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L4M6 Supplier Relationships Questions and Answers

Questions 4

A company supplies IT equipment and buys most of its components from first-tier suppliers in the UK. It wants to analyse its supply market to develop the supply chain and is going to review the main factors that have an influence. The company wants to use the STEEPLED external environmental analysis framework to achieve the best result. Which of the following STEEPLED factors is most likely to have the greatest effect?

Options:

A.

Sociocultural

B.

Technological

C.

Economic

D.

Ethical

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Questions 5

The CEO of a business has asked his procurement manager to source new machinery for the factory. This machinery will help create a new line of products which will give the company a competitive edge. The CEO is heavily invested in this procurement activity as profits have been lower than expected this year and this new line of products could help increase profitability. How should the procurement manager include the CEO in the procurement activity?

Options:

A.

It is important to keep the CEO informed of all decisions that are made

B.

It is important to keep the CEO satisfied as he runs the business

C.

The CEO is a key player- so it is important he is involved early in the process

D.

The CEO is a key player- so should be given regular updates on progress

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Questions 6

An IT company is developing and launching a new product to the market. The project requires experts from different divisions of the business. What type of team should run this project?

Options:

A.

Virtual team

B.

Finance team

C.

Existing performing team

D.

Cross-organisational team

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Questions 7

Under which circumstances would a partnership sourcing approach be used?

Options:

A.

1 and 2 only

B.

1 and 3 only

C.

1 and 4 only

D.

2 and 4 only

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Questions 8

A manufacturing company which produces showers struggles to get hold of a certain part called a mixer valve. It is impossible to make the showers without the mixer-valve and there is only one supplier in the market that produces them. The good news is they aren't very expensive to buy. What type of supplier is the supplier of mixer valves?

Options:

A.

leverage

B.

strategic

C.

routine

D.

bottleneck

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Questions 9

Rivalry between suppliers is more likely to be intense in which of the following situations?

Options:

A.

1 and 2 only

B.

2 and 4 only

C.

1 and 3 only

D.

1 and 4 only

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Questions 10

A software developer is seeking to develop a new fitness trends app. They are looking to create a contract with a fitness expert to give advice on the type of changing fitness trends. What agreement should the app developer aim to achieve?

Options:

A.

Partnering relationship

B.

Cost-based relationship

C.

Quality-based relationship

D.

Traditional contracting relationship

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Questions 11

The Managing Director of XYZ Ltd has asked the Procurement Manager to support the engineering team and ensure a new product design is suitable for volume manufacturing. The Procurement Manager arranged a series of meetings with suppliers and its internal development team, the XYZ manufacturing department, and research and development department to get their feedback on the proposed design. What are the activities undertaken by XYZ Ltd called?

    Early supplier involvement

    Benchmarking

    Cross-organisational involvement

    Subcontracting

Options:

A.

1 and 2 only

B.

3 and 4 only

C.

2 and 3 only

D.

1 and 3 only

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Questions 12

Victoria runs a hotel and has recently had several security issues such as attempted robberies. She has decided that she needs to hire a security firm to ensure these issues don’t continue. She has done some research and has found there are several local security firms who may be able to provide services to her hotel. However, she hasn’t decided exactly what she would require the security firm to do. What should be Victoria’s next steps?

Options:

A.

Issue a Request for Proposal

B.

Issue an Invitation to Tender

C.

Issue a Request for Quotation

D.

Issue a Prior Information Notice

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Questions 13

‘tail spend’ is a common category used in procurement and describes a category of items. What characteristics do theses items have?

Options:

A.

High value, low volume

B.

High value, high volume

C.

Low value, high volume

D.

Low value, low volume

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Questions 14

Which of the following are advantages for the buyer in a partnership arrangement?

    Price stability

    Cost of relationship management

    Supplier complacency

    Cost savings achieved

Options:

A.

1 and 4 only

B.

1 and 2 only

C.

2 and 3 only

D.

2 and 4 only

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Questions 15

The Queen Victoria is a traditional British pub which serves a range of alcoholic beverages. It has a partnership relationship with a local brewery which supplies several types of beer and cider. Logistics is a key concern for the Queen Victoria as deliveries must be made when there is room in the cellar to store the barrels of beer and cider. In what ways could the logistics risk be reduced?

Options:

A.

