CIPS Exam Report for Learner Community:

Transcription

1 CIPS Exam Report for Learner Community: Qualification: Diploma in procurement and supply Unit: D4 - Negotiating and contracting in P&S Exam series: January 2016 Question 1 Learning Outcome 1 (a) Explain FIVE details that a typical Enquiry or Request for Quotation form will include. (b) Describe TWO circumstances in which it may be appropriate to use a performance specification to specify requirements in a commercial agreement. (15marks) (10marks) Learning outcome Explain the documentation that can comprise a commercial agreement for the supply of goods or services (a) There are a number of details that might possibly be included in an Enquiry / Request For Quotation. These details are fairly straightforward and typically, might be as follows: The purchaser's contact details - name, address, telephone and address. A reference number to use in reply to allow easy access to specific quotations A date by which the buyer should receive a reply The quantity and description of the goods or services required - quantities, units of measure, specification and grades etc. The required place and date of delivery to include method and batch sizes, also where there may be multisite locations. The buyer's standard (and any special) terms and conditions of purchase The buyer's required terms of payment such as the time and methods of payment, currency and process to be used. Any five of these should be explained to display an understanding of their nature and what their purpose is. The majority of answers were satisfactory and gained reasonably high marks and some answers were linked to the candidate s personal experience which is always useful, providing the experience is relevant. If answers gained poorer marks it was because they did not provide satisfactory explanation of the points made. Also, some answers appeared to confuse Enquiry or Request for Quotation with Quotations and provided details that a purchaser might expect to find on a supplier s quotation. (b) Typical circumstances in which performance specifications might be used include: When the supplier has greater relevant technical and manufacturing expertise than the buyer so that JANUARY 16_D4_EXAM REPORT _LEARNER_COMMUNITY_FV 1/7

2 the best knowledge available is being used. Here, the buyer will be greatly reliant on the supplier's expertise When technology is changing rapidly in the supplying industry so that the buyer is not in the position of providing out-of-date specifications to potential suppliers and should benefit from the supplier's innovation capacity and technological development. When there are clear criteria for evaluating alternative solutions put forward by suppliers competing for the contract (e.g. at the tendering stage). When the buyer has sufficient time and expertise to assess the potential functionality of suppliers' proposals and competing alternatives, particularly if the supplier is using technology with which the buyer is unfamiliar. It was also acceptable for answers to be based around the advantages of using performance specifications. For 5 marks each, a reasonably detailed description of any two of these points should be made with the emphasis on situations in which they might be the best form of specification to use. Again, the majority of answers were satisfactory and gained reasonable marks. Answers that gained poorer marks did not provide enough detail. Some answers appeared to confuse performance specifications with conformance ones and in such cases, gained very few marks. Also, some answers gave examples of circumstances of the use of performance specifications taken from personal experience. Credit was given in such cases providing there was a clear link between the experience and the use of performance specifications. Question 2 Learning Outcome 2 a) Describe THREE sources of personal power that can be used in a commercial negotiation b) Explain the reasons that lead to a monopoly supplier having high power relative to a purchaser in a commercial negotiation. (15 marks) (10 marks) Learning outcome Explain how the balance of power in commercial negotiations can affect outcomes (a) There are a number of potential sources of personal power that can assist a negotiator during negotiation, as follows: Legitimate power (sometimes called position power ): this is the authority that comes with a negotiator s role (position) in an organisation. This can influence negotiation if the other party believes that this authority is legitimate. Information power: this is based on the accumulation and presentation of data to be used to influence the other party and change their point of view. Expert power: this relates to a negotiator s knowledge and expertise that are recognised and valued and are used to influence and support decisions to achieve a desired outcome. JANUARY 16_D4_EXAM REPORT _LEARNER_COMMUNITY_FV 2/7

3 Referent power: this relates to the fact that a charismatic and inspiring personality can be powerful. Reward power: this is when a negotiator has control over resources such as money, materials and people and the ability to reward (e.g. by awarding a contract). Coercive power: this is the power and ability to threaten sanctions and penalise actions if compliance is not offered. Personality and individual differences: this is the understanding of and willingness to use the above powers as well as having behavioural tendencies and skills and moral orientation. Contextual power: this is, for example, having a BATNA/walk away position. Answers should take any three of these power types and give a reasonably detailed explanation of their nature plus an explanation of how they might be relevant to a negotiation. Generally, answers to this question were not as good as answers to other questions. Some candidates did not appear to be familiar with the above models of personal power, explanation of which should form the basis for answers to this question. Many answers seemed to confuse the titles of the various power sources. For example, instead of referring to referent power, they would refer to it as (e.g.) charisma or appearance. Some answers also gave no reference to any specific type of power but just provided some characteristics. Also some answers, although few in number, discussed overt power and covert power which represent power in relationships rather than power in negotiation. (b) The basis of answers to this question are that, in a monopoly supply situation, the supplier will have high bargaining power in the following ways: Monopoly suppliers tend to be large organisations and there will be only one supplier whereas there may be many buyers. The supplier s product is highly differentiated meaning that a purchaser might not have any other supply options. There may be few, if any, products that might be substitutes for the supplier s product. The volume/value of purchases by the buying organisation is relatively unimportant to the supplier. The supplier s product is important to the buyer. The supplier has specialised processes or equipment meaning that the buyer may not have the opportunity to go elsewhere. The switching costs for the buying organisation are high if a substitute were developed. The supplier might be attractive because of its reputation or quality making alternatives difficult to find. Answers were expected to give a reasonably detailed explanation of why a monopoly supplier might have high power relative to a purchaser using some of the above points. There was no stipulation as to the number of these points to be used and high marks were awarded for answers that linked such points to a supplier s having power over the purchaser. JANUARY 16_D4_EXAM REPORT _LEARNER_COMMUNITY_FV 3/7

