Table Description automatically generated
If the tradeable fall within this quadrant, Sally should shorten the payment period in supplier’s favour and try to win as many concessions as possible in return. Asking for a discount may be a reasonable trade-off.
LO 2,AC 2.3
NEW QUESTION 34
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