L4M2 Certification – Valid Exam Dumps Questions Study Guide! (Updated 147 Questions) [Q43-Q67]

Posted On November 29, 2023

L4M2 Certification – Valid Exam Dumps Questions Study Guide! (Updated 147 Questions)

L4M2 Dumps are Available for Instant Access using Exams4sures

CIPS Level 4M2 Defining Business Needs module is crucial for professionals who are looking to progress in their procurement and supply careers. This module provides learners with the skills and knowledge needed to identify and analyze organizational needs, which is a key competency for any procurement professional. By taking this module, learners will be able to demonstrate their expertise in procurement and supply chain management.

NO.43 GE has developed TurboProp engine that is made from over 850 metal parts. These parts are sourced from many suppliers. Value of spend on these parts make up 73% of total spend. Any delay in receiving a part will cause a bottleneck around the production of the engine. Which of the following should be the best course of action of GE’s CPO?

Drive down prices by using market competition

Increase production

Part standardisation

Reduce delivery cost

NO.44 Which type of specification is less time-consuming to develop?

Outcome-based specification

Design specification

Conformance specification

Technical drawings

NO.45 After a project, the procurement team at CLK Ltd meets up and summarises on the performance. They see that they actually spent $5,000 less than planned budget. The team tries to identifies why there is such difference. This activity is known as…?

Cash flow analysis

Variance analysis

Rolling budget

Cost modelling

NO.46 Buyers are more powerful than the supplier when they are purchasing from monopoly market. Is this statement true?

False, the buyer will be unable to track and manage supplier’s performance

False, buyer will lack negotiating power on cost if the supplier has a monopoly in the market

True, suppliers in monopoly market produce homogenous products

True, in monopoly market, buyer’s switching costs from the incumbent supplier to an-other are relatively low

NO.47 British Steel needs to source a set of instruments that will improve quality of steel. Without these instruments British Steel will loss control of the temperature. The bucket may freeze up, or if it is too hot it leaks out of the casting process, damaging the machine. There is limited supply on the market and quality varies greatly. Which of the following will be the most appropriate managing approach to procure these items?

Bundle these instruments into larger contract

Leverage market competition to drive down cost

Seek continuity of supply

Form partnership with supplier

NO.48 When procuring a machinery, at which stage buyer must check whether it is working to the stand-ards set out in the design specification?

Installation

Maintenance and repair activities

Customer support

Manufacture

NO.49 Which of the following is a challenge of making a business case for straight re-buys?

Terms and conditions

Research of procurement process

Effective inventory control

Identifying suitable suppliers

NO.50 When procuring an IT equipment, at which stage the buyer’s expectations are translated into a technical specification?

Installation

Design

In-service support

Customer support

NO.51 A procurement manager is discussing with other stakeholders about the scope and the implementation of the upcoming construction project. A stakeholder argues that the construction projects are often risky as the overall scope of the work can’t be accurately estimated from the beginning. Furthermore, the project spans over a long period, the costs of materials can fluctuate widely. The procurement manager suggests that the pricing structure should be able to cover the supplier’s costs plus 10% markup on total costs. This arrangement is known as…?

Cost-plus fixed-fee

Cost-plus award fee

Cost-plus incentive fee contracts

Cost-plus Fixed percentage

NO.52 Which of the following are the causes of material cost variance?
1. The buyer updates purchase-to-pay system to track payment and delivery
2. An unprocessed goods received note is missing
3. The employees must work overtime to catch up with the customers’ orders
4. The purchase is made in emergency

2 and 4 only

1 and 4 only

1 and 3 only

2 and 3 only

NO.53 Which of the following activities are considered as primary activities of an organization according to Porter’s value chain? Select TWO that apply:

Maintenance

Picking and delivery components

Sourcing transportation services

Trainees recruitment

Assembly design

NO.54 Facing fiercer competition at home and abroad, IKEA, the leading furniture retailer, needs to im-prove its competitiveness. In order to do this, IKEA must decrease operating costs and improve quality of current and new retail stores. The company establishes a project team. The job of the team is to collect data on performance from multiple stores in several countries, then select the best performing one. The team will work closely with best performing store and study its processes. After the research, the team will recommend best practices to other retail stores. IKEA management can also apply these practices to new stores in the future. Which of the following correctly describe the process undertaken by IKEA project team?

