Jan 05, 2026 Detailed New L4M5 Exam Questions for Concept Clearance
L4M5 Exam Preparation Material with New L4M5 Dumps Questions.
CIPS L4M5 Exam Syllabus Topics:
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The CIPS L4M5 exam format comprises multiple-choice questions and a case study that requires the candidate to apply their knowledge of negotiation skills in a practical scenario. The case study is designed to test the candidate's ability to identify the key issues and stakeholders involved, develop a negotiation strategy, and apply appropriate tactics to achieve a positive outcome. L4M5 exam duration is two hours, and the candidate must achieve a minimum of 50% to pass.
NEW QUESTION # 99
XYZ Ltd is importing goods from overseas. They prefer to pay their supplier in their own currency. Which of the following is a true statement?
- A. XYZ has to pay more if their currency depreciates
- B. XYZ has an advantage in negotiating discounts if their currency appreciates
- C. XYZ is able to pay less if their currency depreciates
- D. Supplier will receive less if XYZ's currency appreciates
Answer: B
Explanation:
The effect of a change of relative exchange rates will be determined by which currency you pay your supplier in.
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LO 2, AC 2.2
NEW QUESTION # 100
How can having a best alternative to a negotiated agreement (BATNA) support the buyer in a negotiation?
Select THREE options that apply.
- A. It helps to be more assertive in a negotiation
- B. It helps to identify the point at which the buyer should walk away
- C. It reduces the likelihood of accepting a poor agreement
- D. It extends the length of the negotiation period
- E. It produces an unacceptable outcome
- F. It guarantees a win-win outcome
Answer: A,B,C
Explanation:
Having a BATNA:
Increases assertiveness (A): Knowing the fallback position empowers the buyer to negotiate more confidently.
Reduces the chance of a poor agreement (B): A BATNA ensures the buyer does not feel pressured to accept suboptimal terms.
Identifies walk-away points (F): It sets a clear boundary, allowing the buyer to exit negotiations if terms don't meet minimum requirements.
These align with CIPS's guidance on using BATNA to strengthen negotiation strategies.
NEW QUESTION # 101
Which of the following are sources of power in organisational relationships?
* Coercive power
* Intruded power
* Referent power
* Tactical power
- A. 1 and 4 only
- B. 1 and 3 only
- C. 1 and 2 only
- D. 2 and 4 only
Answer: B
Explanation:
Coercive powerstems from the ability to apply pressure or sanctions, whilereferent powercomes from reputation, charisma, or respect. These are both recognised power sources in negotiations. "Intruded" and
"tactical" power are not classified within the standard power framework used in CIPS materials.
"Sources of power include coercive (based on threats or penalties), referent (based on personal appeal or influence), and others such as reward, expert, and legitimate power." (L4M5 Commercial Negotiation, 2nd edition, Section 3.1 - Power in Negotiation)
NEW QUESTION # 102
Representatives from South African Department of Health is negotiating the price of hospital drugs with US pharmaceutical companies. Which of the following are most likely to be macro factors that influence the outcomes of the negotiation? Select TWO that apply.
- A. Forward integration
- B. Regulations on health and safety Switching costs of buyer
- C. Order quantity
- D. Digitalisation of medicine
Answer: B,D
Explanation:
All one-to-one commercial negotiations between a specific purchaser and a specific supplier take place within an industrial market and a larger business environment characterised by multiple forces which both parties typically have little control over. STEEPLE framework highlights the 6 main external influences on a business:
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Particularly, pharmaceutical industry is a heavily regulated sector, therefore, legal and regulatory matters in the industry is highly important. Otherwise, technological trends also permeate into pharmaceutical companies, technologies like digitalisation may transform the balance of power in such negotiation.
LO 1, AC 1.3
NEW QUESTION # 103
In addition to organisational power, personal power of each negotiator can influence the outcomes of a negotiation. A good negotiator can leverage different sources of power. Is this statement true?
- A. Yes, because allsources of power have similar effectiveness in every situation
- B. Yes, because the good negotiator recognises his own power in a negotiation
- C. No, because only organisational power can be leveraged during a negotiation
- D. No, because each person has only one superior source of personal power
Answer: B
Explanation:
Explanation
Both organisational and personal power have the ability to influence the outcomes of negotiation. Good negotiators recognises the different sources of relative personal power they possess in a negotiation. There is no one superior source of personal power; they will vary in their effectiveness based on the situation. The more personal sources available the better, even if some not used, these can be used as a fallback.
