CIPS L4M8 ACTUAL FINAL QUESTIONS AND
ANSWERS SET A+
✔✔Trade shows are usually focused on one industry and include all the suppliers that
support this. EG, the following might attend a farming trade show - ✔✔- Machinery
suppliers
- Animal feed suppliers
- Seed suppliers
- Chemical and fertiliser suppliers
- Labour providers
- Insurance companies
- Support organisations
- Fencing suppliers
✔✔The organisations that book a stand wish to promote themselves and gain business.
Procurement professionals attend these events in order to do the following - ✔✔- Meet
contacts they have never seen face-to-face
- Understand what products/services are coming to market
- Discuss industry concerns with like-minded professionals
- Meet potential new suppliers
✔✔Procurement professionals should research potential suppliers after they have been
selected and gather information about the following - ✔✔- Financial performance
- Organisational structure
- Culture
- Ethical policy
- Corporate social responsibility
- Sustainability
- Environmental awareness
- Reputation
- Quality
- Global accreditations
- Technology
,- Location
✔✔If a supplier has had financial difficulties it could affect the buying organisation in the
following ways - ✔✔- Reduced quality of products/services supplied
- Delays in product deliveries
- Shortages of deliveries
- Price increases
- Failure to supply
✔✔A suppliers financial performance can be evaluated by the following methods - ✔✔-
Credit ratings
- Reviewing the balance sheet
- Reviewing liquidity
- Reviewing profitability
- Requesting references from other customers
✔✔Balance sheets are financial documents that list - ✔✔all of an organisations assets
and liabilities at a set point in time
✔✔The liquidity of an organisation is about how quickly its assets can be converted into
cash. Two ratios can be applied to help how liquid an organisation is - ✔✔- The current
ratio
- The quick ratio
✔✔The current ration calculates - ✔✔an organisations ability to pay short-term financial
obligations
✔✔Current rato = - ✔✔Current assets / Current liabilities
✔✔The quick ratio is also known as - ✔✔The Acid Ratio
✔✔The quick ratio is also known as the acid test. The ratio aims to - ✔✔reveal an
organisations ability to meet its creditors immediate demands
✔✔Quick Ratio = - ✔✔(Current Assets - Inventory) / Current Liabilities
✔✔Profit = - ✔✔Sales - cost of goods sold
✔✔The quick ratio or acid test shows - ✔✔whether an organisation can meet its
immediate creditors requirements
✔✔Two most common types of organisational structure - ✔✔- Flat
- Hierarchical
, ✔✔Characteristics of a Flat organisational structure, compared to hierarchical - ✔✔-
Fast decision-making
- Easy for organisation to develop
- Employees have high levels of responsibility
- Internal confusion as staff do not have a specific manager
- Lack of specialist resources
- Little chance of promotion
✔✔Characteristics of a Hierarchical organisational structure, compared to a flat
structure - ✔✔- Departmental communication may be poor
- Limited relationships between staff and senior managers
- Slow decision-making
- Harder to make change happen
- Employees have low levels of responsibility
- Levels of authority are clearly defined
- Employees can specialise in their areas
- Lot of chances for promotion
✔✔Organisational culture can be split into four dimensions (according to Handy) - ✔✔-
POWER: High pace, Dominance of individuals, Active/direct involvement of owner
- ROLE: Bureaucratic, role specific, Lack innovation, Organic growth
- TASK: High pace, silo, Team orientated, Highly ambitious
- PERSONAL: Individual centered, Organised around owner, Entrepeneur driven
✔✔For a supplier to work effectively wth a buying organisation, their ....... should be
compatible - ✔✔Cultures
✔✔If the culture is not acceptable to any party in the supply chain, - ✔✔internal
discontent with policies or procedures may lead to investigations and any resulting
scandals can quickly escalate
✔✔An ethics document (ie code of conduct or ethical policy), which outlines the
behaviour, processes and policies that it expects to be followed within its supply chain,
should include statements on the following areas - ✔✔- Bribery
- Corruption
- Fraud
- Human rights
- Modern slavery
- Working conditions
- Conflicts of interest
ANSWERS SET A+
✔✔Trade shows are usually focused on one industry and include all the suppliers that
support this. EG, the following might attend a farming trade show - ✔✔- Machinery
suppliers
- Animal feed suppliers
- Seed suppliers
- Chemical and fertiliser suppliers
- Labour providers
- Insurance companies
- Support organisations
- Fencing suppliers
✔✔The organisations that book a stand wish to promote themselves and gain business.
