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

2. Forced labor, including all forms of modern slavery, remains a significant issue affecting many supply chains. Procurement professionals and suppliers must collaborate to effectively eliminate forced labor. Which of the following strategies can procurement professionals use to address forced labor practices?
1. Boycotting the goods produced from modern slavery
2. Inclusion of anti-slavery and human trafficking clauses in contracts
3. Training for employees and suppliers to raise awareness of slavery issues
4. Treat all women and men fairly at work

A) 4 and 1
B) 2 and 3
C) 2 and 4
D) 1 and 2

3. 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 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
C) 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
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

4. XYZ Corporation has been acquired by a global company that plans to centralize all sourcing activities and standardize processes. Which factor could help XYZ Corporation gain a competitive advantage through this centralization?

A) Efficiency gains that lead to increased productivity and lower prices
B) Improved benchmarking shared data to provide ability to agree prices with global competitors
C) Ability to use more favorable legislation in different countries and avoid local legal obligations
D) Increased due diligence activity resulting in lower governance of suppliers

5. Which of the following statements highlights a key limitation of direct trade that critics argue weakens its ability to ensure ethical practices?

A) The lack of standardized criteria in direct trade allows companies to define ethical practices on their own, potentially resulting in inconsistent or misleading claims
B) Power imbalances between producers and buyers are completely eliminated through direct trade agreements
C) Direct trade removes the need for third-party certifications, guaranteeing full transparency in all cases
D) Direct trade enforces strict regulations to ensure fair wages for all workers, including temporary laborers

Solutions: