Economic growth can be measured by...?

• A.The PPI
• B.GDP
• C.The CPI
• D.SBLI

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Which of the following are most likely to harm trust between buyer and supplier in a commercial relationship?
Select TWO that apply.

• A.Avoidance of submitting important documentations
• B.Reduced response time during contract performance
• C.Resolving some conditions that would otherwise have them competing for resources
• D.Subjective assessment of performance
• E.Exploring a disagreement to learn from each other's insights

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Professional buyer is planning for the next negotiation of a simple one-off contract. This negotiation is typified by which of the following? Select TWO that apply.

• A.Continuous dialogue with supplier
• B.Total cost of ownership is themost important criterion
• C.Vendor ratings will be used
• D.Arm's-length approach
• E.Pricing is the most important criterion

Correct Answer: D,E

Professional buyers, when planning or engaging in negotiation with suppliers, should always be aware ofwhere the intended and actual relationship with this supplier is positioned on the 'spectrum' or 'continuum' of commercial relationships. The relationship spectrum describes the range of commercial relationships between a buyer and supplier based on richness of communication, longevity and mutual dependence.
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In the question, the contract is simple one-off (or spot buy), which means the relationship will likely to be more transactional. In such relationship, price is the most important criteria and buyer may adopt arm's-length approach.

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If a negotiation results in an offer which does not meet the buyer's minimum requirements, which of the following could the buyer pursue?

• A.PESTLE
• B.BATNA
• C.ZOPA
• D.STEEPLE

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A buying organisation with a low spend but the reputation for paying on-time. In order to increase buyer's leverage in negotiation with suppliers, which of the following should be a priority of this buyer?

• A.Unclear tender award criteria
• B.Volume separation
• C.Spend concentration
• D.Unavailable technical support

Correct Answer: C

Explanation
According to Paul Steele's 'The Seller's Perspective', customer can be classified into 4 categories as below:
To increase theleverage in negotiation, buyer may increase its attractiveness and/or increase spend value. In this scenario, the buyer is already attractive to supplier as it always pays on-time, but the spend is still low. So to have greater leverage, the buyer has toincrease its spend volume by spend concentration. Spend concentration may take many forms as following:
- Vendor base reduction
- Volume pooling
- Volume redistribution
- Volume consolidation across categories
- Standardisation and harmonisation of specifications
- Forming purchasing consortia
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LO 1, AC 1.3

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