Using several suppliers instead of one

B.

Batch ordering

C.

Sharing up-to-date information

D.

Issuing POs electronically.

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Questions 16

A company is about to invite tenders for a contract to clean external windows at several premises, all at least three storeys high. It is going to do this in two stages. For the first stage, it will issue a pre-qualification questionnaire (PQQ) and, from the replies, select at least five potential suppliers to invite to tender. Which of the following is a selection criterion rather than an award criterion?

Options:

A.

Risk assessments at the premises

B.

Method statements for previous contracts

C.

Price that will be charged

D.

Environmental impact assessment

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Questions 17

An amicable style approach to ending a buyer-supplier relationship would be most appropriate in which of the following circumstances?

Options:

A.

1 and 2

B.

1 and 3

C.

3 and 4

D.

1 and 4

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Questions 18

Jenny is a procurement manager who works in the public sector. She has been charged with organising a tender to source new Xray machines for a hospital and to ensure that they receive ‘value for money’. Which of the following should Jenny consider when drafting her ITT?

Options:

A.

Price only

B.

Equity

C.

Whole life costs

D.

Availability

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Questions 19

A garden centre has recently purchased some lollypop sticks to use as plant labels. The staff have written the name of the plant on the lollypop stick and put it next to the plant. This helps them identify which plant is which. However, after a couple of weeks, the lollypop sticks have become mouldy and the writing has faded. Staff are now struggling to identity their plants. The Manager of the garden centre is considering returning the lollypop sticks and asking for a full refund as they were not fit for purpose. Can the Manager do this?

Options:

A.

Yes- the lollypop sticks have gone mouldy- this is unacceptable

B.

Yes- so long as the manager kept the receipt

C.

No- as this was not the lollypop sticks intended purpose

D.

No- the manager cannot prove that the product is faulty

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Questions 20

In a partnership who is responsible for decision making?

Options:

A.

The project steering committee

B.

Both the supplier and the buyer

C.

The buyer

D.

The supplier

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Questions 21

Which of the following is characteristic of an adversarial relationship?

Options:

A.

The communication is always poor

B.

The price is more important than the quality of the product

C.

They are only used for one-off purchases

D.

The outcome of the deal is more important than the long term relationship

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Questions 22

When overcoming stakeholder resistance in a procurement-led project, which of the following groups would have the highest level of influence on other stakeholders?

Options:

A.

2 and 3 only

B.

1 and 4 only

C.

1 and 2 only

D.

3 and 4 only

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Questions 23

What is the correct order of the stages of team development?

Options:

A.

Forming, storming, norming, performing

B.

Forming, norming, performing, storming

C.

Storming, forming, performing, norming

D.

Storming, forming, norming, performing

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Questions 24

Fashion buyer Kamal Sumai is working closely with a key overseas supplier and is monitoring and forecasting cost volatility within the fabric market. Kamal has decided it is the right time to raise a purchase order with his supplier for a greater quantity of fabric than he currently needs. Kamal is attempting to avoid an imminent price increase. What is this tactic known as?

Options:

A.

Spot buying

B.

Forward buying

C.

Derivative buying

D.

Hedging buying

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Questions 25

What are the relationship characteristics of a Partnership?

Options:

A.

Short-term focus and one-off transactions

B.

An adversarial relationship

C.

Sharing ideas and risk

D.

Focus on price competitiveness

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Questions 26

In the 1990s a company spent a lot of time and money developing a device that you could carry around that could play CDs. The product spent a long time in development but when it was released the sales figures were very disappointing. This was in part due to the fact another product was released at a similar time which had much more developed technology and could play music without the cumbersome size of a portable CD player. Which of the following did the company not consider when developing the product?

Options:

A.

threat of substitution

B.

threat of new entrant

C.

rivalry among existing competitors

D.

power of buyers

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Questions 27

Polly Manufacturing is a company which manufactures bicycle parts. It has several factories around the country and is one of the leading suppliers of wheels, bells and pedals. Which of the following is Polly Manufacturing likely to outsource? Select TWO options.

Options:

A.

Manufacturing of all bicycle parts

B.

Manufacturing of bells only

C.

Facilities Management

D.

Cleaning

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Questions 28

If a stakeholder has high power in a business but isn’t interested in your procurement activity, what should be your management style for dealing with this stakeholder?

