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

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

2. Which of the following statements best describes the potential risks associated with adopting ESG considerations?

A) Greenwashing can lead to a loss of consumer trust and brand reputation when companies falsely claim to be environmentally friendly
B) Adopting ESG practices eliminates all regulatory scrutiny and compliance requirements
C) ESG initiatives are primarily concerned with social factors and do not impact environmental or governance aspects
D) Implementing ESG considerations guarantees immediate financial returns and market leadership

3. A homeowner planning to purchase a new air conditioner notices an energy rating label on each model. This rating scheme provides details on the unit's energy efficiency, cooling capacity, and environmental impact. How does this information assist the buyer in making a decision?

A) It ensures that the most expensive air conditioner is always the best choice
B) It guarantees that the air conditioner will last for a specific number of years
C) It provides clear information on energy efficiency and expected electricity consumption
D) It ensures that all air conditioners have the same level of performance

4. Which organisation is responsible for the creation of the 2030 Sustainable Development Agenda?

A) NATO
B) UN
C) ISO
D) ILO

5. Several UK-based companies operate in diverse production industries, each facing unique market structures and supplier dynamics when sourcing raw materials and negotiating contracts. The power balance between buyers and suppliers varies based on market conditions, supplier availability, and industry-specific factors.
Case A: GreenPasture Feeds Ltd
GreenPasture Feeds Ltd is one of many manufacturers producing cattle feed, with soybean meal as a key ingredient. However, the supply of soybean meal is controlled by a small number of vendors, giving them significant bargaining power. As a result, GreenPasture Feeds Ltd faces higher procurement costs due to supplier dominance in the market.
Case B: MedTech Biologics Ltd
MedTech Biologics Ltd develops a specialized vaccine that relies on a crucial active ingredient supplied by a single biotechnology firm in Germany. This exclusive dependency creates a strategic interdependence between MedTech Biologics Ltd and its sole supplier, requiring close collaboration to maintain an uninterrupted supply chain.
Case C: PlayMax Toy Manufacturing
PlayMax Toy Manufacturing produces plastic toys using a specialized food-grade plastic sourced from a few manufacturers. However, the plastic resin needed for production is widely available from numerous global suppliers. This abundance of supply options strengthens PlayMax's bargaining position, allowing the company to negotiate favorable procurement terms.
Case D: BrewMaster Coffee Company
BrewMaster Coffee Company specializes in premium instant coffee production. Since high-quality Arabica coffee beans are grown and supplied by producers across various regions worldwide, the company benefits from an extensive supplier base. This widespread availability gives BrewMaster a competitive edge in securing cost-effective and high-quality raw materials.
Using the provided options, complete the table by identifying the market structure for each case and determining the buyer-supplier power dynamic based on their level of dominance.

A) Monopoly (Single supplier of the key ingredient): Buyer and supplier are interdependent
B) Oligopoly (Few suppliers of soybean meal): Supplier is dominant over buyer

Solutions: