[Full-Version] 2025 New Preparation Guide of CIPS L4M4 Exam
L4M4 Practice Exam - 216 Unique Questions
CIPS L4M4 Exam Syllabus Topics:
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NEW QUESTION # 72
'Phishing' is an activity that can occur when an employee within an organisation receives an email that appears to be from a genuine supplier but is false. These types of emails expose the organisation to the activities of expert cyber criminals. Which type of crime category does this activity fall within?
- A. Corruption
- B. Bribery
- C. Fraud
- D. Human rights
Answer: C
Explanation:
Phishing is categorized as fraud because it involves deceptive practices to gain sensitive information or financial benefits. Responsible sourcing includes ensuring that cybersecurity measures are in place to prevent fraud and protect sensitive information within supply chains.
NEW QUESTION # 73
In the Public Sector, what is the evaluation criteria most often used when evaluating bids fromsuppliers?
- A. Cheapest Overall Tender
- B. Best Value for Money
- C. Most Economically Advantageous Tender
- D. Best Business Fit
Answer: C
Explanation:
Most Economically Advantageous Tender (MEAT) is the Public Sector's go to evaluation criteria.
NOTE that this is changing from October 2023. Public Sector Procurement is currently based on legislation called PCR 2015 which itself is based on EU Procurement Directives. Now the UK has officially Brexited, we're making our own laws and the new Procurement Bill will be coming into effect in November 2024. One of the major changes is that MEAT is changing to MAT (most ad-vantageous tender - without the economical bit).
If you're sitting this exam until July 2024- you're fine- learn what the study guide says. If you're taking the exam from November 2024 I'm not sure what students are expected to do. The entire section on public sector procurement is incorrect for you. My best guess is CIPS may remove questions this section as the study guide will be wrong, but I really don't know how they plan to handle this.
The new Procurement Bill - MEAT to MAT - Hempsons - Hempsons
NEW QUESTION # 74
Which of the incoterms listed are suitable for transporting goods via train?
- A. CRF
- B. FOB
- C. EXW
- D. FAS
Answer: C
Explanation:
EXW- exworks is a suitable incoterm for transporting goods both by rail and boat. It can be used regardless of the mode of transport.
The other three are for transport over water. P. 143 Shipping Incoterms: the Complete Guide - Guided Imports Some students report a lot of questions on Incoterms in the exam, some say they only had 1. Best bet is to learn them if you possibly can.
NEW QUESTION # 75
Which of the following are secondary research sources that can be used when investigating markets and suppliers? Select THREE that apply.
- A. Economic indices
- B. Supplier interviews
- C. Professional magazines
- D. Direct conversations
- E. Supplier websites
- F. Focus groups
Answer: A,C,E
Explanation:
Professional magazines, economic indices, and supplier websites provide secondary data that can be useful in understanding market trends and supplier performance. Responsible sourcing often relies on a mix of primary and secondary data sources to make informed decisions about supplier selection.
NEW QUESTION # 76
A buyer has discovered their supplier has taken the passports of some of their workforce. The supplier has offered the buyer a discount against the contract, but the discount only applies if the buyer does not report this finding. Which ethical concerns should the buyer report to the necessary stakeholders?
* Fraudulent activity
* Bribery
* Modern slavery
* Breach of confidentiality
- A. 2 and 4 only
- B. 1 and 3 only
- C. 1 and 4 only
- D. 2 and 3 only
Answer: D
Explanation:
The withholding of passports is a potential indication of modern slavery, and the offer of a discount to avoid reporting this is a form of bribery. Reporting these ethical concerns aligns with responsiblesourcing practices and is critical for maintaining a supply chain free from human rights abuses.
NEW QUESTION # 77
A supplier operates in a monopolistic market where the threat of entry is low. The product that they offer is key in manufacturing certain types of submarines and there is no known substitute for the product at present.
What type of sourcing relationship is a buyer likely to have with this supplier?
- A. dual sourced
- B. sole sourced
- C. single sourced
- D. multiple sourced
Answer: B
Explanation:
This is sole sourcing as there is only one supplier in the marketplace.
Be careful not to confuse single sourcing and sole sourcing. Single sourcing is when a buyer chooses to work with only one supplier (usually to achieve economies of scale), sole sourcing, on the other hand, is when the buyer doesn't have a choice- they work with one supplier because there is only one supplier in the market.
Types of sourcing is a key concept for this exam.
NEW QUESTION # 78
A Bill of Exchange is an important document used when importing goods into a country from abroad. What is the purpose of this document?
- A. explains which tariffs apply to the goods
- B. specifies the country of origin of the goods
- C. details who is responsible for the insurance of the goods during transit
- D. details payment instructions
Answer: D
Explanation:
A Bill of Exchange is a payment instruction - it says who will pay whom and when.
Bill of Exchange Definition: Examples and How It Works (investopedia.com)
NEW QUESTION # 79
Mark is a category manager responsible for buying large pieces of laboratory equipment in the public (government) sector. Which of the following Incoterms would ensure that an overseas supplier is responsible for paying all delivery costs, including import duties and taxes for these goods?
- A. EXW
- B. DDP
- C. FAS
- D. DPU
Answer: B
Explanation:
DDP (Delivered Duty Paid) requires the supplier to cover all delivery costs, including import duties and taxes.
This term ensures that the buyer receives the goods without additional charges, aligning with public sector procurement practices for cost-effective and transparent sourcing.
NEW QUESTION # 80
A business may be faced with the challenge of deciding whether to source some of its requirements from external suppliers or whether to make them internally. Which of the following factors is likely to justify the decision to make the requirements internally?
- A. The availability of in-house competencies and capacity to carry out the production
- B. The other suppliers are using older technology
- C. External sourcing involves cumbersome tendering procedures
- D. External suppliers are likely to be overcharging
Answer: A
Explanation:
Internal production is often justified when a company has the necessary competencies and capacity. This approach aligns with responsible sourcing by leveraging internal capabilities for better control over quality, cost, and compliance with ethical and environmental standards.
NEW QUESTION # 81
A buyer might opt to do an 'Invitation to Tender' rather than a 'Request for Quotation' process because ...
- A. The supplier market is an oligopoly where there are a few large suppliers dominating the market
- B. The contract will be low value and there are many suppliers, so a simpler approach is required
- C. Time is of the essence, and decisions need to be made quickly without additional stakeholder involvement
- D. The nature of the goods or services being purchased is complex and high value
Answer: D
Explanation:
An Invitation to Tender (ITT) is typically used for complex, high-value procurements where the quality and specific features of the goods or services are of paramount importance. This approach ensures that ethical and responsible sourcing criteria are met, aligning with best practices in procuring specialised goods or services.
NEW QUESTION # 82
A balance sheet will show a company's assets, liabilities and shareholder equity. What is share-holder equity?
- A. the owners' residual claim once all debt has been paid
- B. the profit from sales once tax has been deducted
- C. the amount of money from retained earnings
- D. the amount of money held in the company's bank account
Answer: A
Explanation:
shareholder equity = the owner/s of the organisation's residual claim once all debts have been paid. What Is Shareholder Equity (SE) and How Is It Calculated? (investopedia.com)
NEW QUESTION # 83
During which stage of the procurement cycle would you remove suppliers that do not add value, or could pose a risk to the buying organisation?
- A. develop strategy
- B. supplier selection
- C. contract award
- D. asset management
Answer: B
Explanation:
At supplier selection stage, unsuitable suppliers should be removed (those that do not add value or pose a risk).
At develop strategy stage you're not even looking at suppliers yet- you're just deciding what you need. At contract award and asset management it's too late.
CIPS procurement cycle - Procurement Supply Cycle | CIPS
NEW QUESTION # 84
Ramesh is an IT category manager within the UK's National Health Service and is responsible for the procurement of a new high-value network system, which will spread across multiple doctors' practices and community health centres. Ramesh has reviewed different tender approaches and concluded that the use of a restricted tender is the most appropriate. Which of the following statements is true for a restricted tender process?
- A. The contract will be awarded strictly on pricing criteria
- B. Suppliers responding to the tender are pre-qualified
- C. It is only relevant when there are few suppliers in the market
- D. Direct negotiations occur prior to suppliers submitting their offer
Answer: B
Explanation:
In a restricted tender process, only pre-qualified suppliers are invited to bid, ensuring that participating suppliers have met necessary qualifications. This approach helps in managing high-value contracts by focusing on capable suppliers. Ethical and responsible sourcing in the public sector demands supplier pre- qualification to ensure compliance, transparency, and quality.
NEW QUESTION # 85
Which of the following is a regulatory body which protects the rights of workers?
- A. WWF
- B. ILO
- C. ISO
- D. FairTrade
Answer: B
Explanation:
ILO = the International Labour Organisation.
ISO is the International Standardisation Organisation- they also come up in this exam.
Fair Trade is about paying suppliers properly.
