SCMN 3730 FINAL EXAM NEWEST ACTUAL EXAM
COMPLETE 300 QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS)
|ALREADY GRADED A+
What situations call for negotiation with suppliers vs. competitive bidding? -
ANSWERNegotiation is more appropriate when other issues besides price are important
or when competitive bidding will not satisfy the buyer's requirements on various issues
Best Alternative To a Negotiated Agreement - ANSWERNegotiator's bottom line or
reservation point
Position - ANSWERNegotiator's opening offer
Interest - ANSWER•Unspoken motivation or reason that underlies any given position
•Always focus on the other party's underlying interests, not its stated positions
Need - ANSWERNegotiated outcome that the negotiator must achieve
Want - ANSWERNegotiated outcome that a negotiator would like to have
3 Steps of Triangle talk - ANSWER1. Know exactly what you want
2. Know exactly what they want
3. Propose action in a way that they can accept
Bargaining Zone - ANSWERThe heart of the negotiation process, as any proposal or
counterproposal offered outside of this range is likely to be rejected by the other party
because it is not what he or she is willing to settle for
6 Sources of Negotiation Power - ANSWER•Referent
•Informational
•Reward
•Coercive
•Legitimate
•Expert
Referent Power - ANSWER•Comes from attraction based on socially acceptable personal
qualities and attributes
Informational Power - ANSWER•Ready access to relevant and useful information
•Presentation of facts, data, and persuasive arguments
,Reward Power - ANSWER•One party is able to offer something of perceived value to
other
•Individuals respond and behave accordingly when valued rewards are available
Coercive Power - ANSWER•Taking away or withholding something of value to other party
•Ability to punish
•Can have damaging effects on long-term relationships
•Promotes retaliation or getting even
Legitimate Power - ANSWER•Power based on official position held
•Buyer has legitimate power due to his/her ability to award contract
Expert Power - ANSWER•Special form of informational power
•Often represented by verifiable credentials and stature
Concession - ANSWERMovement away from a position that has perceived value to the
other party to gain something else of value
Low Ball - ANSWERThis tactic involves one party, often the seller, offering an unusually
low price to receive a buyer's business (e.g., getting one's foot in the door)
Honesty and Openness - ANSWERParties with a close working relationship often have a
high level of mutual trust that promotes free and open sharing of information
Questions - ANSWEROpen-ended questions serve a dual purpose as a negotiation tactic.
First, insightful questions can result in revealing new information about the interests
underlying the other party's stated position. Second, questions provide a period of relief
or reflection as the other party takes time to consider an answer. Questions seeking only
a "yes or no" answer does not provide much additional information
Caucaus - ANSWERThis tactic involves taking a time-out; negotiators might need to
process new information, take a needed break, or take a recess if the negotiation is going
poorly; negotiators might feel they are making too many concessions and need to break
an unhealthy pattern of interaction
Trial Balloon - ANSWERA negotiator using this tactic might ask, "What if I can persuade
my manager to endorse this option? Would you go along?" Trial balloons are tests of
acceptability. The other party's on-the-spot reaction to the idea influences whether the
parties should pursue the idea further
Price Increase - ANSWERSellers sometimes argue that, if a buyer does not agree to a
certain price or condition, the price will soon increase. A well-informed and adequately
prepared negotiator can tell the difference between a real price change and a tactic used
by the seller merely to make the sale
High Ball - ANSWERThis tactic involves taking an abnormally high initial position on an
issue
Best and Final Offer - ANSWERThis tactic often signals the end of a negotiation on a
given issue
, Silence - ANSWERThis tactic involves not immediately responding when the other party
makes an offer in the hope that an awkward silence will encourage further offers or
concessions from the other party
Planned Concessions - ANSWERUse of planned concessions signals that it is now the
other party's turn to reciprocate and make a concession on an important issue
Venue - ANSWERSome negotiators insist on negotiating in a location that is more
favorable to them
Major Reasons for a Contract - ANSWER•Establishes terms and conditions by which the
parties agree to conduct business
•Defines type of relationship
•Provides way for parties to obtain mutual benefits
•Represents the understanding of parties
•Helps protect both parties against risk
Master Service Agreement (MSA) - ANSWERContract with a Company & Service
Providers (Suppliers)
Statement of Work (SOW) - ANSWEREach SOW details specific projects with details on
activities, duration & costs
Force Majeure - ANSWERThe course of events that occur if there are unforeseen
calamities such as earthquakes or hurricanes that prevent a supplier from fulfilling its
obligations to the buyer
What are the four key details in an international contract? - ANSWER•Forum selection - in
the event of a dispute
•Payment Currency
•Language
•Force Majeure
What are the two major types of contracts? - ANSWER•Firm Fixed Price
Cost plus Fixed Price
What does a firm fixed price contact entail, and who has the most risk, buyer or seller? -
ANSWER•Price stated doesn't change
•Suppliers bears financial risk in rising market
•Buyer assumes financial risk in declining market
What is a cost plus fixed fee contract, and who is at most risk, buyer or seller, for these?
- ANSWER•Supplier receives reimbursement for all allowable costs up to a
predetermined level plus a fixed fee
•High buyer risk
•Low supplier risk
What is the typical minimum length of a long-term contract? - ANSWERGreater than one
year
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