'Supplier may want to encourage buyer's demand': the buyer tends to prefer lower price, if supplier

wants to encourage its customers to buy more, it needs to offer discount at bulk amount. So this

option is not acceptable.

'Supplier may have high fixed cost - variable cost ratio': Supplier with high fixed cost needs high

volumes to break even, but once achieved, it may be able to offer significant discounts for bulk

orders

'The supplier may have reached economy of scale': when economy of scale is reached, cost per unit

will be minimal which often leads to more favourable price.

'Supplier may need to open new facilities to meet increasing customer's demand': Increasing

customer's demands may excess supplier's current capacity. Therefore, supplier may need to extend

its capacity by investing more in facilities. To cover these fixed cost investment, supplier may charge

higher price.

LO 2, AC 2.1

A push approach typically involves exerting authority or power (1) with the party being influenced

generally aware of the influence process (3). This method involves overtly directing or persuading the

other party, often through explicit information or directives, as per CIPS’s understanding of push

influence techniques.

In contracts which have major commodity input, the price is determined by market forces with no

individual supplier or buyer able to influence it significantly. Prices are much more variable even

within long term contracts and seeking a fixed price would create financial risks for both the buyers

and the suppliers. It is often intelligent to agree a contract price adjustment mechanism to allow for

market price changes so both sides share risk.

The marketing and corporate communications of suppliers are direct sources of microeconomic

information, particularly about individual companies and industry conditions. Other options (RPI,

financial market data, etc.) are more aligned with macroeconomic data, focusing on broader

economic trends, as outlined in CIPS definitions of micro vs. macroeconomic data sources.

Competitive bidding is generally recommended for high-value or complex purchases where the cost

and time required for the bidding process are justified. For low-value, routine items like pens, the

time and resources required for competitive bidding may outweigh the potential cost savings, as

noted in CIPS best practices. Hence, Option C is the best answer.

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

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.

In a win-lose outcome, tactics often involve lowering the other party’s resistance point (1) and

convincing them that the offer is the best possible (2). These strategies are designed to maximize

advantage for one party at the expense of the other, fitting with CIPS’s win-lose negotiation

techniques.

Different questioning styles can be used to elicit desired responses:

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Many commercial negotiations could be considered routine or just not worth the investment for

buyers, and using the phone can make more sense and can be more immediate.

LO 2, AC 2.4

Persistent late payment of the supplier’s invoices (A) and Unequal sharing of gains, risks, and costs

with the supplier (B) are potential sources of conflict as they create dissatisfaction and imbalance in

the relationship. According to CIPS materials:

Late payments (A) can strain the supplier’s cash flow, affecting their operational stability and leading

to mistrust in the buyer.

Unequal sharing of gains, risks, and costs (B) can result in one party feeling exploited or unfairly

treated, which undermines the collaborative spirit essential for long-term partnerships.

In contrast, requesting early supplier involvement, planning visits, or setting delivery dates are

typically part of constructive relationship management practices and do not inherently lead to

conflict.