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CIPS L3M1 Exam Syllabus Topics:
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NEW QUESTION # 35
Value for money can be defined by 'the three E's',
Select those which are not part of 'the 3 E's'.
- A. Effectiveness
- B. Economy
- C. Effluence
- D. Efficiency
- E. Ecology
- F. Energy
- G. Efficacy
Answer: A,C,E,F
Explanation:
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.
NEW QUESTION # 36
Which of the following is least risky from the buyer's viewpoint?
- A. Payment on delivery
- B. Payment of 50% at time of order; with balance to be paid 90 days after delivery
- C. Payment in full at time of order
- D. Payment 60 days after delivery
Answer: D
Explanation:
Payment (the implication here is 'in full') 60 days after delivery allows the buying organisation time to check the goods carefully, and possibly even use them in that time.
All of the other options would require the buyer to part with money prior to holding the goods, thus exposing that sum to risk. The least risky from the buyer's viewpoint is therefore after 60 days.
Particularly hazardous would be payment at time of order.
NEW QUESTION # 37
The Kyoto Agreement is about:
- A. Climate change
- B. Whale protection
- C. Fishing rights
- D. Shipping freight rates
Answer: A
Explanation:
It is about climate change. The other answers are simply made up.
NEW QUESTION # 38
An organisation is...
- A. A collection of social people controlling performance of arranged goals
- B. A social arrangement for the collective performance of controlled goals
- C. A social arrangement for the controlled performance of collective goals
Answer: C
Explanation:
Social arrangement because it involves people; they have a collective goal eg to be a profitable or-ganisation; and their performance must be controlled to work towards or to achieve that goal / those goals.
NEW QUESTION # 39
'Open tendering may impose a substantial administrative burden on the procurement function.' True or false?
- A. False
- B. True
Answer: B
Explanation:
Because a wide range of organisations (or even individuals) may respond to an open tender, consid-erable administrative resource may have to be devoted to analysing offers.
NEW QUESTION # 40
The primary purpose of a public sector organisation is to:
- A. Boost national prestige
- B. Make profit
- C. Provide services
- D. Create jobs
Answer: C
Explanation:
The correct answer is to provide services. However, some other secondary factors may come into play. For example, some public sector organisations may be encouraged to boost national prestige eg airports, airlines; or they may be used as job creation schemes.
NEW QUESTION # 41
The system by which organisations are directed and controlled, thinking about business ethics and stakeholder responsibility, and where Directors may be held to account, is called:
- A. Corporate Manslaughter
- B. Corporate Governance
- C. Corporate Social Responsibility
- D. Corporate Identity
Answer: B
Explanation:
Corporate Governance. Not to be confused with CSR.
Corporate identity relates to marketing and branding; corporate manslaughter is the concept of an organisation being criminally accountable for the deaths of humans through some lack of care. An example might be the deaths of rail company employees on the railway track, where the prosecution would attempt to show that it was the employers' fault.
NEW QUESTION # 42
Which of the following are examples of renewable resources?
- A. Oil
- B. Hydro-electric
- C. Wind power from wind turbines
- D. Coal
Answer: B,C
Explanation:
Both wind power and hydro-electric can be used many times over - they are renewable - wind, riv-ers, tides return each day, more or less.
On the other hand, coal, oil as well as wood, turf and gas are non-renewable - that is, there are lim-ited stocks and they will run out.
Many economies are now switching to use of renewables to generate electricity, heat, etc
NEW QUESTION # 43
Doing the same with fewer resources is:
- A. Economy
- B. Efficiency.
- C.
- D. Efficiency
- E. Effectiveness
Answer: D
Explanation:
Economy is most easily thought of as paying less, hopefully with no loss of quality, service, etc Effectiveness is most easily thought of as achieving the right outputs.
What one really seeks is effectiveness. Unfortunately it is possible to be efficient without being ef-fective. An example from my work life is the collection of statistics / 'returns'. I have come across parts of organisations which were very efficient at collecting data, but the data were not used in any meaningful way - the outputs of the efficiency did not add value and did not create useful outputs. There was a lack of effectiveness. The distinction is worthwhile, I think.
NEW QUESTION # 44
'Partnerships are not-for-profit entities'. True or false?
- A. False
- B. True
Answer: A
Explanation:
This is simply false. Partnerships are normally unincorporated profit-oriented organisations eg ac-countants, lawyers, many consultancies, some retailers, etc. One significant factor about partnerships is that individuals' capital is normally at risk, unlike in limited companies, where the risk is limited.
NEW QUESTION # 45
'Price' and 'payment terms' are the same thing.
True or false?
- A. False
- B. True
Answer: B
Explanation:
An easy question.
Price is what the customer will pay for goods or services eg fifty dollars; payment terms are the ar-rangements under which you pay the price eg in advance, on delivery, 30 days, 60 days, etc.
