Apr-2026 Download Free Latest Exam L4M5 Certified Sample Questions
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CIPS L4M5 exam covers a range of topics, including the negotiation process, negotiation planning, the use of power and influence, communication skills, and conflict resolution. It also examines the legal and ethical considerations involved in commercial negotiations. L4M5 exam is structured to test candidates' ability to apply these concepts in real-world situations, making it a practical and relevant certification for procurement professionals.
NEW QUESTION # 51
Which of the following statements about oligopoly isincorrect?
- A. One firm's behaviour is a function of what its rivals do
- B. A few firms play an important role in the sale of a product
- C. Prices in oligopoly are predicted to fluctuate widely and frequently
- D. Oligopolistic firms recognize their interdependence
Answer: C
Explanation:
Explanation
An oligopoly exists when there are small number of producers that exert a significant influence in the market.
Oligopoly's main characteristics are discussed as follows:
- Interdependence
The most important feature of oligopolyis the interdependence in decision-making of the few firms which comprise the industry. This is because when the number of competitors is few, any change in price, output, product etc. by a firm will have a direct effect on the fortune of its rivals, which will then retaliate in changing their own prices, output or products as the case may be.
- Importance of advertising and selling costs
A direct effect of interdependence of oligopolists is that the various firms have to employ variousaggressive and defensive marketing weapons to gain a greater share in the market or to prevent a fall in their market share. For this various firms have to incur a good deal of costs on advertising and on other measures of sales promotion. Therefore, thereis a great importance of advertising and selling costs under conditions of market situation characterised by oligopoly
- Group behaviour
Another important feature of oligopoly is that for the proper solution to the problem of determination of price and output under, it analysis of group behaviour is impor-tant.
- Indeterminateness of demand curve facing an oligopolist
In this question, 'Prices in oligopoly are predicted to fluctuate widely and frequently' is an incorrect statement as producers in oligopoly often try to set up price. Prices fluctuate more frequently in perfect competition.
LO 2, AC 2.2
NEW QUESTION # 52
Which of the following types of questions should be used most often in the proposing phase?
- A. Probing questions
- B. Hypothetical questions
- C. Closed questions
- D. Open questions
Answer: B
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 # 53
The trust is built based on the other party's professional qualifications or proven or certified technical capability or experience is known as...?
- A. Irrevocable Trust
- B. Goodwill trust
- C. Contractual trust
- D. Competence 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.
Goodwilltrust: 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.
NEW QUESTION # 54
Should a buyer use closed questions in a negotiation?
- A. Yes, because closed questions help to reconfirm certain facts
- B. Yes, because they urge the supplier to provide more :
- C. No, supplier will consider closed questions as provocation
- D. No, the buyer should maximise the use of open questions
Answer: A
Explanation:
:
Asking questions the right way is both an art and a science. Ask the question the wrong way, and the other negotiator might act like a turtle, becoming defensive and withdrawing into their shell. Ask the question the right way, and the other negotiator might "spill the beans.".
Closed Questions: How and when to use them?
Closed questions are those that require a short and focused answer, and are especially helpful in the beginning stages of the negotiation to encourage interaction. They can be used to clarify a point, or to reconfirm certain facts. For example, you can use a closed question to confirm the amount of units the company can produce in a week, or to clarify that what they are really saying is that they don't feel comfortable outsourcing their accounts to India. Most closed questions only require a simple "yes" or "no" response, so there really isn't much room for misinterpretation - great for finding out where both you and they stand.
NEW QUESTION # 55
Which of the following are most likely to be sources of conflict that can emerge from the content of commercial negotiations? Select TWO that apply.
- A. Payment terms
- B. Cultural differences
- C. Requisition
- D. Framework arrangement
- E. Contract governing law
Answer: A,E
Explanation:
There are multiple sources of divergent positions that can arise in situations where money is exchange for goods and services. There are 2 different types of sources. Those that arise from the content or subject matter of the negotiation (what is being negotiated) and those that arise from the process of negotiation (how it is being negotiated).
Sources of divergent position - the content of negotiation:
Table Description automatically generated
Cultural differences are the source of conflict in the process of negotiation.
Requisition is an internal document raised by user or store to communicate to procurement the need to buy the product or service specified. This is merely a internal document.
