SCM 421 Topic 12: Negotiation

The term "expanding the pie" refers to: a. Value proposition b. Value claiming c. Value creation d. Value evaluation e. Value math

c. Value creation

The term BATNA stands for . . .? a. Best Alternative to a Negotiated Agreement b. Best Altercation to No Avail c. Better At True Negotiation Attitude d. Better Alternative to Negotiating an Agreement e. None of the Above

a. Best Alternative to a Negotiated Agreement

One of the two basic reasons why supply managers negotiate is to . . .? a. Expand value for the buying company and the supplier, if possible b. To drive down price to as low of a level as possible c. To increase competition for commodity-like spend d. All of the above e. None of the above

a. Expand value for the buying company and the supplier, if possible

As you negotiate with a potential employer, you ask for an additional $3,000 in annual salary. The employer asks why you why you want this increase, and learns that you need to begin repaying a student loan. The employer states that he cannot increase your salary, but that his company can assume your loan at a 0% interest rate. In this example, the employer has identified your . . .? a. Interest b. Position c. Demand d. Reservation value e. All of the above

a. Interest

Integrative negotiations are also sometimes referred to as: a. Win-win b. Win-lose c. Win-win-win d. 3D negotiations e. None of the above

a. Win-win

The ceiling of the ZOPA is formed by . . .? a. Your RV b. The supplier's BATNA c. The supplier's target value d. Your BATNA e. The supplier's BATNA

a. Your RV

If suppliers are unwilling to bid, then negotiation is a better option than competitive bidding. a. true b. false

a. true

Success in life depends on your ability to negotiate well. a. true b. false

a. true

Supply managers are responsible for ensuring that they get the best products and services from their suppliers. a. true b. false

a. true

Supply managers negotiate for many reasons. a. true b. false

a. true

The most obvious focus of a negotiation is the price that you will pay to a supplier. a. true b. false

a. true

You might need to negotiate even in the case of mundane situations, such as your favorite band coming to town. a. true b. false

a. true

The ZOPA is formed by . . .? a. Your BATNA and the other party's BATNA b. Your RV and the other party's RV c. Your target value and the other party's target value d. All of the above e. None of the above

b. Your RV and the other party's RV

After completing a negotiation, you learn that your first offer was above the supplier's RV. This was probably a good first offer. a. true b. false

b. false

At the end of the day, as a supply professional you will negotiate for two basic reasons: 1) to claim value your company, and 2) to lower price. a. true b. false

b. false

Competitive bidding and negotiation are appropriate tools to help you achieve your cost goals for buys that are in the Routine quadrant of the Strategic Sourcing Matrix. a. true b. false

b. false

If you are involved in an integrative negotiation, you focus on value creation and avoid value claiming at all costs. a. true b. false

b. false

If you are unable to make an apples-to-apples comparison, then competitive bidding is a better option than negotiation. a. true b. false

b. false

In a negotiation, the RV is used to calculate BATNA. a. true b. false

b. false

Negotiations often lead to a decreased understanding of a supplier—and as a result, less cooperation. a. true b. false

b. false

Threats can help you move the negotiation forward whether you are ready to end the negotiation or not. a. true b. false

b. false

Negotiations that involve both value creation and value claiming are referred to as . . .? a. Inter-organizational negotiations b. Ambassador negotiations c. Integrative negotiations d. Delta negotiations e. Demise negotiations

c. Integrative negotiations

Which of the following is your best approach to creating value in a negotiation? a. Negotiating to pay a higher price to the supplier b. Negotiating to pay a lower price to the supplier c. Introducing more than one issue into the negotiation d. All of the above e. None of the above

c. Introducing more than one issue into the negotiation

You are negotiating with a supplier, and the supplier makes a very aggressive first offer. The best strategy is to . . .? a. Focus on the supplier's offer and ask the supplier to justify the offer. b. Readjust your planned initial offer by making a more moderate and reasonable offer. c. Tell the supplier that it appears that you are looking at the deal in different ways, and give the supplier an opportunity to make a more reasonable offer. d. Stand up and threaten to leave the table. e. All of the above are excellent responses to a very aggressive first offer by the supplier.

c. Tell the supplier that it appears that you are looking at the deal in different ways, and give the supplier an opportunity to make a more reasonable offer.