4 The majority of answers to this question were good although some did not provide enough detail to gain high marks. Some poorer answers discussed market structures such as describing the features of a monopoly market and comparing these with (e.g.) an oligopoly as well as using theoretical market models such as Porter s Five Forces rather than giving reasons why a monopoly supplier might have high power relative to a purchaser. Models such as Porter s Five Forces help explain how and why monopolies exist but do not really explain why a monopoly supplier might have power over a purchaser. Such answers seemed to ignore the fact that a monopoly supplier is not necessarily the only supplier in a particular market but might be a supplier that has been selected by a purchaser as the only suitable supplier available. Question 3 Learning Outcome 3 (a) Examine FIVE resources required for an effective face-to-face negotiation meeting (b) Suggest FIVE points that should be considered when preparing for a telephone negotiation compared with a face-to-face negotiation. (15marks) (10 marks) Learning Outcome Analyse the resources required for a negotiation a) The following represent resources that may be required for effective face-to-face negotiation: Personnel: this means sufficient participants and support staff with the right skills are required for each stage of the meeting. Finances: a budget is required for items such as room hire, refreshments, travel and conferencing facilities as well as fees for expertise support staff or mediators. Time - Sufficient time should be set aside for a single or series of meetings. Allocation of time for preparation and for follow up work/follow up meetings will also need to be considered. Information: this is a key resource for communication within the meeting but also as an activity in preparation for the meeting such as market analysis, supplier, market, environmental factors, bargaining positions etc. Space : the venue should be selected to suit the requirements of the negotiation and should be suitably set up and equipped with the appropriate layout and surroundings to suit the negotiation. Equipment including visual aids, breakout rooms and refreshments should be made available. Information and communication technology: the increasing use of virtual negotiations will require telephones and/or equipment for tele-conferencing, web conferencing, information access/sharing, etc. Answers were expected to select any five of these points and provide an explanation of their roles in negotiation. Answers to this question were generally of a very high standard with many candidates gaining full marks. Occasionally, candidates referred to sources of power (as in Q2a) rather than resources but such answers were few in number. JANUARY 16_D4_EXAM REPORT _LEARNER_COMMUNITY_FV 4/7

5 (b) There are quite a large number of possible points that would need to be considered, when preparing for a telephone negotiation, as follows: Pre-arranging a suitable time for both parties and ensuring you have the correct telephone number to call. Preparing an agenda for the call and sharing it prior to the negotiation. Preparing questions to ensure understanding and overcome the lack of non-verbal cues. Making a note of all conversations prior to the call, preparing to listen carefully to the other parties tone and intonation and being ready to check understanding of both parties. Preparing strong cases or arguments as they may prevail to a greater extent in telephone negotiations. Taking steps to initiate the call as there tends to be a power advantage to the party who makes the call. Preparing psychologically because telephone calls create psychological pressure to conclude a deal before hanging up. Problems with technical, environmental or background noise such as poor telephone lines or a noisy office may interfere with telephone negotiations so precautions should be taken before the telephone call. Answers were expected to select any five of the above points and provide a brief description of them and their possible effect on telephone negotiation. Answers should also indicate how such points would relate to negotiation preparation. Answers to this question were generally not as good as those for part (a). Many answers did not really focus on points that should be considered when preparing for telephone negotiation. Such answers tended to focus on differences between telephone negotiation and face-to-face negotiation. Many answers discussed nonverbal communication which is not present in telephone negotiation but this is not something that can be prepared for in the true sense. Some answers mentioned the use of conference calls for negotiation and the need to prepare for these. Credit was given for the use of this topic in answers. Question 4 Learning Outcome 4 a) Identify THREE types of non-verbal communication and explain why each is important in negotiation. b) Explain the use of FOUR different types of question (9 marks) (16 marks) Learning Outcome Explain how to analyse the process and outcomes of the negotiations to inform future practice JANUARY 16_D4_EXAM REPORT _LEARNER_COMMUNITY_FV 5/7

