CIPS L4M6 Exam Practice Test Instant Access

Question 1

Victoria runs a hotel and has recently had several security issues such as attempted robberies. She has decided that she needs to hire a security firm to ensure these issues don't continue. She has done some research and has found there are several local security firms who may be able to provide services to her hotel. However, she hasn't decided exactly what she would require the security firm to do. What should be Victoria's next steps?

AIssue a Request for Proposal

BIssue an Invitation to Tender

CIssue a Request for Quotation

DIssue a Prior Information Notice

Answer : A, A

Victoria should use a 'request for proposal' -- this allows the security firms to submit ideas on how best to serve the hotel. They might come up with some ideas that Victoria hasn't thought about and can price against their own ideas. As Victoria doesn't have a concrete specification, an ITT or RFQ are not appropriate. A PIN tells suppliers that a tender opportunity is coming up and is used in the Public Sector. A hotel is not a Public Sector organisation. See p.76 for more information on when to issue a Request for Proposal

Question 2

Rivalry between suppliers is more likely to be intense in which of the following situations?

A1 and 2 only

B2 and 4 only

C1 and 3 only

D1 and 4 only

Answer : B, B

Intense rivalry occurs when suppliers are equally balanced and face high barriers to exit, leading to aggressive competition to retain market share, as described in Porter's Five Forces model.

Question 3

Which of the following are considered value-adding primary activities?

Inbound logistics

Firm infrastructure

Technology development

Marketing and sales

A2 and 4 only

B3 and 4 only

C1 and 2 only

D1 and 4 only

Answer : D, D

Comprehensive and Detailed

In Michael Porter's Value Chain model, primary activities are those that are directly involved in the creation and delivery of a product or service. These include:

Inbound Logistics:Activities related to receiving, storing, and distributing inputs internally.

Operations:Transforming inputs into the final product.

Outbound Logistics:Distributing the final product to customers.

Marketing and Sales:Activities that inform buyers about products and services, induce buyers to purchase them, and facilitate their purchase.

Service:Activities that maintain and enhance the product's value, such as customer support and repair services.

Firm infrastructure and technology development are considered support activities, as they assist the primary activities in helping the organization achieve its competitive advantage.

CIPS L4M6 Study Guide

Question 4

What is a valid reason for terminating a commercial relationship?

AFulfilment of the contract

BOne late delivery

CThe other party seeks to trade with other parties alongside you

DA change of management within the other party, but no change to the company ethos

Answer : A, A

Contracts are normally terminated when their obligations have been fulfilled. Termination due to one late delivery or management changes would be unreasonable unless specified in the contract. Trading with other parties is common unless exclusivity clauses exist.

Question 5

Robbie is a procurement manager at a public sector organisation. He is running a tender which is worth 2m and so will advertise this on OJEU. His manager has reminded Robbie to include CPV codes on the tender. What purpose would this serve?

ATo ensure suppliers know the deadline for tender submission

BTo ensure suppliers can find the opportunity

CTo ensure more suppliers bid for the tender

DTo ensure only qualified suppliers bid for the tender

Answer : B, B

CPV codes help suppliers find opportunities they can bid for. CPV codes are a numerical classification for products e.g. Strawberry Jam is 15332296 and when they are included on a Tender, any supplier who is registered with that same CPV code will get a notification that the tender is live. CPV codes arediscussed on p.72 but not in much detail- so don't worry if you don't know much about them. So long as you know the above, you'll be fine.

Question 6

Tim manages the procurement department at a large retailer. He wants to ensure that his team are achieving value for money in their procurement activities. Which of the following should Tim set up?

AITT

BAudit

CFramework

DContract

Answer : B, B

Tim should do an audit. P.71 of the textbook says ''to ensure that a procurement department is achieving value for money, an audit should be undertaken''

Question 7

Which of the following statements are true regarding the characteristics of a restricted market? Select TWO that apply.

The marketplace is heavily regulated by Governments and legislation

Existing suppliers within the marketplace offer excellent services

There are many suppliers already in operation within the marketplace

High financial investment is required to enter the marketplace

C1 and 4 only

A1 and 2 only

D2 and 4 only

B2 and 3 only

C1 and 4 only

D2 and 4 only

Answer : C, C

Comprehensive and Detailed

A restricted market is characterized by high barriers to entry, often due to stringent government regulations and the need for substantial financial investment. These factors limit the number of new entrants, resulting in a market dominated by a few established suppliers. While existing suppliers may offer excellent services, the key defining features of a restricted market are the regulatory constraints and the significant capital required to compete.

CIPS L4M6 Study Guide

CIPS Supplier Relationships L4M6 Exam Practice Test