Options:

A.

Keep them satisfied – they have high power

B.

Keep them informed – they have high power

C.

Manage closely – they’re a key player

D.

Minimum effort is required as they’re not interested- do nothing

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Questions 29

A partnership approach to a buyer-supplier relationship, as opposed to a traditional adversarial approach, would have which of the following characteristics?

Options:

A.

Greater levels of transparency

B.

Increased supplier contractual terms

C.

Specifications designed by the buyer

D.

Shared cost benefits

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Questions 30

A university based in Europe has an objective to increase the number of students coming from the United States of America (USA). The university appoints a consultant with specialist knowledge of the USA market and has issued them with a performance-based specification. Which of the following is a characteristic of a performance specification?

Options:

A.

It provides details of how the services must be carried out

B.

It encourages innovation from the supplier

C.

It enables the buyer to detail technical information

D.

It ensures the supplier must conform with the specification

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Questions 31

When outsourcing, which legislation details the rights of employees who may find themselves now working for the outsourcing company?

Options:

A.

ITT

B.

PCR 2015

C.

OJEU

D.

TUPE

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Questions 32

A confectionery company has a portfolio of different items to sell. Their most popular product is the chocolate brownie cake, but they have begun to trial sales of cereal bars, granola cereal, and chewing gum. As a high-quality producer in a competitive market, the company requires effective supplier sourcing arrangements. Which ONE of the following product lines would be the most suitable for partnership sourcing?

Options:

A.

Chocolate brownie cake

B.

Chewing gum

C.

Cereal bars

D.

Granola cereal

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Questions 33

Which of the following relationship types are listed on the relationship spectrum?

    Partnership

    Contractual

    Transactional

    Conspiratorial

Options:

A.

2 and 3 only

B.

1 and 3 only

C.

1 and 2 only

D.

2 and 4 only

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Questions 34

How would a buyer measure value for money from a relationship with a new supplier for goods?

Options:

A.

Audit of how suppliers promise

B.

Lowest possible cost

C.

Balance of quality and cost

D.

Quality and volume of goods

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Questions 35

A buyer should concentrate their efforts on managing the start and onboarding stage of a supplier relationship by ...

    Keeping all information and plans confidential from the supplier

    Pre-qualifying and assessing the supplier's capability

    Focusing solely on the buying organisation's goals

    Building a positive and trusting relationship

Options:

A.

1 and 2

B.

1 and 3

C.

3 and 4

D.

2 and 4

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Questions 36

Harry has just entered into a partnership with a key supplier. Although he is excited about the prospect, he thinks it’s a good idea to set some goals and KPIs. Which of the following criteria should Harry use to decide if a KPI is appropriate?

Options:

A.

Measurable, achievable and relevant

B.

Relatable, precise, and measurable

C.

Time bound, difficult and relevant

D.

Significant, measurable and achievable

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Questions 37

Which of the following are examples of ways in which businesses can add value? Select THREE that apply.

Options:

A.

Through delivering excellent service

B.

Creating a win-win price

C.

Product features and benefits

D.

Reducing customer service levels

E.

Investing in customers

F.

Offering convenience

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Questions 38

Which of the following macro-environmental factors can affect supply chains?

Options:

A.

social, economic and cost

B.

environmental, ethical and cost

C.

political, economic and social

D.

environmental, ergonomic and social

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Questions 39

Barry is a procurement manager at Sea Biscuits, a company which manufactures biscuits in the shape of dolphins and starfish. He works in an office that orders stationary regularly for its 100 person workforce. Stationary is a low-spend category item and Barry often orders stationary from different suppliers based on which supplier can provide the item the cheapest at that point in time. According to the Kraljic matrix, what type of suppliers provides stationary to Barry?

Options:

A.

leverage

B.

strategic

C.

routine

D.

Bottleneck

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Questions 40

Value for money is often described at the ‘three Es’; economy, efficiency and effectiveness. However some people consider a 4th E which refers to the public sector. What is the fourth E?

Options:

A.

Equality

B.

Environment

C.

Equity

D.

Ethics

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Questions 41

A law firm is ending an agreement with a client they have represented for many years. What is the most important legal consideration to be taken before terminating?

Options:

A.

Employee rights

B.

Confidentiality

C.

Finance

D.