Although this may seem rather obvious, I have encountered a surprising number of people who seem to confuse the two.
NEW QUESTION # 46
In terms of interest rates, the 'base rate' is:
- A. The interest rate stated within a contract of supply for late payments
- B. The interest rate used to calculate repayments on a credit card
- C. The interest rate payable on a loan for the procurement of a new instrument
- D. The interest rate set by government or the central bank of a country
Answer: D
Explanation:
The base rate is often used as a basis for the calculation of other rates, some of which eg credit card repayment rates, bear no resemblance to the base rate. Some longer-term, perhaps more responsible, lending, uses changes in the base rate to determine a repayment rate for debt eg mortgage rates. For credit card repayment rates and for late payments in business contracts there is often a considerable amount of freedom to agree relevant rates, but government is often encouraged to influence to try to ensure some level of sanity.
The answer which references procurement of a new 'instrument' is an attempt at humour, 'base' be-ing a type of guitar.
NEW QUESTION # 47
The letters 'NFP' mean...
- A. Not for procurement
- B. Not-for-profit
- C. Non-funded purchase
- D. Newly focused (on) profit
Answer: B
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.
NEW QUESTION # 48
The 'five forces' model is also known as an 'Industry Structure Analysis'.
True or false?
- A. False
- B. True
Answer: B
Explanation:
This is true. In my view, 'Industry Structure Analysis' is a better term, not only because that is what Michael Porter originally called it, but because it better describes what the model is about. For ex-ample, it reminds us that the model is not about a single firm, but it is about an entire industry, and the structure around that industry.
NEW QUESTION # 49
A market situation where there is only one supplier is called:
- A. Imperfect competition
- B. Monopsony
- C. Monopoly
- D. Oligopoly
Answer: C
Explanation:
The correct answer is, of course, 'monopoly'.
NEW QUESTION # 50
The y-axis of the Product Life Cycle could properly show the following (select all that apply):
- A. Losses
- B. Profits
- C. Sales
Answer: A,B,C
Explanation:
The vertical axis (the y-axis) of the product life cycle diagram could correctly show all three, and might commonly show losses and / or investment in the early stage(s).
NEW QUESTION # 51
Which one of the following is a commercial document issued by a seller seeking payment for goods or services?
- A. Pre-qualification question naire
- B. Delivery note
- C. Supplier quotation
- D. Invoice
Answer: D
Explanation:
This should be straightforward.
If unclear, check your notes / textbook.
NEW QUESTION # 52
The Equality Act in the UK was introduced in which year?
- A. 0
- B. 1
- C. 2
- D. 3
Answer: B
Explanation:
The Act was introduced in 2010. Although this is a UK-centric question it is valid for several rea-sons. Firstly, the UK was one of the first countries to introduce such a wide-ranging Act; secondly the Act is so wide-ranging that all UK managers need to be familiar with it. People who live and work outside the UK may wish to familiarise themselves with the content of the Act to have an idea of what the impact of such legislation might be like.
Interestingly, in the UK, the Act has seldom been used 'in anger'.
NEW QUESTION # 53
In which one of the following sectors would you least expect to find seasonal unemployment:
- A. Construction
- B. Tourism
- C. Agriculture
- D. Policing
Answer: D
Explanation:
Agriculture and tourism are normally associated with high levels of seasonal employment, and hence to some extent, unemployment.
Construction also often has an element of seasonality. For example, there is a saying in Alaska: 'there are two seasons - winter and construction', although in some less extreme climates construc-tion carries on year-round.
In most situations, we normally expect police employment levels to be relatively consistent through-out the year.
NEW QUESTION # 54
Thinking of the STEEPLED factors which may impact long-term on an organisation, under which one heading would the following appear: growth trends, unemployment patterns, incomes, interest rates exchange rates and tax rates?
- A. Economic
- B. Ethical
- C. Environmental
- D. Political
Answer: A
Explanation:
The correct answer, covering all of these, is 'economic'.
'Political' could also be considered, but 'economic' covers them all.
The other two answers suggested are not really relevant.
NEW QUESTION # 55
Which of the following would not normally be seen as part of public sector procurement?
- A. Pursuit of equal opportunities policies, internally and externally
- B. Personal bonus payments for procurement staff, linked to savings made
- C. Achieving defined service levels
- D. An emphasis on the use of the competitive principle
- E. Personal financial rewards from suppliers for buyers in return for awarding contracts
Answer: B,E
Explanation:
Public sector procurement staff are expected to work and offer their best to their employer, normal-ly without additional reward for creating cost savings, which is part of their work; and they should not receive rewards from suppliers.
This latter point takes us into the area of procurement ethics, which CIPS regards as being particu-larly significant for procurement professionals.
The other answers shown are typical features of public sector procurement.
NEW QUESTION # 56
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