Under which of he following circumstances is competitive bidding a better option than negotiating? a. There is a small dollar volume, making negotiating a less attractive option b. There are unclear specifications, where negotiating would be confusing to the supplier c. There are an adequate number of suppliers that want to compete for your business d. Suppliers are unwilling to bid e. There is a very short timeframe, making negotiations less attractive.

c. There are an adequate number of suppliers that want to compete for your business

Which of the following is the best use of an ultimatum, based on the recommendations presented in the courseware? a. "The best that I can do is $2.25 per unit with a quality level of 99.9%. Take it or leave it." b. "The best that I can do is $2.25 per unit with a quality level of 99.9%. I will give you until 9:00 am tomorrow to decide." c. "My last offer was my best offer. Take it or leave it." d. "The best that I can do is $2.25 per unit with a quality level of 99.9%, or $2.30 per unit with a quality level of 99.95%." e. "I do not want to pay more than $2.25 per unit with a quality level of 99.9%, but I may be able to go just a little bit higher."

d. "The best that I can do is $2.25 per unit with a quality level of 99.9%, or $2.30 per unit with a quality level of 99.95%."

As a supply manager, by making an aggressive first offer, you can form a/n _______ which might help to drive down price. a. Floor b. Ceiling c. Price point d. Anchor e. Elevation point

d. Anchor

Which of the following is NOT a common "process" negotiating mistake? a. Don't invest time b. Don't understand counterpart c. Lack convincing positions d. Failing to ask e. None of the Above

d. Failing to ask

The expectation that if one party makes a concession, the other party will make the next concession is called the . . .? a. Concession expectation b. Quid pro quo c. Multiple concession expectation d. Norm of reciprocity e. Serial concession pattern

d. Norm of reciprocity

Which of the following is NOT a tactic that you would use during a distributive negotiation? a. Walk away b. Set a deadline c. Point out dings d. Pursue interests e. None of the above, they are all distributive negotiation tactics.

d. Pursue interests

The use of a "limited time offer" in a negotiation is an example of . . .? a. The ding tactic b. Investment in time c. Limited authority d. Ultimatums e. The power of silence

d. Ultimatums

Which is the following is a tactic that you would use to move a negotiation toward an integrative negotiation? a. Pursue interests b. Explore possibilities c. Build trust d. Share benefits e. All of the above

e. All of the above

Which of the following are common negotiation process mistakes? a. Rely on assumptions b. Don't understand counterpart c. Don't invest time d. Lack convincing positions e. All of the above

e. All of the above

Which of the following are common negotiation outcome mistakes? a. Leave money on the table b. The winner's curse c. Failing to ask d. Lack clear objectives e. Only A, B, & C

e. Only A, B, & C

Which of the following should be considered when sharing co-created value with the supplier? a. How each party to the negotiation values the different benefits of the relationship b. How much the relationship's success depends on your supplier's capabilities. c. Your willingness to take a more liberal approach to sharing in the short term. d. The need to state your ultimatum by inviting a selection form a limited menu. e. Only A, B, & C

e. Only A, B, & C

If, during the negotiation, you discover information that substantially changes the negotiation landscape, you should . . .? a. Ask the supplier for additional concessions b. Recalculate your ZOPA c. Ask to have your legal counsel present d. Ask for an even lower price e. Pause the negotiation

e. Pause the negotiation

If you are confident about the _____, it is generally best to make the first offer. a. Timeframe b. Supplier's responsiveness c. Shifting focus d. Reflexive point e. ZOPA

e. ZOPA

Which of the following should you ask to develop an effective negotiation plan? a. Are you claiming value? b. What are the facts? c. What are the issues? d. How strong are your positions? e. What concessions are you willing to make? f. All of the above g. Only B, C, D, and E

f. All of the above

Which of the following is an example of a negotiation? a. A purchasing manager meets with a supplier to discuss the delivery of product prior to signing a contract. b. Your roommate agrees to wash the dishes if you cook meals. c. You haggle with a street vendor about the price of a pair of shoes. d. The President of the U.S. meets with the premier of China to discuss carbon emissions goals for each country. e. All of the above.

e. All of the above

What is the key to pursuing interests? a. Probe b. Explore possibilities c. Use anchors d. Set a deadline e. Both A& B

e. Both A& B

A negotiation that is arm's length, adversarial, and even confrontational is called a . . .? a. Hard place negotiation b. Hard stop negotiation c. Integrative negotiation d. Pareto negotiation e. Distributive negotiation

e. Distributive negotiation