LO 1, AC 1.3
NEW QUESTION # 104
According to Dr. Mari Sako, which of the following is potentially the weakest trust to be built?
- A. Competence trust
- B. Goodwill trust
- C. Charitable trust
- D. Contractual trust
Answer: D
Explanation:
Trust is the expectation that the other party will behave in a predictable and mutually acceptable way. In inter- firm relationships, the presence and absence of trust can affect the level of cost in a relationship. The existence of trust is taught to lower the transaction cost in a relationship. Dr. Mari Sako identified taxonomy of 3 types of trust in commercial relationship, which is very useful from the perspective of procurement.
Contractual trust: Trust based on the contract with TOP. This is potentially the weakest source of trust if there is nothing else to base the trust on, but it is the quickest to establish.
Competence trust: Trust based on TOP's professional qualifications or proven or certified technical capability or experience.
Goodwill trust: Trust based on knowing TOP has your interest at heart and will not behave opportunistically.
This is potentially the strongest type of trust, but it takes the longest time to build.
Otherwise, trust also has legal meaning. A trust is a legal document that can be created during a person's lifetime and survive the person's death. A trust can also be created by a will and formed after death. Charitable trusts are trusts which benefit a particular charity or the public in general.
NEW QUESTION # 105
A buying organisation with a low spend and the reputation for paying late might be viewed by a supplier as which of the following?
- A. Core
- B. Develop
- C. Exploit
- D. Nuisance
Answer: D
Explanation:
To answer this question, you should know The seller's perspective as in 'How to Negotiate Professionally':
Chart, treemap chart Description automatically generated
In the scenario, the buyer's spend is low, while they seem unattractive to seller (as they tend to pay late). So the buyer is classified as Nuisance in seller's perspective.
NEW QUESTION # 106
Which of the following are typical characteristics of activity-based costing (ABC) method? Select TWO that apply.
- A. Limited understanding of true costs incurred
- B. Variable and all related overhead expenses are specifically assigned to a business activity
- C. ABC has tended to over cost products on long runs and under cost those on short runs
- D. ABC provides the information required to take action and realise improvements
- E. Costs are allocated based on volume
Answer: B,D
Explanation:
:
Activity-based costing is an alternative approach to traditional absorption costing. The characteristics of these two methods are illustrated in the graph below:
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NEW QUESTION # 107
Which of the following are factors that might shift the demand curve for a consumer good to the right?
1. Prices of complementary goods decrease
2. Price of the consumer good decreases
3. Customers' expectation of higher prices in the future
4. Consumer tastes shift toward substitute products
- A. 3 and 4 only
- B. 1 and 3 only
- C. 1 and 2 only
- D. 4 and 2 only
Answer: B
Explanation:
Explanation
A shift in demand occurs when an influencing factor other than price changes. Those factors are:
- The income ofbuyers
- The tastes and preferences of buyers
- The prices of other goods and services, especially substitutes and complements
- Expectations of buyer about the future
In this question:
- 'Prices of complementary goods decrease' will lead toquantity demanded for that complements rising, then demand for consumer good will increase accordingly.
- 'Price of the consumer good decreases' will increase the quantity demanded for that good, but it will not shift the demand curve
- 'Customers' expectation of higher prices in the future': in this scenario, customers tend to buy more to store in present, which leads to demand curve shifting to the right
- 'Consumer tastes shift toward substitute products': Demand for substitutes will rise, so demand forthat consumer good will decrease and the demand curve shifts to the left.
LO 2, AC 2.2
NEW QUESTION # 108
Which of the following is categorised as fixed cost?
- A. Land rental paid in advance
- B. Additional pallet hires due to higher demand in year-end season
- C. Raw materials for next year production
- D. Governments taxes
Answer: A
Explanation:
An organisation's expense can be categorised into three groups:
Fixed Costs - costs that do not change with output.
Variable Costs - costs that vary in direct proportion to output.
Semi-variable costs - costs that are a combination of the above, with both a fixed and variable element.
Among the four options:
"Land rental paid in advance": This is fixed cost. The rental won't increase when the production increases.
"Additional pallet hires due to higher demand in year-end season": This can be identified as semi-variable cost (or step cost).
"Governments taxes": The taxes are often levied by a percentage of income or revenue. Therefore, it is variable
"Raw materials for next year production": This is obviously variable cost.
Reference:
CIPS study guide page 79-84
Study tips: Fixed variable and semi-variable costs - AAT Comment
NEW QUESTION # 109
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.