Framework arrangement is a rather loose set-up, without any legal standing. It usually occurs when an organisation has decided for itself to limit the number of suppliers it is willing to work with and, through a purely internal process, sets up an approved list of such suppliers.
LO 1, AC 1.1
NEW QUESTION # 56
In a negotiation for a new contract, the supplier suggests the buyer to shorten payment period from 45 days to
15 days because they are investing in new facilitiesto expand the supply capacity. The buyer replies that she can only sign off the deal if the payment period is 30 days or more since it often takes at least 30 days for her company to collect the payment from customers. A permission from senior managementis required for this suggestion. In order to ensure that supplier understands the matter, she reiterates it throughout the meeting.
Which tactics is she using?
1. Outrageous initial demand
2. Salami slicing
3. Lack of authority
4. Broken record
- A. 1 and 3only
- B. 2 and 4 only
- C. 1 and 2 only
- D. 3 and 4 only
Answer: D
Explanation:
In the scenario, the buyer states that permission from senior management is required to shorten payment period and she only has authority to sign off a deal in which thepayment period lasts at least 30 days. The buyer is using lack of authority. The buyer also repeats the matter again throughout the negotiation. This is a common tactic known as broken record.
NEW QUESTION # 57
Which of the following is NOT a barrier to entry in a monopolized market?
- A. The government gives a single firm the exclusive right to produce some good
- B. A key resource is owned by a single firm
- C. A single firm is very large
- D. The costs of production make a single producer more efficient than a large number of producers
Answer: C
Explanation:
Monopolies exist in many markets in real life for very different reasons:
Ownership of a Key Resource: When one company exerts sole control over a resource that is necessary for the production of a specific product, the market may become a monopoly. For example, the only medication deemed acceptable to treat a disease comes from a particular ingredient X, and knowledge of this ingredient X is owned by a single family owned company. The company can, therefore, be said to have a monopoly over ingredient X that is needed to cure the disease because it is the only company that can produce a product deemed acceptable.
Government Franchise: In certain instances, a monopoly may be explicitly created by the government if it grants a single company, whether private or government-owned, the right to conduct business in a particular market. For example, when a national railways transportation service is created by the government, in most cases they are granted a monopoly on the operation of passenger trains in the country. As a result, other firms are only able to offer passenger train services with the cooperation and/or permission of the government- owned provider.
Intellectual Property Protection: Extending intellectual property protection to a company in the form of patents and copyrights is yet another way in which monopolies are created. When a government does this, it is in fact giving a single company an exclusive right to provide a particular product / service to the market.
Patents and copyrights work in providing owners of intellectual property with the right to act as an exclusive provider of a new product for a specific length of time. This creates a temporary monopoly in the market with regards to new products and services.
Natural Monopoly: A market may also become a monopoly simply because it may be more cost-effective for one company to serve the whole market than to have several smaller firms in competition with one another. A company with virtually unlimited economies of scale is referred to as a natural monopoly. Such firms become monopolies due to their position and size, which makes it impossible for new entrants in the market to compete price-wise. Natural monopolies are common in industries with high fixed costs and low marginal costs of operation such as providers of television, telephone, and internet services.
In this question, 'A single firm is very large' is not enough to tell whether this market is monopolistic.
NEW QUESTION # 58
A skilled negotiator will use a range of questioning techniques in a negotiation. If they wished to explore options with the other party without making any formal commitment, which type of question style would they use?
- A. Reflective
- B. Leading
- C. Hypothetical
- D. Multiple
Answer: C
Explanation:
Reference: CIPS L4M5 Study Guide, Section 3.2 - The Negotiation Process
NEW QUESTION # 59
Colin Smith is preparing to negotiate for a chemical used in fertiliser. His organisation's objective is ethical and sustainable procurement. Using the Must-Intend-Like (MIL) framework, how should Colin categorise this objective?
- A. Likely to have
- B. Intend to have
- C. Like to have
- D. Must have
Answer: D
Explanation:
In MIL planning, "Musts" are non-negotiable requirements (policy, law, mandatory standards). Ethical
/sustainable procurement is typically a policy/legislative compliance requirement, so it belongs in Must;
"Intend/Like" cover important and desirable aims respectively.
Reference: CIPS L4M5 (2nd ed.), LO 2.2 - Negotiation planning tools (MIL), objectives hierarchy, compliance vs value adds.
