L3M1 Procurement and Supply Environments Questions and Answers

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.

Explanation

Exchange rate - the rate at which the currencies are exchanged. This rate can vary frequently, some-times several times per hour, depending on circumstances.

The interest rate is the rate charged on loans - the cost of borrowing.

The base rate is the basic interest rate used for agreeing loans within an economy. This rate is nor-mally set by the government or the central bank. Loans within that economy will usually be at a higher rate than the base rate, often much higher.

The equilibrium rate (more commonly 'equilibrium price') is the rate at which supply and demand meet, not necessarily related to currency.

Explanation

Specification is the answer. The second sentence in the rubric makes it clear that this is the correct answer.

Explanation

This is true: the liability of shareholders is limited to their agreed financial commitment, not beyond that.

Explanation

Equilibrium price as demand and supply are perfectly balanced.

Equivalium is a made-up word. When I was studying for my MCIPS back in the 1980's it was a re-quirement to undertake a research study. My research was into the monopolistic supply of valium and librium to the UK's National Health Service by a Swiss company called Hofmann la Roche. That research endeared me neither to branded drugs, nor, possibly unfairly, to multinationals.

The likely choice of answers for people who don't know the correct answer is probably between 'equilibrium' and 'clearing'. Clearing would be a logical choice, but it's not the one your assessor re-quires.

Explanation

The 3 E's are economy, efficiency, effectiveness. The 3 E's are often seen as part of the role of pro-curement in an organisation.

Therefore all the other answers here should be selected, as they are not part of the 3 E's.

The 3 E's are often seen as part of the role of procurement in an organisation.

Explanation

This is true.

Explanation

CO2 is the correct answer - carbon dioxide.

CO is carbon monoxide; H20 is water (or steam or ice) and CO3 is carbon trioxide.

Explanation

This is true.

The purpose of creating or entering into a trading bloc is to increase the volumes of trade between countries within that bloc. This is irrespective of trade between blocs, which may grow or not, de-pending on circumstances.

Explanation

This is the standard definition, widely used, and given in your textbook.

Explanation

'Multi-national corporation' is the correct answer. Very large international organisations, with very large turnover, purchasing power and influence. Examples would include: Alphabet, Amazon, Ap-ple, Dell, Ford, Shell, Toyota, etc

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.

Explanation

This a definition of liquidated damages. Calculated in advance of the event occurring ie pre-contract and thus agreed by the parties in advance. Meaningful advance calculations (estimates) must be available to enforce legally.

The term and the spirit of 'penalty clause' is discouraged in English law - damages should be aimed at returning the damaged party back into the position they would have been in, had a wrong not been done.

Unliquidated damages can only be awarded by a court after the event, and should not be relied up-on.

An example of a quantum meruit award can be found in the British Steel v Cleveland Bridge (1984) case - a rare occurrence, and again something which must not be relied upon.

Explanation

Pre-qualification QUESTION NO:naire is the correct answer.

A supplier quotation comes from the supplier side; both the RFQ and the ITT are intended to be more formally binding, including the price element, than what is described here.

Explanation

This is simply false. Partnerships are normally unincorporated profit-oriented organisations eg ac-countants, lawyers, many consultancies, some retailers, etc. One significant factor about partnerships is that individuals' capital is normally at risk, unlike in limited companies, where the risk is limited.

Explanation

Agriculture and tourism are normally associated with high levels of seasonal employment, and hence to some extent, unemployment.

Construction also often has an element of seasonality. For example, there is a saying in Alaska: 'there are two seasons - winter and construction', although in some less extreme climates construc-tion carries on year-round.

In most situations, we normally expect police employment levels to be relatively consistent through-out the year.

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.

Explanation

It is an economy in which the public and private sectors work together. This is now the norm in most countries, with private sector involvement to a greater or lesser extent. In North Korea there is a (rare example of a) planned economy, and in the United States there is a heavily market-led (pri-vate sector) economy.

Explanation

Corporate Governance. Not to be confused with CSR.

Corporate identity relates to marketing and branding; corporate manslaughter is the concept of an organisation being criminally accountable for the deaths of humans through some lack of care. An example might be the deaths of rail company employees on the railway track, where the prosecution would attempt to show that it was the employers' fault.

Explanation

The correct answer, covering all of these, is 'economic'.

'Political' could also be considered, but 'economic' covers them all.

The other two answers suggested are not really relevant.

Explanation

In 2015 an agreement was reached in Paris, France among most world nations to try to limit climate change and its effects.

The other answers shown are simply fictions.

Explanation

The only one of these four which fits the bill is 'purchase order'.

The supplier quotation and the invoice both come from the supply side.

The requisition is an internal document.

Explanation

The primary objective of private sector is to create profit(s).

While the other answers may occur in private sector, they are not the primary objective.

Explanation

A well-known measure of carbon footprint.

Procurement professionals are encouraged to incorporate environmentally-friendly thinking into their workplace activities and decision-making.