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CIPS
CIPS Level 3 Advanced Certificate in Procurement and Supply Operations
L3M1
Procurement and Supply Environments Questions and Answers

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Questions # 1:

Which of the following are core stakeholders of a private sector organisation? Select all that apply.

Options:

The local authority / government where the headquarters building is located.

Customers

The insurers of the headquarters building

Shareholders

Answer

B, D

Explanation

Both customers and shareholders are core stakeholders of a private sector organisation, although this fact appears to be somewhat diluted in the minds of some modern-day academics and commenta-tors. The shareholders are the owners of the business - it is for them that everyone is working and their objective is invariably profit. The profit is derived fromreligiously focusing on another core stakeholder group - the customers. If either of these two stakeholder groups is ignored, it is unlikely that happy times lie ahead.

Questions # 2:

Fiscal policy deals with:

Options:

Government decisions and actions regarding the number of staff members employed in the government Treasury

Government decisions and actions regarding the level of interest rates and supply of money in the economy

Government decisions and actions regarding the balance between taxation revenue and public expenditure

Government decisions and actions regarding exchange rates and unemployment in the economy

Answer

Explanation

The correct answer simply describes what fiscal policy is.

This topic is often mentioned or discussed in serious radio / TV news broadcasts.

Questions # 3:

Which of the following are ways of classifying organisations? (select all that apply)

Options:

Activity

Size

Primary objective

Structure and ownership

Answer

A, B, C, D

Explanation

All of these are ways of classifying organisations.

Examples: Retailers, SMEs, limited companies, etc

Questions # 4:

Continuously gathering and analysing intelligence from sources such as professional, industry and trade journals, websites, conferences and exhibitions, published reports and online databases is called:

Options:

Industrial espionage

Purchasing research

Data analysis

Environmental scanning

Answer

Explanation

Continuously scanning the environment can bring rewards in the form of new supply companies, new products and services, awareness of supply firm or industry difficulties, etc.

Purchasing research is a very close answer to the correct one, but is likely to be more focussed, spe-cific.

If faced with a difficult choice as to which of two options in the exam is correct, think about what was included as part of your syllabus.

In this case, environmental scanning is the first entry in your Learning Outcome 3.1

Questions # 5:

In Hofstede’s dimensions of differences in national cultures, which one measures the extent to which security, order, control and predictability are preferred to ambiguity, risk and change?

Options:

Long-term orientation

Power-distance

Individualism

Masculinity

Uncertainty avoidance

Answer

Explanation

The answer is uncertainty avoidance. Even if you have never heard of Hofstede, you can select the correct answer based on the explanation given in the QUESTION NO:.

Although the word 'culture' does not appear in the syllabus, much of Learning Outcome 3.0 can be seen as referring to culture. Some understanding of culture, both organisational culture and national culture is essential to human interactions in the procurement and supply environment. Check out Geert Hofstede's website to learn more about his work.

Questions # 6:

Because of the need for frequent or semi-frequent uses of competition, public sector buyers are less likely to find themselves in a close partnership arrangement with a supplierthan private sector buy-ers.True or false?

Options:

False

True

Answer

Explanation

This is true.

Questions # 7:

The letters 'NFP' mean...

Options:

Newly focused (on) profit

Not for procurement

Non-funded purchase

Not-for-profit

Answer

Explanation

The answer is 'not-for-profit', meaning 'third sector' (charities, co-operatives, NGOs, etc). This is not the same as 'public sector'. You should be clear on this terminology.

Questions # 8:

The abbreviation ‘SME’ stands for …

Options:

Small and medium-sized entity

Small and medium-sized enterprise

Supply management enterprise

Single-minded entrepreneur

Answer

Explanation

This is the standard definition, widely used, and given in your textbook.

Questions # 9:

Which of the following are normally not a source of funds for a third sector organisation?

Options:

Proceeds from sales of tobacco products

Proceeds from gambling

(Correct)

Grants from taxpayers

Charitable contributions

Merchandise sales revenue

Answer

Explanation

Third sector organisations often rely on charitable contributions. An example might be Medecins Sans Frontieres.

They also sometimes receive grants from taxpayers, sometimes in return for work done eg the chari-ty Barnardo's receive government funding in return for advising the British government on man-agement of some children in its care.

Finally some NFPs have, for example, retail outlets which generate income to aid the organisation. Oxfam is such an example.

Third sector can be expected to ster clear of certain areas for ethical reasons. Alcohol, gambling, to-bacco, and weapons are examples.

Questions # 10:

A market situation where there is only one supplier is called: