[Jun 18, 2024] L3M1 Exam Brain Dumps - Study Notes and Theory
Pass CIPS L3M1 Test Practice Test Questions Exam Dumps
NEW QUESTION # 33
Which of the following are core stakeholders of a private sector organisation? Select all that apply.
- A. Shareholders
- B. Customers
- C. The local authority / government where the headquarters building is located.
- D. The insurers of the headquarters building
Answer: A,B
Explanation:
Both customers and shareholders are core stakeholders of a private sector organisation, although this fact appears to be somewhat diluted in the minds of some modern-day academics and commenta-tors. The shareholders are the owners of the business - it is for them that everyone is working and their objective is invariably profit. The profit is derived from religiously focusing on another core stakeholder group - the customers. If either of these two stakeholder groups is ignored, it is unlikely that happy times lie ahead.
NEW QUESTION # 34
Why is procurement governance important?
Select all that apply.
- A. Procurement has sway over large sums of organisational funds
- B. Procurement's decisions benefit some suppliers over others
- C. There may be potential opportunities to commit fraud
- D. It's not important
Answer: B,C,D
Explanation:
It is important, for the reasons given in the three correct answers.
NEW QUESTION # 35
The study of population and population trends is called:
- A. Demagoguery
- B. Demographics
- C. Topography
- D. Hieroglyphics
Answer: B
Explanation:
Demographics now seen as being a part of STEEPLED.
The other terms shown have nothing to do with this topic and are simply fillers.
NEW QUESTION # 36
'The costs of business activities which are not reflected in the costing of a product or service and paid for by consumers, but which are borne by the wider community - such as the costs of pollution and associated ill health, traffic congestion or environmental degradation' are known as:
- A. Overheads
- B. Externalities
- C. Exclusions
- D. Taxation
Answer: B
Explanation:
We are now aware that the cost of externalities to society are considerable. A simple example would be that proximity to flow of motor vehicles is likely to increase ill-health requiring state-funded medical services where they exist, to treat at state (taxpayers') expense those who become ill. In the UK the number of people affected this way is believed to be numbered in the tens of thousands an-nually. Thus some businesses' cost structures do not reflect their true cost to society.
Another example would be the discharge of untreated waste into rivers or the sea, where the com-panies undertaking these activities may not be contributing financially to the cleaning up required.
In future years there is likely to be much debate about this, as some people will attempt to find ways to make companies pay the full cost of running their businesses.
NEW QUESTION # 37
Which of the following might be objectives of private sector organisations? Select all that apply.
- A. To maximise taxation
- B. To minimise profit
- C. Market share
- D. Shareholder value
Answer: C,D
Explanation:
To gain market share and to create shareholder value (increase the value of shares) are common aims of private sector organisations.
The other two answers are the antithesis of what firms usually want.
NEW QUESTION # 38
'The value of a commodity or service measured in terms of the standard monetary unit' describes:
- A. Price
- B. Value added
- C. Cost
- D. Value for money
Answer: A
Explanation:
The definition shown refers to the word 'price'. The price is what someone will pay for something - the extent to which a customer values something - and the reference to the standard monetary unit refers to, for example, a dollar, a Euro, a dinar or whatever.
The other answers are, to some extent, intended to confuse, as they use some of the words shown in the definition. Care must be taken not to jump to a conclusion here.
The response 'cost' should give pause for thought, as, in a sense, the cost of doing or making some-thing may have value. But value is determined by the customer - this definition is a reference to the value the customer would pay - the price.
NEW QUESTION # 39
A 'firm price' and a 'fixed price' are the same thing.
True or false?
- A. False
- B. True
Answer: A
Explanation:
To the lay person, they may look the same.
However, for a procurement professional, a fixed price may be altered in some circumstances eg 'fixed price with incentive', 'fixed price with exchange rate adjustment', etc.
A firm price on the other hand cannot be altered, and is the price which will be paid under the con-tract.
An earlier text by Patrick Behan on government contracting refers.
NEW QUESTION # 40
Which of the following are ways of classifying organisations? (select all that apply)
- A. Structure and ownership
- B. Activity
- C. Primary objective
- D. Size
Answer: A,B,C,D
Explanation:
All of these are ways of classifying organisations.
Examples: Retailers, SMEs, limited companies, etc
NEW QUESTION # 41
Which of the following might result from increased costs of production (especially wages) without increased demand, so that producers have to increase their prices to maintain profitability?
- A. Demand-pull inflation
- B. Cost-push inflation
- C. Monetary inflation
- D. Stagflation
Answer: B
Explanation:
Inflation, in this case, is created by the increased cost of production coming through into the econ-omy.
The other answers are essentially names of alternative types of inflation.
NEW QUESTION # 42
Fiscal policy deals with:
- A. Government decisions and actions regarding exchange rates and unemployment in the economy
- B. Government decisions and actions regarding the level of interest rates and supply of money in the economy
- C. Government decisions and actions regarding the number of staff members employed in the government Treasury
- D. Government decisions and actions regarding the balance between taxation revenue and public expenditure
Answer: D
Explanation:
The correct answer simply describes what fiscal policy is.
