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CIPS L3M1 Exam Questions
Procurement and Supply Environments (Page 6 )

Updated On: 16-Feb-2026
Page 3 of 19
PDF with 90 Questions

Doing the same with fewer resources is:

  1. Efficiency
  2. Effectiveness
  3. Economy
  4. E. Efficiency.

Answer(s): A

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.



Thinking of Michael Porter's Industry Structure Analysis (commonly referred to as Five Forces Analysis), the content of the centre circle is about:

  1. Governmental regulation of competition within an economy
  2. Competitive rivalry within the industry
  3. Governmental interference in an industry
  4. Competitor price-cutting to increase market share

Answer(s): B

Explanation:

Competitive rivalry within an industry.

This can be quite an important point, and why I have such a dislike of the less formal title for the model - the model is about entire industries, not just about a single firm - this is commonly misun- derstood by students (and sadly, some tutors) - and the original Porter title - 'Industry Structure Analysis' - helps us understand that, I think. I find this tool of analysis to be very helpful in under- standing behaviour within sectors, despite criticism of the model and its age from some commenta- tors
The other answers shown are mere fictions.



As well as a Goods Received Note (GRN), three-way matching to authorise a payment to a supplier should involve two other documents.
Which two?

  1. Service Level Agreement
  2. Invoice
  3. Purchase Order
  4. Bill of Materials

Answer(s): B,C

Explanation:

The GRN, invoice and PO should all match to enable payment to occur. The BoM will help calculate the extent of the requirement, prior to the PO being issued. An SLA will help ensure adequate and contractual delivery of any services required.



'Trade within major trading blocs tends to expand, whereas this is not necessarily the case regarding trade between major trading blocs'. True or false?

  1. True
  2. False

Answer(s): A

Explanation:

This is true.
The purpose of creating or entering into a trading bloc is to increase the volumes of trade between countries within that bloc. This is irrespective of trade between blocs, which may grow or not, de- pending on circumstances.



Think carefully.
There is low consumer demand; production capacity is unused; prices are stable or are falling; busi- ness profits are low; unemployment is high; and business confidence is low. Is this:

  1. Recovery
  2. Recession
  3. Boom
  4. Depression

Answer(s): D

Explanation:

This is a description of a depression - the worst of all economic situations, which governments will do almost anything to avoid.
A recession is a decline in the performance of the economic factors mentioned (unemployment ris- es), and technically in the UK, a recession would be two successive quarters of decline (reducing economic activity / reducing GDP). A recovery is coming out of recession, and a boom is when the economy is in the opposite state to the depression shown in the question. Generally, an economy's behaviour is cyclical.






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