Internal benchmarking

Competitive benchmarking

Internal audit

Site visit

NO.55 A procurement manager includes provision on recovery from natural disaster into a through-life specification. Some suppliers suppose that provision is unnecessary. Is procurement manager’s action justified?

No, because with current technology, natural disaster can’t disrupt supply chain.

Yes, because natural disaster may cause risks in organisation’s supply chain

Yes, because the regulations require contract to have recovery provision

No, because this provision will incur unnecessary cost to supplier

NO.56 Ethan is the newly appointed CEO of ATT Group. He sees that the company is wasting financial resources on unnecessary spends. To solve this problem, Ethan requires all functional managers to prepare their department budget from scratch. Each spend must have justification or it will not be approved. Which budgeting method is Ethan using?

Value preposition budget

Zero-based budget

Incremental budget

Activity-based budget

There are four common types of budgets that companies use: (1) incremental, (2) activity-based, (3) value proposition, and (4) zero-based.
Incremental budgeting takes last year’s actual figures and adds or subtracts a percentage to obtain the current year’s budget. It is the most common method of budgeting because it is simple and easy to understand.
Activity-based budgeting is a top-down budgeting approach that determines the amount of inputs required to support the targets or outputs set by the company. For example, a company sets an out-put target of $100 million in revenues. The company will need to first determine the activities that need to be undertaken to meet the sales target, and then find out the costs of carrying out these ac-tivities.
In value proposition budgeting, the budgeter considers the following questions:
– Why is this amount included in the budget?
– Does the item create value for customers, staff, or other stakeholders?
– Does the value of the item outweigh its cost? If not, then is there another reason why the cost is justified?
Value proposition budgeting is really a mindset about making sure that everything that is included in the budget delivers value for the business. Value proposition budgeting aims to avoid unneces-sary expenditures – although it is not as precisely aimed at that goal as our final budgeting option, zero-based budgeting.
As one of the most commonly used budgeting methods, zero-based budgeting starts with the as-sumption that all department budgets are zero and must be rebuilt from scratch. Managers must be able to justify every single expense. No expenditures are automatically “okayed”. Zero-based budgeting is very tight, aiming to avoid any and all expenditures that are not considered absolutely essential to the company’s successful (profitable) operation. This kind of bottom-up budgeting can be a highly effective way to “shake things up”. This is the method used in the scenario.
Reference:
– CIPS study guide page 58
– Types of Budgets – The Four Most Common Budgeting Methods (corporatefinanceinstitute.com) LO 1, AC 1.4

NO.57 Thani Ltd is a fast growing logistics company with a fleet of 20 tractors. To meet Net Zero objec-tive, the company needs to electrify its fleet. Angelica is assigned to investigate the market price of electrifying services. After the investigation, she realises that the current market price is very expensive and unsustainable for her company. She decides to break down the costs before negotiating with the suppliers. Which internal stakeholders may help Angelica estimate the breakdown of costs? Select TWO that apply.

