CIPS L3M1 Procurement and Supply Environments Exam Practice Test

Page: 1 / 14
Total 90 questions
Question 1

The price of one currency expressed in terms of another currency is called the:



Answer : C

Exchange rate - the rate at which the currencies are exchanged. This rate can vary frequently, some-times several times per hour, depending on circumstances.

The interest rate is the rate charged on loans - the cost of borrowing.

The base rate is the basic interest rate used for agreeing loans within an economy. This rate is nor-mally set by the government or the central bank. Loans within that economy will usually be at a higher rate than the base rate, often much higher.

The equilibrium rate (more commonly 'equilibrium price') is the rate at which supply and demand meet, not necessarily related to currency.


Question 2

Thinking of Michael Porter's Industry Structure Analysis (commonly referred to as Five Forces Analysis), which of the following are seen as threats (select all that apply):



Answer : A, C

The model speaks of the threat of new entrants and the threat of substitutes. New entrants are par-ticularly attracted by high profitability in the sector. Substitutes can come about in a number of ways for example, through lower prices or because of technology.


Question 3

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?



Answer : E

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.


Question 4

Which of the following are examples of non-renewable resources?



Answer : B, D

Coal and oil are the correct answers. These are finite resources and will run out some day.

The others shown are renewables.


Question 5

Which one of the following initiates the procurement process inside the buying organisation, calling for action by the procurement professionals?



Answer : D

This should be an easy question.

If you are unfamiliar with any of these terms, return to your textbook soon.

The RFQ is the action taken by procurement often, further to the requisition and other necessary documentation.


Question 6

Monetary policy deals with:



Answer : C

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

Fiscal policy relates to taxation and its relationship to government expenditure.

The other two suggested answers: exchange rates and unemployment rates are a factor of other poli-cies; the size of coins and banknotes is beyond the scope of your syllabus and my knowledge. :)


Question 7

Value for money can be defined by 'the three E's',

Select those which are not part of 'the 3 E's'.



Answer : A, B, C, D

The 3 E's are economy, efficiency, effectiveness. The 3 E's are often seen as part of the role of pro-curement in an organisation.

Therefore all the other answers here should be selected, as they are not part of the 3 E's.

The 3 E's are often seen as part of the role of procurement in an organisation.


Page:    1 / 14   
Total 90 questions