Procurement professionals attend these events in order to do the following - ✔✔- Meet
contacts they have never seen face-to-face
- Understand what products/services are coming to market
- Discuss industry concerns with like-minded professionals
- Meet potential new suppliers
✔✔Procurement professionals should research potential suppliers after they have been
selected and gather information about the following - ✔✔- Financial performance
- Organisational structure
- Culture
- Ethical policy
- Corporate social responsibility
- Sustainability
- Environmental awareness
- Reputation
- Quality
- Global accreditations
- Technology
,- Location
✔✔If a supplier has had financial difficulties it could affect the buying organisation in the
following ways - ✔✔- Reduced quality of products/services supplied
- Delays in product deliveries
- Shortages of deliveries
- Price increases
- Failure to supply
✔✔A suppliers financial performance can be evaluated by the following methods - ✔✔-
Credit ratings
- Reviewing the balance sheet
- Reviewing liquidity
- Reviewing profitability
- Requesting references from other customers
✔✔Balance sheets are financial documents that list - ✔✔all of an organisations assets
and liabilities at a set point in time
✔✔The liquidity of an organisation is about how quickly its assets can be converted into
cash. Two ratios can be applied to help how liquid an organisation is - ✔✔- The current
ratio
- The quick ratio
✔✔The current ration calculates - ✔✔an organisations ability to pay short-term financial
obligations
✔✔Current rato = - ✔✔Current assets / Current liabilities
✔✔The quick ratio is also known as - ✔✔The Acid Ratio
✔✔The quick ratio is also known as the acid test. The ratio aims to - ✔✔reveal an
organisations ability to meet its creditors immediate demands
✔✔Quick Ratio = - ✔✔(Current Assets - Inventory) / Current Liabilities
✔✔Profit = - ✔✔Sales - cost of goods sold
✔✔The quick ratio or acid test shows - ✔✔whether an organisation can meet its
immediate creditors requirements
✔✔Two most common types of organisational structure - ✔✔- Flat
- Hierarchical
, ✔✔Characteristics of a Flat organisational structure, compared to hierarchical - ✔✔-
Fast decision-making
- Easy for organisation to develop
- Employees have high levels of responsibility
- Internal confusion as staff do not have a specific manager
- Lack of specialist resources
- Little chance of promotion
✔✔Characteristics of a Hierarchical organisational structure, compared to a flat
structure - ✔✔- Departmental communication may be poor
- Limited relationships between staff and senior managers
- Slow decision-making
- Harder to make change happen
- Employees have low levels of responsibility
- Levels of authority are clearly defined
- Employees can specialise in their areas
- Lot of chances for promotion
✔✔Organisational culture can be split into four dimensions (according to Handy) - ✔✔-
POWER: High pace, Dominance of individuals, Active/direct involvement of owner
- ROLE: Bureaucratic, role specific, Lack innovation, Organic growth
- TASK: High pace, silo, Team orientated, Highly ambitious
- PERSONAL: Individual centered, Organised around owner, Entrepeneur driven
✔✔For a supplier to work effectively wth a buying organisation, their ....... should be
compatible - ✔✔Cultures
✔✔If the culture is not acceptable to any party in the supply chain, - ✔✔internal
discontent with policies or procedures may lead to investigations and any resulting
scandals can quickly escalate
✔✔An ethics document (ie code of conduct or ethical policy), which outlines the
behaviour, processes and policies that it expects to be followed within its supply chain,
should include statements on the following areas - ✔✔- Bribery
- Corruption
- Fraud
- Human rights
- Modern slavery
- Working conditions
- Conflicts of interest