Sales and Marketing department

Engineering department

Finance department

Commercial agency

Suppliers

NO.58 Which of the following are main focuses of ISO 27001:2013 standard?
1. Confidentiality
2. Logistics
3. Process
4. Life cycle

1 and 3 only

3 and 4 only

2 and 3 only

2 and 4 only

This International Standard (ISO 27001:2013) has been prepared to provide requirements for establishing, implementing, maintaining and continually improving an information security management system. The adoption of an information security management system is a strategic decision for an organization. The establishment and implementation of an organization’s information security management system is influenced by the organization’s needs and objectives, security requirements, the organizational processes used and the size and structure of the organization. All of these influencing factors are expected to change over time.
The information security management system preserves the confidentiality, integrity and availability of information by applying a risk management process and gives confidence to interested parties that risks are adequately managed.
It is important that the information security management system is part of and integrated with the organization’s processes and overall management structure and that information security is considered in the design of processes, information systems, and controls. It is expected that an information security management system implementation will be scaled in accordance with the needs of the organization.
This International Standard can be used by internal and external parties to assess the organization’s ability to meet the organization’s own information security requirements.
The order in which requirements are presented in this International Standard does not reflect their importance or imply the order in which they are to be implemented. The list items are enumerated for reference purpose only.
ISO/IEC 27000 describes the overview and the vocabulary of information security management systems, referencing the information security management system family of standards (includ-ing ISO/IEC 27003[2], ISO/IEC 27004[3] and ISO/IEC 27005[4]), with related terms and defini-tions.
Reference:
– ISO/IEC 27001:2013 Information technology – Security techniques – Information security management systems – Requirements LO 3, AC 3.1

NO.59 A procurement team is categorising their purchased items into four quadrants of Kraljic’s supply chain portfolio matrix. They realise that there are some low-value items which come from very few suppliers in the market. The organisation is critically dependent on these suppliers. The team plans to reduce the dependence by finding alternative sources. Is this a right course of action?

Yes, the organisation needs to reduce the supply risks

No, the organisation should run competitive biddings to exploit the competition

No, there is no way to escape this dependency

Yes, this action will dramatically increase the supplier’s bargaining power

NO.60 What will be the result of retaliation between business rivals in an industry?

Higher exit barrier

More new entrants

Lower profit

Greater bargaining power of suppliers

NO.61 To strengthen its market presence, ABC Group decided to develop a new product. A cross-functional team was formed to discuss the scope and the functions of the product. They will also survey the potential customers to see what they like, what they love, and what they dislike. What is this process called?

Value analysis

Cash flow analysis

Product standardisation

Value engineering

NO.62 A CPO is analyzing whole life cycle costing of a machinery. He realises that cost elements are not specific but come from a range of values. Which whole-life costing model should the CPO use to get the most accurate total cost of ownership?

Simulation models

Optimisation models

Decision support models

Kraljic’s preferencing model

NO.63 When should procurement professional tolerate a risk?

When the risk may disrupt the production

When the risk imposes an existential threat

When the risk causes some trivial annoyance

When the risk breaks the relationship with the strategic supplier

NO.64 Which of the following are the fair and reasonable comparators in price analysis? Select TWO that apply:

Pricing formula

Price indices

Strike price

Cost driver

Competitive bidding

NO.65 In Kano model, which of the following types of requirement should be excluded from the product or service?

Must-be requirements

Performance requirements

Attractive requirements

Reverse requirements

Kano model of excitement and basic quality (Kano et al, 1984; Berger et al, 1993; Matzler et al, 1996) brings a different perspective for the analysis of improvement opportunities in products and services because it takes in consideration the asymmetrical and non-linear relationship between performance and satisfaction. The Kano model classifies customers requirements in three categories (figure 3):
a) Basic Requirements (or Must-be requirement). The basic requirements fulfill the basic func-tions of a product. If they are not present or their performance is insufficient, customers will be extremely dissatisfied. On the other hand, if they are present or have sufficient performance, they don’t bring satisfaction. Customers see them as prerequisites. For instance, for luxury automobiles, “air bags” are considered basic. A customer won’t feel satisfied if the automobile has “air bag”, however he/she will not buy it if “air bag” is not present.
b) Performance Requirements (or One-dimensional requirements). As for these requirements, satisfaction is proportional to the performance level – the higher the performance, the higher the customer’s satisfaction will be and vice-versa. Gas consumption in automobiles is an example of these requirements. Usually customers explicitly demand performance requirements.
c) Excitement Requirements (or Attractive requirements). These requirements are key to cus-tomer satisfaction. If they are present or have sufficient performance, they will bring superior satisfaction. On the other hand, if they are not present or their performance is insufficient, customers will not get dissatisfied. For instance, a surprise gift at the end of a dinner in a restaurant will certainly bring satisfaction, but it will not cause dissatisfaction if not offered. These requirements are not demanded nor expected by customers.
Two other types of requirements may be identified in the Kano model: neutral and reverse ones. Neutral requirements do not bring either satisfaction or dissatisfaction. Reverse require-ments bring more satisfaction if absent than if present.