- A. Chief negotiator
- B. Commercial expert
- C. Observer
- D. Secretary
(Correct) - E. Technical expert
Answer: C,D
Explanation:
A negotiating team can be as few as two people, and one person can play one or more of these roles:
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As from the scenario, Jasmine will act as an observer and a scribe (or secretary).
NEW QUESTION # 110
In addition to organisational power, personal power of each negotiator can influence the outcomes of a negotiation. A good negotiator can leverage different sources of power. Is this statement true?
- A. Yes, because the good negotiator recognises his own power in a negotiation
- B. Yes, because all sources of power have similar effectiveness in every situation
- C. No, because only organisational power can be leveraged during a negotiation
- D. No, because each person has only one superior source of personal power
Answer: A
Explanation:
Both organisational and personal power have the ability to influence the outcomes of negotiation. Good negotiators recognises the different sources of relative personal power they possess in a negotiation. There is no one superior source of personal power; they will vary in their effectiveness based on the situation. The more personal sources available the better, even if some not used, these can be used as a fallback.
LO 1, AC 1.3
NEW QUESTION # 111
Where can we find the data on macroeconomics?
1. From trade journal
2. From supplier's marketing catalogue
3. From stock exchange market
4. From government's statistics
- A. 1 and 3 only
- B. 1 and 2 only
- C. 2 and 4 only
- D. 3 and 4 only
Answer: D
Explanation:
Macroeconomic indicators are statistics or data readings that reflect the economic circumstances of a particular country, region or sector. They are used by analysts and governments to assess the current and future health of the economy and financial markets.
Macroeconomic indicators will vary in their meaning and the impact that they have on the economy, but broadly speaking there are two main types of indicator.
- Leading indicators, which forecast where an economy might be heading. They are often used by governments to implement policies because they represent the first phase of a new economic cycle. These include the yield curve, interest rates and share prices.
- Lagging indicators, which reflect an economy's historical performance and only change after a trend has been established. They are used to confirm a trend is underway. These include gross domestic product (GDP), inflation and employment figures.
There is also the category of coincident indicators, but these are generally grouped in with lagging indicators as they either happen at the same time or after an economic shift.
The best macroeconomic indicator to watch will heavily depend on your personal preferences, what positions you are taking and which country your portfolio is focused on. However, there are some very common indicators that most traders and investors will keep an eye on.
For simplicity's sake, we have split these out into leading and lagging indicators.
Top leading indicators:
1. The stock market
2. House prices
3. Bond yields
4. Production and manufacturing statistics
5. Retail sales
6. Interest rates
Top lagging indicators:
1. GDP growth rates
2. The Consumer Price Index (CPI) and inflation
3. Currency strength and stability
4. Labour market statistics
5. Commodity prices
A procurement professional may find stock market data from the security exchange, while most lagging indicators (such as GDP, CPI, unemployment rate, currency and inflation rate, etc) can be found from government statistics data.
Reference:
- CIPS study guide page 117-118
- What Are the Key Macroeconomic Indicators?| IG EN
LO 2, AC 2.2
NEW QUESTION # 112
Which of the following types of questions should be used most often in the proposing phase?
- A. Probing questions
- B. Closed questions
- C. Hypothetical questions
- D. Open questions
Answer: C
Explanation:
At the proposing phase either side may start making tentative proposals regarding their offering. In the case of negotiation where TOP has already submitted a tender or proposal, this stage may provide an opportunity for them to make proposals to improve on their initial offers in general or in areas highlighted by the buying side in advance.
The word 'if' is very useful at this stage and allows you to test tentative proposals without committing yourself. Skilled negotiators use language very carefully. The questions with 'if' are hypothetical ones.
LO 3, AC 3.1
NEW QUESTION # 113
Which of the following are features of a single-sourced type of relationship on the relationship spectrum?
Exclusivity granted in relation to a particular product
The supplier is an oligopoly market structure
The supplier is trusted and collaborative
Framework contracts are used to identify the supplier
- A. 1 and 3 only
- B. 1 and 2 only
- C. 2 and 3 only
- D. 2 and 4 only
Answer: A
Explanation:
Single-sourced relationships often involve exclusivity for a specific product (1) and a high level of trust and collaboration (3) between buyer and supplier. This type of relationship is selected for strategic procurement purposes, often involving long-term partnerships, which align with CIPS's relationship spectrum guidelines.
NEW QUESTION # 114
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CIPS L4M5 Certification Exam Questions: https://drive.google.com/open?id=1GfWaKyfdSfBuqcx6tay2OQ0AOUMrTKL9