Security

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Questions 42

A local council requires facilities management services for ten schools based in their region. This service is a high spend, high risk, critical contract. Which sourcing approach would be the most appropriate?

Options:

A.

Request for quotation

B.

Competitive tendering

C.

Statement of source requirements

D.

Direct negotiation

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Questions 43

A doctor's surgery requires a complex database system to manage all of its patients data, which is highly sensitive. The system also needs to link to other departments of the health service such as physiotherapy and intensive care. The Manager of the surgery is considering outsourcing the management of the database to an IT company. What is the Manager's main motivation for doing this?

Options:

A.

The supplier is an expert in their field

B.

This will result in economies of scale

C.

This will free-up internal resources

D.

This will result in cost-savings

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Questions 44

Which of the following tender processes available to a buyer involves a Pre-Qualification Questionnaire (PQQ) to identify, assess, and create a shortlist of suppliers being invited to the Invitation to Tender (ITT) stage? Select TWO that apply.

Options:

A.

Open Procedure

B.

Mini-Competition Procedure

C.

Restricted Procedure

D.

Two-stage Procedure

E.

Competitive Bidding Procedure

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Questions 45

Which of the following documents would you expect a supplier to submit as part of a Request for Proposal? Select THREE

Options:

A.

Full pricing information

B.

Liquidity Ratio

C.

Risk Assessments

D.

Method Statements

E.

Gearing Ratio

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Questions 46

Which of the following describes differentiation as a method of competitive advantage?

    A company that sets out to be the lowest-cost producer in the market

    A company that will seek to be unique in a way that is valued by buyers

    A company producing a standard or budget cost product

    A company producing a product that attracts a premium price charge

Options:

A.

1 and 2 only

B.

1 and 3 only

C.

2 and 3 only

D.

2 and 4 only

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Questions 47

When overcoming stakeholder resistance in a procurement-led project, which of the following groups would have the highest level of influence on other stakeholders?

    Negative leaders

    Silent opponents

    Supporters

    Promoters

Options:

A.

2 and 3 only

B.

1 and 4 only

C.

1 and 2 only

D.

3 and 4 only

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Questions 48

Which of the following factors would you use to analyse the macro-environment? Select THREE.

Options:

A.

social

B.

cultural

C.

political

D.

philosophical

E.

legislative

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Questions 49

Which of the following are valid strategies for dealing with conflict? Select THREE

Options:

A.

Competing

B.

Collecting

C.

Contesting

D.

Compromising

E.

Collaborating

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Questions 50

A ‘synergy’ within a partnership can lead to what?

Options:

A.

Poor performance

B.

Increased costs

C.

Miscommunications

D.

Greater creativity

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Questions 51

A buyer is seeking to set up an agreement for one year for the purchase of paper. They complete a tender exercise and supplier X wins the contract, and all other suppliers are told that they will not be needed for the next 12 months. Where would the buyer place supplier X on the relationship spectrum?

Options:

A.

Arms length

B.

Single sourced

C.

Partnership

D.

Transactional

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Questions 52

Early Supplier Involvement can be described as a collaborative relationship between a buyer and a supplier to develop a new project. Handfield’s model describes four different levels of supplier involvement ranging from none to ‘black box’ (which is when the design is primarily driven by the supplier. What other level features on this model?

Options:

A.

Blue Box – when the buyer creates the product without input from the supplier

B.

Red Box- when the supplier provides legal advice to the buyer on areas such as copywrite

C.

White Box – when there is informal integration and the buyer consults with a supplier on a design

D.

Grey Box – when the involvement is buyer driven

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Questions 53

In an oliogopy market, what would a regulator do?

Options:

A.

prevent price fixing and collusion

B.

stop the market becoming a monopoly

C.

ensure value for money for buyers

D.

ensure health and safety standards

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Questions 54

Sandra is a buyer for a large supermarket and has been increasing unhappy with the performance of a long-term supplier of bananas. Over time the deliveries have become unreliable and this has had impacts on the supermarket’s profitability. What should Sandra do first?

Options:

A.

Obtain business approval to terminate the contract

B.

Develop an exit strategy

C.

Review the market and look for an alternative supplier

D.

Give written notice to the supplier of plans to terminate

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Questions 55

Which of the following options are legitimate reasons for terminating a contract? Select TWO that apply.