NEW QUESTION # 60
Jessica Taylor, a senior buyer, is reflecting on her most recent negotiation. She has been asked by her manager to create a written record of performance. Which of the following should Jessica include in this negotiation performance report? Select THREE that apply:
- A. Other suppliers that could have been used
- B. A detailed pricing structure
- C. A comparison of actual versus set objectives
- D. Travel expenses to attend the meeting
- E. A checklist of for future
- F. Evaluation of the negotiator's performance
Answer: B,C,F
NEW QUESTION # 61
Why is the use of power important for integrative commercial negotiations?
* Moving negotiations forward when they get stuck on certain issues
* Maximising the share of value gains for the negotiator's side
* Coercion of the other party into a submissive agreement
* Breaking through negotiation barriers related to attitude
- A. 2 and 4 only
- B. 1 and 2 only
- C. 1 and 4 only
- D. 2 and 3 only
Answer: C
Explanation:
In integrative (win-win) negotiations, power is not used to dominate or coerce but to enable progress and overcome barriers. Power can help move negotiations forward when discussions stall on specific issues and can help address behavioural or attitudinal barriers that prevent collaboration. Maximising one side's share of gains and coercion are characteristics of distributive or adversarial negotiations, not integrative ones. CIPS clearly differentiates the constructive use of power in integrative negotiations as a means to facilitate dialogue, encourage engagement, and unlock joint value, rather than to force submission or extract disproportionate gains.
Reference: CIPS L4M5 Commercial Negotiation (CORE), 2nd edition - LO 3.1: Constructive use of power in integrative commercial negotiations.
NEW QUESTION # 62
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. 2 and 4 only
- C. 1 and 2 only
- D. 3 and 4 only
Answer: D
Explanation:
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 laggingindicators:
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, whilemost lagging indicators (such as GDP, CPI, unemployment rate, currency and inflation rate, etc) can be found from government statistics data.
NEW QUESTION # 63
Where a market consists of a large producer with high power, it is known as ...
- A. An oligopoly structure
- B. A monopoly structure
- C. A monopolistic structure
- D. A monopsony structure
Answer: B
Explanation:
A monopoly occurs when a single supplier dominates a market, giving them high bargaining power over buyers. By contrast, monopsony is where a single buyer dominates, oligopoly involves a few large suppliers, and monopolistic competition refers to many suppliers with differentiated products. Monopoly power in negotiations means buyers have reduced leverage and may need to rely on regulatory frameworks or collaborative strategies to balance outcomes.
Reference: CIPS L4M5 (2nd ed.), LO 1.2 - Market structures and their impact on negotiation leverage.
NEW QUESTION # 64
A supplier's mark-up on all products is 25%. Supplier's profit margin is...?
- A. 75%
- B. 20%
- C. 30%
- D. 15%
Answer: B
Explanation:
Explanation
Table Description automatically generated with medium confidence
Text Description automatically generated with low confidence
LO 2, AC 2.1
NEW QUESTION # 65
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. 2 and 4 only
- C. 1 and 2 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.
NEW QUESTION # 66
Which of the following is the most appropriate approach to investors or shareholders who have high level of influence but low interest in the running of business?
- A. Keep these people inform through general communication media
- B. Engage and consult with them regularly
- C. Manage them closely
- D. Engage and keep them satisfied
Answer: D
Explanation:
Investors or shareholders who have high level of influence but low interest belong to 'Keep satisfied' quadrant of Mendelow's Stakeholder Matrix.
You may read 2 versions from L4M1 and L4M5 here:
Table Description automatically generated
LO 1, AC 1.1
NEW QUESTION # 67
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CIPS L4M5: Commercial Negotiation exam is an essential qualification for procurement professionals who want to enhance their negotiation skills. Successful completion of L4M5 exam demonstrates that candidates have the knowledge and skills required to negotiate complex commercial contracts. L4M5 exam is a valuable asset for procurement professionals who want to advance their careers and stand out in the job market.
Free CIPS L4M5 Exam 2026 Practice Materials Collection: https://www.examtorrent.com/L4M5-valid-vce-dumps.html
L4M5 Exam Info and Free Practice Test All-in-One Exam Guide Apr-2026: https://drive.google.com/open?id=14rl6cYt4EZzPIG43eqEvS9mmbmsS7uV4
