CIPS L4M2 - Defining Business Needs
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Give examples of Primary Business Activities - CORRECT ANSWER - Outbound
logistics
Inbound logistics
Operations
Tend to be direct costs
Give examples of Secondary Business Activities - CORRECT ANSWER - Human
resources (HR)
Procurement
Technology
Tend to be indirect
What is Price Analysis and what are the different methods that might be used? - CORRECT
ANSWER - Price analysis is a way of testing whether the price paid is fair or not
Price analysis methods:
Prices paid before
Published prices (catalogues)
Pricing formula
Competitive bidding
What is purchase cost analysis (PCA)? - CORRECT ANSWER - Analysis of the
individual materials, components and activities that make up an item
,PCA can help cost reduction strategies
Name the three types of purchases and explain them - CORRECT ANSWER - New Buy:
new purchase when a completely new requirement is identified
They can be highly resource intensive, expensive and high-risk
Used when - new business, opportunities or products
Change in legislation
Change in technology
Modified Re-Buy: a straight rebuy, but with some changes
These can be more complex and require problem-solving skills
Used when - cutting costs
Volume discounts (via supplier list consolidation)
Changes and regulations
Examples, components consulting services and software
Straight Re-Buy: exact same specification, item and supplier
Likely a routine purchase and to be a call off from current contract or framework agreement
Typically, low value and low risk
Examples, utilities (gas, water), MRO, raw materials
What does RAQSCI stand for and why might it be used? - CORRECT ANSWER - R:
regulatory
A: availability
Q: quality
S: service requirements
C: cost
I: innovation
, This is a way of identifying business needs
What is the 5 main criteria for a business case? - CORRECT ANSWER - Objectives -
issues management might be used
Options - look at a number of ways to solve the problem
Costs & Benefits - analysis to ensure benefits outweigh the costs
Risk Assessments - identify and deal with any hazards the project might face
Implementation Plan - check if there is a suitable plan
What is a market? - CORRECT ANSWER - a group of buyers and sellers of a particular
good or service
Facilitates trade of products and services between buyers and sellers
What is an industry & the 3 groups they're typically classified by? - CORRECT
ANSWER - Formed to service a market
Industries are made up of segments which are groups that share common characteristics
Industries are usually classified into three groups
Primary activities: mining, raw materials
Secondary activities: manufacturing
Tertiary activities: services
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Give examples of Primary Business Activities - CORRECT ANSWER - Outbound
logistics
Inbound logistics
Operations
Tend to be direct costs
Give examples of Secondary Business Activities - CORRECT ANSWER - Human
resources (HR)
Procurement
Technology
Tend to be indirect
What is Price Analysis and what are the different methods that might be used? - CORRECT
ANSWER - Price analysis is a way of testing whether the price paid is fair or not
Price analysis methods:
Prices paid before
Published prices (catalogues)
Pricing formula
Competitive bidding
What is purchase cost analysis (PCA)? - CORRECT ANSWER - Analysis of the
individual materials, components and activities that make up an item
,PCA can help cost reduction strategies
Name the three types of purchases and explain them - CORRECT ANSWER - New Buy:
new purchase when a completely new requirement is identified
They can be highly resource intensive, expensive and high-risk
Used when - new business, opportunities or products
Change in legislation
Change in technology
Modified Re-Buy: a straight rebuy, but with some changes
These can be more complex and require problem-solving skills
Used when - cutting costs
Volume discounts (via supplier list consolidation)
Changes and regulations
Examples, components consulting services and software
Straight Re-Buy: exact same specification, item and supplier
Likely a routine purchase and to be a call off from current contract or framework agreement
Typically, low value and low risk
Examples, utilities (gas, water), MRO, raw materials
What does RAQSCI stand for and why might it be used? - CORRECT ANSWER - R:
regulatory
A: availability
Q: quality
S: service requirements
C: cost
I: innovation
, This is a way of identifying business needs
What is the 5 main criteria for a business case? - CORRECT ANSWER - Objectives -
issues management might be used
Options - look at a number of ways to solve the problem
Costs & Benefits - analysis to ensure benefits outweigh the costs
Risk Assessments - identify and deal with any hazards the project might face
Implementation Plan - check if there is a suitable plan
What is a market? - CORRECT ANSWER - a group of buyers and sellers of a particular
good or service
Facilitates trade of products and services between buyers and sellers
What is an industry & the 3 groups they're typically classified by? - CORRECT
ANSWER - Formed to service a market
Industries are made up of segments which are groups that share common characteristics
Industries are usually classified into three groups
Primary activities: mining, raw materials
Secondary activities: manufacturing
Tertiary activities: services