Options:

A.

You ordered 10,000 items instead of 1,000

B.

One of the contracted parties has clearly failed to perform its duties

C.

There has been a serious breach of contract terms

D.

Your internal stakeholder requested the wrong items

E.

Your MRP system placed a replenishment order that you do not need

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Questions 56

Which of the following are NOT one of the four key principles of procurement in the EU?

Options:

A.

Transparency

B.

Value for Money

C.

Non-Discrimination

D.

Proportionality

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Questions 57

Hungry Sandwich Co. produces over 5,000 freshly made sandwiches on-site every day. The main ingredient that Hungry Sandwich Co. buys is bread. It is the item they spend the most money on, and they have a long-term partnership agreement with a local bakery to manufacture and supply fresh bread every morning. Using a supplier positioning matrix, which is the appropriate category for bread for Hungry Sandwich Co.?

Options:

A.

Non-critical

B.

Bottleneck

C.

Abundant

D.

Strategic

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Questions 58

A restricted market is a market where there are only a small number of capable and competent suppliers. Which of the following is not a reason for a marketplace to be restricted?

Options:

A.

Low levels of profitability

B.

High barriers to entry

C.

Strong governmental regulation

D.

The product is easy to source elsewhere

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Questions 59

Tim manages the procurement department at a large retailer. He wants to ensure that his team are achieving value for money in their procurement activities. Which of the following should Tim set up?

Options:

A.

ITT

B.

Audit

C.

Framework

D.

Contract

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Questions 60

Robbie is a procurement manager at a public sector organisation. He is running a tender which is worth £2m and so will advertise this on OJEU. His manager has reminded Robbie to include CPV codes on the tender. What purpose would this serve?

Options:

A.

To ensure suppliers know the deadline for tender submission

B.

To ensure suppliers can find the opportunity

C.

To ensure more suppliers bid for the tender

D.

To ensure only qualified suppliers bid for the tender

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Questions 61

A textile company is purchasing a new item which is low value. This item is likely never to be required again by the company and is widely available from many different suppliers. Which commercial relationship type would be most effective for the buyer to choose?

Options:

A.

Adversarial

B.

Closer tactical

C.

Outsourcing

D.

Partnership

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Questions 62

Which one of the following is an advantage of early supplier involvement?

Options:

A.

Supplier is responsible for all intellectual property risks

B.

Large investment in supplier communications

C.

Understanding of supplier capabilities

D.

No need for supplier non-disclosure agreements

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Questions 63

What are service credits?

Options:

A.

A type of payment where goods are delivered before payment is made

B.

A mechanism for performance management where the buyer has the right to deduct money from payments owed for under performance

C.

When a buyer makes a purchase on credit

D.

A clause in a contract that allows for additional bonus payments for meeting KPIs

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Questions 64

The Public Sector in the UK is unable to enter into formal partnership relationships with any supplier. Is this statement TRUE?

Options:

A.

Yes- the Public Sector is regulated by EU procurement regulations which prohibits this

B.

Yes- the Public Sector is unable to enter partnerships because they operate in a monopoly market

C.

No- the Public Sector can enter into partnership relationships with suppliers providing they have tendered the opportunity

D.

No- the Public Sector can enter into partnership relationships when contracts are over the threshold value.

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Questions 65

Cigarettes and alcohol are often described as having an ‘inelastic price’. What does this mean?

Options:

A.

Changes in price will greatly affect how much of the item is bought

B.

Changes in price will not affect how much of the item is bought

C.

The product is subject to high rates of tax

D.

The product is subject to age restrictions

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Questions 66

When a large organization partners with a small supplier to develop new technology, it is necessary for regular communication. Is this statement true?

Options:

A.

No, because partnerships do not require regular communication during development of new technology

B.

Yes, because partnerships require regular communication to succeed in meeting mutual objectives

C.

Yes, because a small supplier must be told what to do and when, because they have fewer employees

D.

No, because regular communication will stop a small supplier from doing their work

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Questions 67

Which of the following would not affect rivalry in a marketplace? Select TWO.

Options:

A.

industry growth or decline

B.

exit barriers

C.

switching costs

D.

supply chain disruption

E.

legislative changes

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Exam Code: L4M6
Exam Name: Supplier Relationships
Last Update: May 16, 2025
Questions: 226

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