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A buyer is approaching a negotiation where the company is in a low-power negotiating position in relation to the supplier. How can the buyer improve leverage and power with the supplier?
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?
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.
John is in a negotiation with a supplier. They have decided that their future
relationship will be long term, built on trust and respect, and that gains and risk
will be shared between the parties. The parties will also share ideas and
collaborate on those ideas. Which of the following is this type of relationship?
An organisation is developing the specification for a capital purchase project. An important stakeholder has doubt on the draft specification. The buyer invites him to the product function meetings. In these meeting the attendees can raise their concerns, the specification development team takes in all the concerns and adjusts the specification accordingly. What kind of technique is the specification development team using?
In the scenario, anyone who has concerns can join a meeting to raise their thoughts. The project team takes the stakeholders' ideas into account. This is known as coalition: A group of people or organisations come together and work collaboratively to achieve some goals. Specifically in this scenario, the goal is creating a high-quality and unified specification for an important project.
CIPS study guide page 164-165
What Is a Coalition Anyway?
A senior buyer analyses the supply market and he realises that his organisation is treated as Exploit according to supplier's perspective model. What does he need to do?
The supplier's perspective model has two axes: Spend value and Attractiveness:
Exploit is the quadrant where the buyer has high spend but low attractiveness. Overarching supplier objective would be: 'Milk this customer and charge a high price to compensate for all the pain they put us through'.
The buyer should increase its attractiveness to raise the position to Core customer. To do this, a buyer may:
- Simplify procurement processes
- Simplify contracting processes
- Use clear and concise documentation
- Eliminate onerous supplier terms and conditions
- Make the payment on time
- Use transparent processes
- Promote ethical behaviours
LO 1, AC 1.4
At which stage in a negotiation would questions be asked to obtain missing information?
There are 5 key phases of negotiation:
The opening phase: confirm understanding and get the issue on the table
The testing phase: check assumption and confirm understanding
The proposing phase: asking 'if'
The bargaining phase: using tradeables
The agreement and closing phase
The testing could take the form of questions following a presentation by either side or questions on a tender or proposal document received by the buyer from the potential supplier. The testing phase is necessary to confirm that your approach and objectives are appropriate for the negotiation situation you now find yourself in. Careful listening, observation and interpretation of TOP's responses may give indication of the following:
Areas where TOP is willing and unwilling to make concessions
What factors or issues TOP places a high value on
If there are any non-commercial or emotional factors that may be pertinent
TOP's underlying interests - why they are taking the position they are.
XYZ Ltd decides to go to market for a cleaning contract to service a number of offices. It knows that it will get a price which may, or may not, be better than the one it is currently paying. To gain leverage in the marketplace, the organisation decides to add other related services to the scope, such as gardening, security and maintenance, which increase the value of the contract. This is an example of which forms of spend consolidation?
Buying organisation may increase its leverage with suppliers by concentrating spend. Supplier spend consolidation can take many forms as outlined below:
- Vendor base reduction: straightforward reduction of number of suppliers in any category
- Volume pooling: pooling cross organisational requirement until your order volume is high enough to attract new bidders/additional discounts
- Volume redistribution: making recommendations following spend analysis to move from one supplier to another
- Volume consolidation across categories: certain purchase requirements may be common across a number of categories. In the scenario, XYZ has combined different categories but closely related to office services into a larger contract so that they can increase their leverage.
- Standardisation and harmonisation of specifications: analysis of specifications and standards for a high spend purchased input, may show that there is a little difference between them and that the specification can be standardised or at least harmonised across the group or across national, regional or global operations.
- Forming purchasing consortia: buyers may decide to come together and combine their purchase volumes to attract better deals.
LO 1, AC 1.3
Exam domains verified against: Official CIPS L4M5 exam guide, last checked October 2026.
Analyse the application of commercial negotiations in procurement and supply, including definitions, negotiation in the sourcing process, sources of conflict, and stakeholder influence. Differentiate between collaborative win-win and distributive win-lose approaches. Explain how power balance affects negotiation outcomes and identify relationship types that impact negotiations.
Describe types of costs and prices including direct, indirect, variable and fixed costs. Analyse break-even analysis, costing methods, volumes, margins and mark-ups. Contrast economic factors at micro and macro levels. Analyse criteria such as objectives, bargaining mix, positions and interests. Identify resources required including location, colleagues, communication methods and room layout.
Identify the stages of a negotiation from preparation through opening, testing, proposing, bargaining, agreement to closure, and how behaviours should change at each stage. Appraise persuasion methods and tactics to influence outcomes. Compare communication skills including questioning, listening, push and pull behaviours, nonverbal communication, cultural awareness and emotional intelligence. Analyse how to assess negotiation processes and outcomes to improve future practice.
Sample question from this domain above: Q4
Common questions about the exam itself