This topic is often mentioned or discussed in serious radio / TV news broadcasts.
NEW QUESTION # 43
The principle that different spends may require different procedures, with different levels in the or-ganisational hierarchy having different spend authorisations is called:
- A. Devolved authority
- B. Delegated authority
- C. Diluted authority
- D. Distributed authority
Answer: B
Explanation:
It's 'delegated authority' - where the authority to spend has been delegated to others, at a 'lower lev-el' in the organisation.
Normally organisational finance or procurement policies will explain how this is to work, often with a written delegation provided by a more senior manager. The authority to spend is invariably a tem-porary permission, which may be withdrawn under certain circumstances eg breach of rules, exces-sive spend, maverick spend, etc.
NEW QUESTION # 44
Which of the following are examples of non-renewable resources?
- A. Wind power from wind turbines
- B. Hydro-electric
- C. Coal
- D. Oil
Answer: C,D
NEW QUESTION # 45
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:
- A. Depression
- B. Recovery
- C. Boom
- D. Recession
Answer: A
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.
NEW QUESTION # 46
Thinking of Michael Porter's Industry Structure Analysis (commonly referred to as Five Forces Analysis), which of the following are seen as threats (select all that apply):
- A. Suppliers
- B. New entrants
- C. Substitutes
- D. Buyers
Answer: B,C
Explanation:
The model speaks of the threat of new entrants and the threat of substitutes. New entrants are par-ticularly attracted by high profitability in the sector. Substitutes can come about in a number of ways for example, through lower prices or because of technology.
NEW QUESTION # 47
Under a contract with a price adjustment clause, which of the following would commonly be grounds for price adjustment (depending on the precise contract terms)?
- A. Desire by shareholders to have increased profits
- B. Substantially escalating materials costs
- C. Quality problems brought about by supplier's haste to complete the contract to aid their cashflow
- D. Exchange rate fluctuations
Answer: B,D
Explanation:
Exchange rate fluctuations and escalating materials costs can both substantially impact on a contract price. Where a contract has been drafted to allow for it, the price may be adjusted in line with some pre-agreed mechanism or formula to make the price paid more equitable.
Quality problems of the supplier's own making and shareholders seeking extra profit - neither being uncommon - are not seen as being grounds for adjusting price (upwards).
I should mention that price adjustment clauses can result in prices being adjusted either upwards or downwards, or not at all, depending on circumstances.
NEW QUESTION # 48
Protecting domestic industry from the effects of global competition is known as:
- A. Protectionism
- B. Interventionism
- C. Preventionism
- D. Globalism
Answer: A
Explanation:
Increasingly practised, albeit often quietly, protectionism seeks to protect domestic industries, re-ducing access to markets for foreign companies. The aim is normally to protect domestic worker's jobs, often with an eye on domestic politics. Industries recently (late 2020) mentioned in this subject area include agriculture, airlines, defence, shipbuilding, steel, etc - not just in UK or Europe, but worldwide.
The World Trade Organisation seeks to reduce protectionism - an activity supported by many econ-omists, as globalism is believed by many to increase global wealth overall.
However, this is not clear cut, and there are a variety of views.
Interventionism is not relevant to this question and preventionism is a made-up word.
NEW QUESTION # 49
Which of the following constitute non-tariff barriers to trade?
- A. Complex customs procedures and paperwork for any goods crossing borders
- B. Reduced import duties
- C. Government subsidies to domestic producers
- D. Increased import duties
Answer: A,C
Explanation:
Non-tariff barriers are restraints on international trade which are not so obvious as simple duties or tariffs. Complex procedures can slow things down, reducing the incentive to export to that country resulting in protected domestic business; subsidies to one's own producers make it more difficult for foreign firms to compete - again creating a barrier to trade.
Increased import duties would be a form of tariff (potentially in breach of GATT / WTO agree-ments); reduced import duties would free up / encourage trade.
NEW QUESTION # 50
An organisation is...
- A. A social arrangement for the collective performance of controlled goals
- B. A social arrangement for the controlled performance of collective goals
- C. A collection of social people controlling performance of arranged goals
Answer: B
Explanation:
Social arrangement because it involves people; they have a collective goal eg to be a profitable or-ganisation; and their performance must be controlled to work towards or to achieve that goal / those goals.
NEW QUESTION # 51
In one format for describing socio-economic groupings, skilled, semi-skilled and unskilled working class people would be classified as:
- A. D
- B. A,
- C. C2,
- D. C1
Answer: D
Explanation:
This is a broad group of people deriving income from employment, including some skilled people through to unskilled.
A, B and C1 would be those people often referred to as upper middle class or upper class; whereas E would describe a broad group of the poor, the unemployed, etc.
These are rough generalisations regarding people's likelihood of income, taste, lifestyle, etc. To take an extreme example, there is probably not much point in trying to market Dom Perignon (an expen-sive brand of champagne) to the E group. But the E group might welcome promotion of a low-cost brand of tobacco or cigarettes.
NEW QUESTION # 52
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