CIPS L3M1 Procurement And Supply Environments Practice Exam 60 Questions

CIPS L3M1 PROCUREMENT

AND SUPPLY

ENVIRONMENTS

PRACTICE EXAM 60

QUESTIONS

Question 1: A packaging supplier proposes a redesign that cuts waste sent to land�ll by 30% without reducing product protection. Which external consideration is being improved most directly?

Choices:

1) Environmental performance 2) Market entry barriers 3) Exchange-rate certainty 4) Political stability

Correct Answer: Environmental performance

Explanation: Reducing waste and land�ll is an environmental improvement and may also lower disposal costs and support sustainability objectives.Page 1

Question 2: A procurement manager works for an organisation funded mainly by

membership fees and donations. It exists to promote a social cause and has no private shareholders. Which sector is the best �t?

Choices:

1) Private equity sector 2) Extractive sector 3) Third sector 4) Central banking sector

Correct Answer: Third sector

Explanation: An organisation pursuing a social purpose without private shareholders, and funded through memberships or donations, is characteristic of the not-for-pro�t or third sector.

Question 3: A company buying glass bottles learns that customers are rapidly

switching to aluminium cans for the same use. Which of Porter's forces is illustrated?

Choices:

1) Supplier integration 2) Threat of substitutes 3) Rivalry caused only by in�ation 4) Buyer concentration

Correct Answer: Threat of substitutes

Explanation: A substitute is an alternative product or service that satis�es a similar need.Growing use of cans instead of bottles increases the threat of substitutes.Page 2

Question 4: After supplier selection, which document normally communicates the

buyer's formal instruction to supply speci�ed goods or services at agreed terms?

Choices:

1) Goods-return note 2) Requisition 3) Purchase order 4) Supplier statement

Correct Answer: Purchase order

Explanation: A purchase order is issued by the buyer to the supplier and records the authorised requirement, such as description, quantity, price, delivery, and applicable terms.Question 5: A self-employed buyer runs a business alone, keeps the pro�ts after tax, and is personally liable for business debts. Which form of private-sector organisation is this?

Choices:

1) Public corporation 2) Limited company 3) Sole trader 4) Charitable trust

Correct Answer: Sole trader

Explanation: A sole trader is owned by one individual and normally has unlimited personal liability for the business's debts.Page 3