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CIPS Supplier Relationships Sample Questions (Q73-Q78):

NEW QUESTION # 73
A 'restricted market' is likely to arise when the entry costs for new suppliers are prohibitively high, and levels of market profitability amongst existing suppliers may be relatively low. Is this a true statement?

A. Yes, new entrants are low; however, due to high competition, profit levels are always very high
B. No, entry costs are low in all markets due to technology, and this is increasing profitability significantly
C. Yes, these markets usually have only a small number of competent and capable suppliers
D. No, usually these markets have a regular flow of new suppliers entering them

Answer: C

Explanation:
Comprehensive and Detailed Explanation:
Arestricted marketis characterized by:
* High entry barriers: Significant capital investment, stringent regulatory requirements, or specialized knowledge needed to enter the market.
* Limited profitability: Existing suppliers may operate on thin margins, deterring new entrants.
These factors result in a market with few competent and capable suppliers, limiting competition and options for buyers.
Reference:
CIPS L4M6 Study Guide

NEW QUESTION # 74
Beyond Say is a manufacturer of diamond rings. It sources a lot of different parts to create its products including diamonds, gold, cardboard boxes for the rings to go in, as well as stationary and copier paper for the offices. Although it doesn't buy many diamonds, these represent a large part of Beyond Say's spend. Which category of spend would diamonds represent?

A. It isn't possible to tell
B. Critical/Strategic Spend
C. Operational Spend
D. Tactical Spend

Answer: B

Explanation:
This is category 'A' spend in the ABC model - they represent a large value and a small number of purchases / suppliers. See p.17 for more information on the ABC Analysis

NEW QUESTION # 75
Supplier development should be undertaken with all suppliers that a buyer uses. Is this statement TRUE?

A. no- supplier development should only be done with tactical suppliers
B. yes- this will improve efficiencies for the buyer
C. no- supplier development should only be done with strategic suppliers
D. yes- it is important to develop all relationships

Answer: C

Explanation:
Supplier development is time-consuming and resource-intensive so should only be done with strategic suppliers. P.14

NEW QUESTION # 76
A buyer is procuring a high-value specialist piece of medical equipment to use in the healthcare sector from a market that consists of minimal competition. The buyer has decided to use an open tender procedure to purchase the equipment. Is this an appropriate method to use?

A. Yes, as complex procurement must always use this type of tender process
B. No, an emergency tender process is required due to the critical nature of the equipment
C. No, a tendering process is not required as there are few suppliers
D. Yes, a shortlisting process is not required as there are few suppliers

Answer: C

Explanation:
If the market has few suppliers, an open tender is not appropriate, as it adds unnecessary time and cost.
Instead, a restricted or negotiated procedure is more effective. Open tendering is best used in highly competitive markets.

NEW QUESTION # 77
Which of the following are elements of a business that can develop a company's competitive advantage? Select THREE.

A. natural resources
B. cost focus
C. organisation culture
D. human resource management
E. cost leadership

Answer: A,C,D

Explanation:
This is one of those questions you have to read carefully- it asks for 'elements of a business'. Cost focus and cost leadership are ways a company can improve their competitive advantage, but they're not elements of a business. The other three options are. Porter created a list of elements of a business that can help a company's competitive advantage- these can be found on p.33-34

NEW QUESTION # 78
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