WWF is the World Wildlife Foundation, or if you watched wrestling in the 90s, the original WWE. You do not need to know about wildlife or wrestling for this exam.
NEW QUESTION # 86
Why do tenders often have longer timescales in the public sector when compared with those of the private sector?
- A. All public sector purchases are mandated to use a tendering procedure
- B. There is wider stakeholder involvement in the public sector
- C. Regulation of the public sector usually dictates minimum timescales
- D. There is a more detailed debrief requirement in the public sector
Answer: C
Explanation:
Public sector procurement is governed by specific regulations that stipulate minimum timescales for various stages of the tendering process. These regulations are designed to ensure transparency, fairness, and adequate time for suppliers to prepare their bids. For instance, under the Procurement Act 2023, certain procedures have defined minimum periods for tender submissions to allow sufficient time for supplier participation.
Exact Extract from Study Guide:
"Public sector procurement is subject to specific regulations that dictate minimum timescales for tendering processes to ensure fairness and transparency."
NEW QUESTION # 87
A business may be faced with the challenge of deciding whether to source some of its requirements from external suppliers or whether to make them internally. There are many factors that need to be considered before arriving at such a decision. Which of the following factors is likely to justify the decision to make the requirements internally?
- A. The availability of in-house competencies and capacity to carry out the production
- B. The other suppliers are using older technology
- C. External sourcing involves cumbersome tendering procedures
- D. External suppliers are likely to be overcharging
Answer: A
Explanation:
The decision to make a product internally rather than sourcing it externally is influenced by several factors.
One of the primary considerations is the availability of in-house competencies and capacity. If an organisation possesses the necessary skills, technology, and resources to produce the required goods or services efficiently, it may opt for internal production to maintain control over quality, reduce costs, and protect proprietary information.
Exact Extract from Study Guide:
"Make or buy decisions take into account: product/service is core, the organisation's capacity to make, current market (cost saving with economy of scales and/or logistics), amount of competition."
NEW QUESTION # 88
A procurement manager has a new contract to award. They know there will be considerable interest from potential suppliers, as there are approximately twelve companies in the market. Which of the following is a benefit of using a full competitive tendering process for this new contract?
- A. All suppliers will know how much the others have bid
- B. All bidders will be treated equally
- C. It is a quick and informal process
- D. Only the procurement manager can decide who wins
Answer: B
Explanation:
A full competitive tendering process ensures fairness by treating all suppliers equally, allowing them to compete on a level playing field. This aligns with ethical sourcing principles, especially in the public sector, where transparency and equal opportunity are paramount.
NEW QUESTION # 89
In order to assess whether a company is able to meet its current liabilities, which financial ratio should you use?
- A. Gearing Ratio
- B. Acid Test
- C. Return on Equity
- D. Gross Profit Margin
Answer: C
Explanation:
"Meet current liabilities" is a posh way of saying "can you pay your bills". You're therefore looking for a liquidity ratio- a ratio that looks at assets vs liabilities (i.e. money in the bank vs money owed out). The Acid Test is a liquidity ratio. It's sometimes called the 'quick ratio'. Both terms come up on the exam. The other options are financial ratios but aren't for liquidity.
NEW QUESTION # 90
In a negotiation, a supplier does not want to upset or offend the buyer, so concedes their own requirement in order to ensure harmony. Which negotiation tactic is the supplier using?
- A. collaborative
- B. accommodating
- C. competitive
- D. compromising
Answer: B
Explanation:
This is accommodating: the supplier puts the buyer's interest above his own.
This is from the Thomas Killman model of conflict resolution. There are 5 strategies; competitive, collaborative, avoiding, accommodating and compromising. In the study guide it doesn't mention the name of the model but you do need to know the 5 strategies. The model comes up a lot in other modules so is a good one to learn. Particularly L5M1 which is about management theory.
NEW QUESTION # 91
A procurement manager who works in the public sector has received 8 submissions to a tender op-port unity that was advertised on OJEU. The average price submission for the contract was £1m but one supplier has submitted a price of £200,000, which the procurement manager has identified as being 'an abnormally low tender'. What should be the procurement manager's course of action?
- A. automatically dismiss the low bid
- B. investigate the low bid
- C. award the bid a 0 for price
- D. award the contract to the low bid as this represents better value for money
Answer: B
Explanation:
You should investigate automatically low tenders by clarifying the bid with the supplier. It could be they have misunderstood the requirement. Or the bid could be genuine and they can really provide best value for money.
But without enquiring, you just don't know.
NEW QUESTION # 92
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