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CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions:

1. A large retail chain, HyperMart, sources products from multiple suppliers, each specializing in different categories such as electronics, clothing, and groceries. To maintain a diverse selection, HyperMart has contracts with multiple suppliers for each product category. At the same time, these suppliers serve various large retailers and are not solely dependent on HyperMart for their sales.
In this scenario, how does the mutual independence between HyperMart and its suppliers illustrate the dynamics of the power dominance model?

A) Suppliers hold power over HyperMart because they provide unique products that are difficult to substitute
B) The dependence of HyperMart on suppliers for critical products increases supplier power
C) Both HyperMart and its suppliers operate independently without significant power over each other
D) HyperMart has significant power over suppliers due to its large purchasing volume

2. Which of the following scenarios best illustrate instances of bribery?

A) Upon landing at Dhaka Airport, the customs official informs that a 'standard processing fee' of $20 is required to allow entry into the country upon which a receipt for payment will be given
B) A supplier has just sent the procurement official her invoice for approval. Included in her expenses is a large round sum figure for 'client entertainment' without any price breakdown
C) A buying organization excludes certain bidders from a high-value tender on the basis that these bidders have not detailed what environmental protection measures they would take
D) During the audit of a luxury goods distributor, the auditor was asked to take a pen home as a gift. After checking organizational policy, the auditor accepted the gift

3. ABC Group, the country's largest textile company, is considering partnering with a Fair Trade-certified supplier to support sustainability and ethical practices. However, they are concerned about potential challenges in working with a Fair Trade organization. Which TWO of the following challenges might ABC Group face in this partnership?

A) The Fair Trade certification process may require complex audits, and if there is a longer period between audits, activities could change and will no longer be compliant
B) The product prices from Fair Trade suppliers are often significantly lower than conventional suppliers, making it hard to remain competitive
C) Improved stakeholder perception of the brand, which can lead to reputational benefits
D) There are no real challenges, as all Fair Trade products are guaranteed to be competitive and cost-efficient
E) Fair Trade standards may require investments in audits supported by self-assessment reports and office reviews adding costs to the business

4. Alphacom Corporation seeks to enhance its competitive advantage through global sourcing. Which of the following strategies would best contribute to this goal?

A) Investing in automated technologies to replace local labor
B) Hiring additional staff to manage remote sourcing operations
C) Centralizing all procurement decisions at the headquarters to streamline processes
D) Establishing partnerships with local suppliers to enhance supply chain responsiveness

5. The ILO's fundamental principles and rights at work are binding on which countries?

A) All member states of the ILO
B) Only developed countries
C) Only countries with high labor standards
D) Only those that have ratified the ILO conventions

Solutions: