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CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions (Q104-Q109):

NEW QUESTION # 104
According to CIPS, demand management enables an organization to align its capacity with fluctuations in demand. Effective demand management ensures that products or services are available to the right people at the right time and place. Which of the following actions must the organization take to successfully manage demand?
1. Organization must keep their warehouses full of safety stock to meet demand effectively
2. Organizations must divert funds from other operational activities in order to acquire inventories
3. Organization must be prepared to respond to volatile events
4. Organizations must involve stakeholder in the process for real time information about demand

A. 2 and 3
B. 4 and 1
C. 3 and 4
D. 1 and 2

Answer: C

Explanation:
Based on the figure from the study guide, demand can be managed in four ways. Among the given options, Choices 3 and 4 are included. Therefore, the correct answer is Option C.

Reference: LO-1.4; Page 109; Demand Management and the need for urgent orders

NEW QUESTION # 105
NIMBUS TeK, a leading call center employing cost-effective English-speaking workers in countries like India, Pakistan, and the Philippines, has gained a competitive advantage through global sourcing. Which of the following are effective global sourcing practices that the call center has implemented? Select any TWO.

A. Service Level Agreement
B. Managing relationship with supplier before selection
C. Detailed research of the market and potential suppliers
D. Key Performance Indicator

Answer: A,C

Explanation:

Choice B- Option B is the correct answer as it is a part of RESEARCH under good practices. Choice D- Giving suppliers a clear understanding of the business expectations is a good practice in global sourcing. Therefore is also an answer. Incorrect answer: Choice A- Supplier relationship management is essential but once the supplier has been selected. Choice C- Key Performance Indicator is not a part of good practices in global sourcing. Reference: LO-1.2; Page 70; Competitive advantage through global sourcing

NEW QUESTION # 106
The World Fair Trade Organization (WFTO) aims to help large global businesses expand into new markets, offering better products and fairer prices for consumers. Is this statement accurate?

A. No, the WFTO focuses on supporting smaller and disadvantaged producers
B. Yes, the WFTO establishes global rules to safeguard consumers
C. Yes, the WFTO provides financial aid to international companies
D. No, the WFTO primarily focuses on diminishing the influence of multinational corporations

Answer: A

Explanation:
Choice C- This is correct. The WFTO's mission is to support small and disadvantaged producers, ensuring fair wages, ethical trade practices, and market access.
Incorrect answer:
Choice A- This is incorrect. The WFTO does not focus on diminishing multinational corporations but works to empower disadvantaged producers.
Choice B- The WFTO does not establish global regulations but promotes fair trade practices and ethical business standards for producers and consumers, therefore this is wrong.
Choice D- This is incorrect. The WFTO's mission does not involve providing financial aid to businesses; it focuses on promoting fair trade principles.
Reference:
LO-3.3; Page 294-295; The World Fair Trade Organization (WFTO) and its principles

NEW QUESTION # 107
Which of the following methods does the ILO use to monitor compliance with labor standards in its member states?

A. Monitoring through commercial advertising and media channels
B. Direct intervention in national legal systems
C. Only direct financial audits of companies
D. Reporting system, direct observations, and complaints mechanism

Answer: D

Explanation:
Choice B- The ILO uses a combination of methods to monitor labor standards, such as reporting, investigating which falls under direct observation and complaints mechanism.
Incorrect answer:
Choice A- The ILO does not conduct financial audits of individual companies but relies on reports and investigations at the country level.
Choice C- While the ILO provides technical assistance, it does not directly intervene in national legal systems but works with governments to improve compliance.
Choice D- The ILO does not monitor labor standards through commercial advertising or media but relies on formal mechanisms such as reports, investigations, and dialogues.
Reference:
LO-3.1; Page 255; The role of the UN and ILO in pursuing improved ESG and ethical standards

NEW QUESTION # 108
In the power dominance model, which factor is most likely to strengthen the buyers' power relative to suppliers?

A. A small number of suppliers for a large number of buyers
B. High switching costs for buyers
C. High availability of substitute products
D. Low price sensitivity among buyers

Answer: C

Explanation:
Choice D is the correct answer. When numerous substitute products are available, buyers can easily switch suppliers if dissatisfied, increasing their bargaining power in negotiations.
Incorrect answer:
Choice A- This typically increases supplier power, as a limited number of suppliers can dictate terms to a larger pool of buyers.
Choice B- This would decrease the power of buyers, as they would be less likely to change suppliers due to the costs involved.
Choice C- If buyers are not sensitive to price, they are less likely to negotiate strongly or switch suppliers based on cost, which decreases their bargaining power.
Reference:
LO-1.4; Page 127-128; Responsible use of power relationships

NEW QUESTION # 109
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