Free L4M2 Exam Braindumps (page: 5)

Page 5 of 37

At which stage of through-life contract management, procurement team needs to identify sources of risk and the ways to mitigate them?

  1. Specification stage
  2. Supplier relationship stage
  3. Tendering stage
  4. Contracting stage

Answer(s): B


Risk management has become incredibly complex, especially for capital purchase which requires through-life contract. Any source of risks should be identified and closely managed from the specification stage.
There should be sufficient information in the specification to minimise risks later in the through-life contract. Here is something to consider:
- Make sure the parties to the contract are clearly identified. This is particularly important if a prime contractor is being used. Allow them to subcontract elements of the specification.
- Clearly identify any testing and quality assurance procedures and who will perform them.
- Document every important aspect of the specification including a project plan
- Include a reasonable limitation of liability clause in the contract and reference it in the specifica-tion
- Identify any guarantees that are needed
- Be clear on what insurance will and will not cover
- Make sure there is clear audit trail of any changes to the specification together with approvals LO 3, AC 3.2

Which of the following are recognised competitive strategies?
1. Winning new business at all cost
2. Getting more customers' attention
3. Creating stand-out products and brands
4. Focusing on niche market
5. Acquiring competitors

  1. 3 and 4 only
  2. 3 and 5 only
  3. 1 and 2 only
  4. 2 and 5 only

Answer(s): A


"A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average. The fundamental basis of above average profitability in the long run is sustainable competitive advantage. There are two basic types of competitive advantage a firm can possess: low cost or differentiation. The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus."


(Porter, Michael E., "Competitive Advantage". 1985, Ch. 1, pp 11-15. The Free Press. New York.)
Creating stand-out products and brands is considered as Differentiation. An organisation that is not clear about which of these three strategies to use is described as 'stuck in the middle' LO 2, AC 2.1

Robert is a senior buyer at MMC Construction Ltd. His company is doing multiple development projects in the country, which increases procurement workload significantly. Meanwhile, most of the tasks are handled manually, which causes bottlenecks in the workflows. The procurement team is overwhelmed by the workload and complains from other departments. From previous experience, Robert knows that electronic system may help his procurement team. He writes a business case to submit to the senior management, in which he insists on the possible productivity improvement by adopting e-system in procurement. Is Robert's action reasonable?

  1. No, there's no need to make a business case for new purchase
  2. Yes, productivity improvement is a mandatory element in every business case
  3. No, adopting e-system may make procurement department jobless
  4. Yes, his reason may appeal the senior management

Answer(s): D


Composing a compelling business case requires the proposer to write in the language of the approvers. Generally, approvers are business executives or important shareholders whose major interest is the profitability of the firm. Business case proposer may embed the following contents:
- Return on investment: according to Investopedia, Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment's cost. A business case would seem more attractive if the proposal is expected to have high ROI.
- Time to market: Time-to-market (TTM) refers to the time from which a company initially con-ceives a product or service idea to the point when the actual product or service is accessible to buyers in the market (Afonso et al., 2008). The speed at which companies can introduce products into the market is critical for sustaining competitive advantage, and the reduction of product development cycle time has become a strategic objective for many technology-driven firms.
- Customer satisfaction: Keeping existing customer to stay in the business can affect greatly on the profit margin of a firm. A new proposal that finds the way to innovate while keeping the current customers satisfied may gain the interest of senior management.
- Improving productivity: Productivity is the measure of how efficient and effective a firm is. Im- proving the productivity means that with the same or lesser input, better output is generated. In- creasing productivity also improves the profitability of a company.
- Risk management: Any business activity contains inherent risks. For example, for a mining company to be truly responsible, it must keep all of its workers safe, healthy and motivated, meet the expectations of the local community and government for the region in which it is operating, ensure it impacts on the environment positively if at all, as well as achieve the financial objectives set by its investors for both the short and long term. Managing risks well improves the production throughput and maintains customer satisfaction.
In the scenario, Robert is trying to convince the senior management to adopt e-procurement system by insisting on potential productivity improvement. This is the right approach. A business plan should engage and please senior management and directors. An appealing business case tells them how important things to the business (such as productivity, return on investment, customer satisfaction or costs) are affected by the plan.


CIPS study guide page 19-21
LO 1, AC 1.1

Which of the following are typically included in a conformance specification? Select 2 that apply.

  1. Product functions
  2. Product dimensions
  3. Brand name
  4. List of outcome
  5. Packaging requirements

Answer(s): B,E


A conformance specification is a specification that defines the technical and physical characteristics and/or measurements of a product, such as physical aspects (e.g. dimensions, colour, and surface finish), design details, material properties, energy requirements, processes, maintenance requirements and operational requirements.
On the other hand, performance specification typically includes list of output or outcome or func- tional requirements. Brand name can be a part of performance specification because brand is a re- minder of quality that customers remember. For example, when talking about Roll Royce, people will think about an elegant car.


CIPS study guide page 118-124
LO 3, AC 3.1

Page 5 of 37

Post your Comments and Discuss CIPS L4M2 exam with other Community members:

Tshepang 8/18/2023 4:41:00 AM
kindly share this dump. thank you

Tshepang 8/18/2023 4:41:56 AM
Kindly share this dump. Thank you