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| Certification Vendor: | CIPS |
|---|---|
| Exam Name: | Defining Business Need |
| Exam Number: | L4M2 |
| Passing Score: | 70% |
| Available Languages: | English |
| Real Exam Qty: | 60 |
| Related Certifications: | CIPS Level 4 Diploma in Procurement and Supply |
| Exam Duration: | 90 minutes |
| Exam Format: | Objective Response (Multiple Choice) |
| Sample Questions: | CIPS L4M2 Sample Questions |
| Exam Way: | Computer-based exam at accredited centres |
| Pre Condition: | Recommended 2+ years relevant business experience |
| Official Syllabus URL: | https://www.cips.org/qualifications/diploma-in-procurement-supply/defining-business-need |
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The CIPS L4M2 exam covers a wide range of topics, including the importance of defining business needs, the key stakeholders involved in the process, and the various techniques used to gather requirements. It also covers the different types of requirements, such as functional and non-functional requirements, and how to prioritize them based on their importance. L4M2 Exam also assesses the candidate's ability to evaluate and validate requirements and to communicate them effectively to stakeholders.
NEW QUESTION # 27
A buyer may consider switching from one product or service to another, or from one supplier to another.
Which of the following options are a type of switching cost?
* Inflation cost
* Historical cost
* Retraining cost
* Modification cost
Answer: B
Explanation:
When developing a business case, procurement professionals must consider the costs associated with changing suppliers, known as switching costs.
The CIPS L4M2 Study Guide, Chapter 4 (Developing the business case), explains:
"Switching costs arise when an organisation changes from one supplier, product or service to another. These costs may include retraining staff, modifying systems or processes, and integration costs." Assessment of each item:
* Inflation cost relates to general economic price increases and is not caused by switching suppliers.
* Historical cost refers to past expenditure and does not affect the decision to switch.
* Retraining cost is incurred when staff must learn new systems, processes or products due to a change in supplier.
* Modification cost arises when equipment, processes or systems need to be altered to accommodate a new supplier or product.
The correct combination of switching costs is 3 and 4, making Option C correct.
CIPS Reference:
CIPS L4M2 Defining Business Needs
Chapter 4: Developing the business case and evaluating sourcing options
NEW QUESTION # 28
Company A sells a product for $100. The total unit variable costs are $60. Fixed costs as in its ac-count are
$20,000. How many products does the company have to sell to achieve break-even point?
Answer: D
Explanation:
Break even point = Fixed costs/(Price-variable cost). In this case, break even point = 20,000/(100-60) = 500 Reference: CIPS study guide page 28-29 LO 1, AC 1.2
NEW QUESTION # 29
A company has a lists of items that make up 15% of total spend. These items also do not largely impact on quality of final product. The supply continuity is secured. Which of the following will be the most appropriate managing approach to purchase these items?
Answer: D
Explanation:
Those items make up small portion of spend and the supply risk is low. So it is tactical item according to Kraljic portfolio matrix. Procurement should bundle these items into larger contracts, simplify procurement process.
LO 2, AC 2.1
NEW QUESTION # 30
Which of the following are likely to be disadvantages of using outcome-based specifications? Select THREE that apply
Answer: A,D,E
Explanation:
An Outcome Based Specification (OBS) focuses on the desired outcome of a service in business terms, rather than a detailed technical specification of how the service is to be provided; this allows providers scope to propose innovative solutions that might not have occurred to the procurement team. Outcome should be distinguished from output, which is the measurable results of a set of inputs. The example of difference between outcome and output is written at the bottom of page 123 in the study guide.
Outcomes should be the starting point in making new specification. However, using outcome-based specification has some setbacks:
- First, it is not easy to measure the outcomes. Usually, outcome of a project is a statement like 'increase customer satisfaction', 'maintain ambient temperature' or 'provide a convenient way to do something'. They are not easy to measure as output.
- Second, sometimes the desired outcomes require time to be materialised
- Third, outcomes can be ambiguous
Reference:
LO3, AC 3.1
NEW QUESTION # 31
Which of the following are typical social considerations throughout the contract life cycle? Select the TWO that apply.
Answer: B,D
Explanation:
The following are typical social criteria in procurement:
* Reducing unemployment
* Preventing the use of child labour
* Preventing discrimination on the grounds of race, religion, disability, sex or sexual orientation
* Encouraging good employment practice
* Reducing local unemployment
* Reducing social exclusion
* Promoting training opportunities for the young or disadvantaged
* Encouraging access to work for people with disabilities
Reference:
LO 3, AC 3.2
NEW QUESTION # 32
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