Reference:
– Integrating Kano model and QFD for Designing New Products
– CIPS study guide page 171-172

NO.66 A buying organisation may not have technical capability to produce a highly complex specification. Which of the following are sources of information that can be used to create the specification? Select TWO that apply

Standard terms and conditions

Name cards

Industry standards

Suppliers’ know-how

Constitution

NO.67 Which of the following factors are likely to be direct barriers to a new entrant in a supply market?

Threat of forward integration

Value to price

Brand identity

Availability of substitutes

Cost advantages

There are many types of barriers to entry into a market. Some of these include:
– Economies of Scale: When manufacturing or selling at a large scale, companies are able to avail cost advantages because per unit costs of the product fall. So the more the company produces in quantity the more the benefit. When existing companies have this advantage, it can act as a barrier to entry because a new entrant will have to try to match the scale to achieve the same cost ad-vantage as the existing company. This may not be possible at the initial stage.
– A Differentiated Product: If the product being sold by the existing company or companies is highly differentiated or enjoys strong brand loyalty, then this can act as a strong barrier to entry. The new entrant will have to invest in creating a product with newer and unique features and bene-fits that surpass those offered by the old company. In addition, there will need to be strong efforts to break existing brand loyalties and shift them to a new untested company.
– High Capital Costs: If an industry requires huge capital investments at the onset, then this will act as a barrier to entry for many of the potential entrants. Only those will attempt to enter the competitive fray who have the resources to make this high initial investment.
– Other Cost Advantages: Apart from those cost benefits that come from economies of scale, there are other advantages that an existing firm may enjoy. These include access to the best suppliers, an understanding of existing materials and knowledge of their quality, possession of any necessary and important patents, and proprietary information and technological knowledge. There are also learning advantages, achieved over years of business and experience.
– Cost of Switching: The cost associated with a consumer’s move from one company or product or another is called the switching cost. If there are significant switching costs, then a new entrant may not be able to create means of removing these. Or, they may have to offer significant advantage to counter these switching costs at their own expense.
– Distribution Network: Often, distribution relationships are well established and may prove to be a strong barrier to entry for a new company. A new entrant will obviously need access to these dis-tribution channels but will need to invest extra in order to engage distributors who have established relations with existing competitors.
– Suppliers: As with distributors, suppliers may be vital to the operations of a new business. Exist-ing suppliers may have contracts or loyalties with existing companies and may prove to be difficult to form relationships with.
– Legal and Government Created Barriers: Government and regulatory requirements such as permits and licenses may be a strong barrier to entry. There may also be laws governing ways to conduct business that may conflict with a company’s practices in other countries.
– Barriers to Exit: Interestingly, barriers to exit may act as a deterrent to entry by new companies. If a company is unable to easily leave a competitive environment in case business does not work out, then it will have to stay and compete even if that is a detrimental business practice. In this case, the company may choose to not enter the market in the first place.
Reference:
LO 2, AC 2.2

The CIPS L4M2 exam covers a variety of topics, including the identification of business needs, the development of procurement strategies, and the implementation of procurement plans. It also covers the importance of stakeholder engagement and communication, as well as risk management and the monitoring and evaluation of procurement activities.

CIPS L4M2 Exam Practice Test Questions: https://www.exams4sures.com/CIPS/L4M2-practice-exam-dumps.html