L4M2 Exam Dumps - CIPS Level 4 Diploma in Procurement and Supply Questions and Answers

Comprehensive and Detailed Explanation (from CIPS L4M2 – Market Analysis)

Supplier power is low when:

Buyers can easily substitute products (Option B).

Switching costs are low, so buyers can change suppliers without difficulty (Option D).

Low competition (A) or low innovation (E) strengthens supplier power, not weakens it. High quality (C) increases supplier leverage.

Relevant L4M2 references:

“Factors influencing supplier bargaining power”

“Porter’s Five Forces model – supplier power and substitution”

Explanation

There are two major types of specification: conformance and performance specifications. They have the following characteristics:

Table Description automatically generated

Since performance specification is often a list of outputs or outcomes, it usually takes less time to develop than conformance specification.

Explanation

The buying organisation is keen to encourage innovation so they should use the outcome or output based specification. In an outcome-based specification, umbrella statements like 'good quality', 'ambient temperature', 'convenient way' are often used. This may confuse the suppliers, and it's hard to check the solution that supplier offers. On the other hand, ouput-based specifications often include measurable requirements. For example, a specification for air conditioning system states that the system should maintain the room temperature at 19-24 degrees Celsius. Therefore, output specification is more appropriate in this case.

Comprehensive and Detailed Explanation (paraphrased from CIPS L4M2 content)

CIPS L4M2 describes key international standards that can be used in specifications.

ISO 14000 series – focuses on environmental management systems. It includes frameworks and guidance to help organisations reduce negative environmental impacts, comply with regulations, and continually improve environmental performance. Typical concepts include:

Environmental policy and planning

Environmental performance monitoring

Life cycle thinking / analysis

By contrast:

ISO 9000 series – quality management and continuous improvement.

ISO 27000 series – information security.

ISO 31000 – risk management.

So:

Option B is correct: ISO 14000 is about environmental standards and explicitly includes life cycle analysis / life cycle considerations.

The other options incorrectly associate ISO 14000 with quality, information security, or risk management.

Specifications in procurement can reference ISO 14000 requirements to embed environmental sustainability criteria into supplier requirements.

Relevant CIPS L4M2 areas:

Use of standards (ISO 9000, ISO 14000 etc.) in specifications

Environmental management and sustainability requirements

Life cycle and environmental performance in defining business needs

Detailed Explanation:

A (Customer payment upon purchase): Immediate payments improve cash flow.

D (Loan): Loans provide cash inflow, though they may increase liabilities.Options like supplier payment on receipt (C) negatively impact cash flow, and sales promotions (B) may increase expenses. Reference: CIPS Level 4, Financial Management in Procurement.

Explanation

According to Investopedia, the financial services sector provides financial services to people and corporations. This segment of the economy is made up of a variety of financial firms includ-ing banks, investment houses, lenders, finance companies, real estate brokers, and insurance com-panies. As noted above, the financial services industry is probably the most important sector of the economy, leading the world in terms of earnings and equity market capitalization. Large conglomerates dominate this sector, but it also includes a diverse range of smaller companies.

According to the finance and development department of the International Monetary Fund (IMF), financial services are the processes by which consumers or businesses acquire financial goods. For example, a payment system provider offers a financial service when it accepts and transfers funds between payers and recipients. This includes accounts settled through credit and debit cards, checks, and electronic funds transfers.

Companies in the financial services industry manage money. For instance, a financial advi-sor manages assets and offers advice on behalf of a client. The advisor does not directly provide investments or any other product, rather, they facilitate the movement of funds between savers and the issuers of securities and other instruments. This service is a temporary task rather than a tangible asset.

Financial goods, on the other hand, are not tasks. They are things. A mortgage loan may seem like a service, but it's actually a product that lasts beyond the initial provision. Stocks, bonds, loans, commodity assets, real estate, and insurance policies are examples of financial goods.

Explanation

A monopoly is a market with a single seller (called the monopolist) but with many buyers. In this market, the bargaining power of supplier is higher than of buyer since the supplier is the only seller.