6 (a) Once again, there are a large number of possible answers to this question. Non-verbal communication is a concept that has been very widely studied globally and this has led to a huge range of possibilities. The emphasis here is on suggest because it is very difficult to make definite connections between non-verbal actions and what they are perceived to display. Possible answers may include use of the following points: Eye contact: failure to make/maintain eye contact suggests dishonesty. However, staring at the other party may be perceived as threatening. Eye contact should be made when delivering an important part of a message. Body positioning: slouching suggests lack of attention or interest and turning away suggests rudeness or, in effect, ignoring the other party. Crossed legs and arms suggest resistance whereas leaning forward with knees and hands apart suggests openness. Neuro-linguistic programming: this is a range of non-verbal behaviours that may lead the other party towards an empathetic relationship using (e.g.) mirroring which involves picking up aspects of the other party s body language, vocal tone or vocabulary. There are many other aspects of neurolinguistic programming. Encouragement by (e.g.) nodding: small nods acknowledge that information is being received and tilting the head to one side suggests developing interest. The two together are seen as a powerful encouragement. Smiling could be seen as encouraging also. Gestures: there are many of these such as hand over mouth suggesting doubt; hands behind head suggesting confidence; crossed arms suggesting being defensive; leaning forward suggesting willingness; clenching/unclenching fists suggesting frustration and evasive eye contact suggesting deception. Cultural bias: there are cultural biases which can have an effect on the negotiation process. These might include such things as dress code and greeting methods (handshake; bowing, etc.). Proxemics: this is how close one party wants to be to the other party and it differs between cultures with some cultures preferring to be more physically distant than others. Facial gestures: these might include the position of eyebrows (frowning might suggest worry, criticism or disagreement). Also, the mouth dropping open suggests astonishment or horror whereas tightened lips suggest a defensive mood. Thrusting the chin out may be seen as being rebellious. Silence: this is a non-verbal behaviour used as a negotiation tactic because it conveys power, exerts pressure and encourages the other party to fill the silence and potentially give away important information. Paralanguage: this is tone of voice, speed of speaking and emphasis. It relates to how something is said. Object language: this is (e.g.) personal grooming, dress and furniture in the negotiation room. All of these things say something about the party negotiating and the environment in which the negotiation is being carried out. Answers should select any three of these points and explain them and their potential effect on negotiation. There are other possible answers because, as stated above, this is potentially a huge subject. JANUARY 16_D4_EXAM REPORT _LEARNER_COMMUNITY_FV 6/7

7 Answers to this question were generally of a very high standard with many gaining full marks. Sometimes, some of the above points such as gestures, eye contact, facial expressions and body posture were put together under the heading kinesics but this was acceptable. One error that occurred (though not greatly) was answers that gave letters and s as examples of non-verbal communication. Whilst it could be argued that these are examples of non-verbal communication because they do not involve spoken words, they are not non-verbal communication in the true sense. Non-verbal communication refers specifically to communication in a meeting that is not spoken. (b) There are a range of types of question and four of these should be selected and explained with reasonable detail. They are as follows: Open questions: these help to provide information and usually begin with words such as who, why, what, how, when and where. Such questions cannot be answered with a simple yes or no, because they demand more. It is particularly useful to use open questions during the opening and testing phases of a negotiation. Closed questions: such questions usually demand a simple yes or no answer and are useful for establishing specific points of fact. They also assist in summarising points to clarify the situation, or in reviewing what has been agreed. Probing questions: these are usually used to clarify points of detail and are normally open questions directed to a specific subject. They may be used to make the other party give required information. Multiple questions: this is a string of questions asked as one, for example, How do you ensure fixed prices, delivery, quality, and the level of after-sales service we require? They are useful for putting the other party under pressure. Leading questions: these indicate that a particular answer is expected, for example, So there will be no problem in meeting our quality requirements? where the answer is clearly No. Such questions can be used to gain acceptance of a negotiator s views. Reflective questions: these emphasise the need to bring feelings into a negotiation, for example, You seem unhappy about that proposal. They often appear as statements without a question mark, but clearly require a response from the other party indicating what they feel. Hypothetical questions: such questions usually begin What if. or Suppose. and are useful for getting the other party to think about new ideas and enable options to be discussed or extended. Answers were generally very good and gained high marks and gaining full marks was not uncommon. One problem, although not widespread, was that some answers displayed a misunderstanding of the meaning of types of question (i.e. open questions, etc.) and invented specific questions that might be asked during negotiation such as When can you deliver.?. A few answers also described loaded questions which is not one of the recognised question types. JANUARY 16_D4_EXAM REPORT _LEARNER_COMMUNITY_FV 7/7