Which of the following is an example of an organisation updating an internal governance standard?
Answer(s): B
Comprehensive and Detailed Explanation From Exact Extract of Documents:Internal governance standards are the policies, procedures, and practices that guide how an organisation operates internally. According to the L5M5 study guide (p.313), updating a Standard Operating Procedure (SOP) is an example of strengthening internal governance. This ensures compliance, consistency, and risk management within an organisation's operations. By contrast, achieving ISO 9001 (A) involves external certification, paying a living wage (C) relates to external social responsibility, and paying dividends (D) relates to shareholder rewards, not governance. Procurement professionals must understand governance frameworks because robust internal governance ensures compliance with ethical procurement standards and reduces risks of malpractice.
Managing Ethical Procurement and Supply (L5M5) Study Guide, p.313
What is a monopsony?
Comprehensive and Detailed Explanation From Exact Extract of Documents:A monopsony exists when there is only one buyer in a market but multiple sellers. For example, in the defence industry, a government may be the sole buyer of military equipment such as submarines. This contrasts with a monopoly, where only one seller dominates the market. The L5M5 study guide (p.127) explains that monopsony can create power imbalances, as the buyer holds significant leverage over suppliers, potentially leading to unfair contract terms. Ethical procurement requires recognising such risks and ensuring that dominant buyers do not exploit suppliers unfairly.
Managing Ethical Procurement and Supply (L5M5) Study Guide, p.127
Jan is a procurement manager exploring Low-Cost Country Sourcing. Which of the following is a legitimate motive for this?
Answer(s): D
Comprehensive and Detailed Explanation From Exact Extract of Documents:The L5M5 study guide (p.71) explains that the legitimate motive for Low-Cost Country Sourcing (LCCS) is reducing operational expenses by accessing cheaper materials, labour, or manufacturing. However, this must be conducted ethically, balancing cost savings with environmental, social, and legal responsibilities. Options A and B reflect unethical practices, while C is irrelevant. Procurement professionals must carefully evaluate suppliers in low-cost countries to ensure compliance with ethical standards such as labour rights, environmental protection, and anti-bribery legislation. LCCS can create value but must not compromise sustainability or governance.
Managing Ethical Procurement and Supply (L5M5) Study Guide, p.71
Red Flag Inc. introduces a new ESG policy and is considering low-cost country sourcing. They need to evaluate suppliers. Which activities should they carry out? Select THREE
Answer(s): A,B,D
Comprehensive and Detailed Explanation From Exact Extract of Documents:Effective supplier evaluation must align with ESG policies. The L5M5 study guide (p.80) highlights that procurement should establish performance management frameworks (A), ensure that KPIs reflect ESG objectives (B), and carry out regular risk assessments (D). While certifications such as ISO9001 and SA8000 (C) are valuable, requiring them universally may exclude smaller, ethical suppliers unable to afford certification costs. Option E is unethical and discriminatory, as not all low- cost country suppliers use forced labour. A balanced, risk-based approach ensures ethical compliance while supporting sustainability goals.
Managing Ethical Procurement and Supply (L5M5) Study Guide, p.80
Which organisation is responsible for the creation of the 2030 Sustainable Development Agenda?
Answer(s): A
Comprehensive and Detailed Explanation From Exact Extract of Documents:The United Nations (UN) launched the 2030 Sustainable Development Agenda, which includes the 17 Sustainable Development Goals (SDGs). The L5M5 study guide (p.4) emphasises that these goals cover social, environmental, and economic priorities, including poverty reduction, climate action, decent work, and responsible consumption. NATO, ISO, and ILO play important roles in governance, standards, and labour rights but are not responsible for the SDGs. For procurement professionals, the SDGs provide a global framework to align ethical supply practices with wider sustainability objectives.
Managing Ethical Procurement and Supply (L5M5) Study Guide, p.4
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