VCEPrep L4M2 Exam Questions Real L4M2 Practice Dumps [Q19-Q43]

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VCEPrep L4M2 Exam Questions | Real L4M2 Practice Dumps

Verified L4M2 Exam Dumps Q&As – Provide L4M2 with Correct Answers

To prepare for the CIPS L4M2 exam, candidates are advised to review the official exam syllabus, which outlines the key topics and concepts that will be covered in the test. They can also take advantage of various study materials, such as textbooks, online courses, and practice exams, to help them prepare for the exam.

QUESTION 19
According to Porter’s value chain, which of the following activities is categorised as support activity?

Product warranties and special services

Storage of raw materials

Distribution of products from factory to retailer

Supervising the production line

Develop digital SRM technology to manage suppliers better

QUESTION 20
A hospital extensively spends on medical and implantable devices, medical, surgical and pharma-ceutical supplies, costs of supplies related to buildings and maintenance operations. Hospital’s procurement manager suggests that the hospital has an opportunity to reduce operational costs by reducing variation of medical devices and pharmaceutical supplies. Which of the following best describe the procurement manager’s suggestion?

Process standardisation

Product standardisation

Value engineering

Process re-engineering

QUESTION 21
Which of the following is the process for improving the value of a new product or service?

Value engineering

Porter’s Five Forces

Planning and design

Value analysis

QUESTION 22
Which of the following is the disadvantage of embedding standards in a specification?

Standards do not improving buyer’s bargaining power

Embedding standards into specification requires enormous time and effort

Standards are too static and discourage innovation

Standards are too flexible and may cause ambiguity in the specification

QUESTION 23
Which of the following activities are considered as secondary activities of an organization? Select TWO that apply

Component fabrication

Training

Information system development

Shipping

Service response

QUESTION 24
Robert is a senior buyer at MMC Construction Ltd. His company is doing multiple development projects in the country, which increases procurement workload significantly. Meanwhile, most of the tasks are handled manually, which causes bottlenecks in the workflows. The procurement team is overwhelmed by the workload and complains from other departments. From previous experience, Robert knows that electronic system may help his procurement team. He writes a business case to submit to the senior management, in which he insists on the possible productivity improvement by adopting e-system in procurement. Is Robert’s action reasonable?

No, there’s no need to make a business case for new purchase

Yes, productivity improvement is a mandatory element in every business case

No, adopting e-system may make procurement department jobless

Yes, his reason may appeal the senior management

Composing a compelling business case requires the proposer to write in the language of the approvers. Generally, approvers are business executives or important shareholders whose major interest is the profitability of the firm. Business case proposer may embed the following contents:
– Return on investment: according to Investopedia, Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost. A business case would seem more attractive if the proposal is expected to have high ROI.
– Time to market: Time-to-market (TTM) refers to the time from which a company initially con-ceives a product or service idea to the point when the actual product or service is accessible to buyers in the market (Afonso et al., 2008). The speed at which companies can introduce products into the market is critical for sustaining competitive advantage, and the reduction of product development cycle time has become a strategic objective for many technology-driven firms.
– Customer satisfaction: Keeping existing customer to stay in the business can affect greatly on the profit margin of a firm. A new proposal that finds the way to innovate while keeping the current customers satisfied may gain the interest of senior management.
– Improving productivity: Productivity is the measure of how efficient and effective a firm is. Im-proving the productivity means that with the same or lesser input, better output is generated. In-creasing productivity also improves the profitability of a company.
– Risk management: Any business activity contains inherent risks. For example, for a mining company to be truly responsible, it must keep all of its workers safe, healthy and motivated, meet the expectations of the local community and government for the region in which it is operating, ensure it impacts on the environment positively if at all, as well as achieve the financial objectives set by its investors for both the short and long term. Managing risks well improves the production throughput and maintains customer satisfaction.
In the scenario, Robert is trying to convince the senior management to adopt e-procurement system by insisting on potential productivity improvement. This is the right approach. A business plan should engage and please senior management and directors. An appealing business case tells them how important things to the business (such as productivity, return on investment, customer satisfaction or costs) are affected by the plan.
Reference:
LO 1, AC 1.1

QUESTION 25
Which of the following is the technology that disrupts traditional retail?

Self-Driving Cars

Blockchain

E-commerce

Robotics

QUESTION 26
Facing fiercer competition at home and abroad, IKEA, the leading furniture retailer, needs to im-prove its competitiveness. In order to do this, IKEA must decrease operating costs and improve quality of current and new retail stores. The company establishes a project team. The job of the team is to collect data on performance from multiple stores in several countries, then select the best performing one. The team will work closely with best performing store and study its processes. After the research, the team will recommend best practices to other retail stores. IKEA management can also apply these practices to new stores in the future. Which of the following correctly describe the process undertaken by IKEA project team?

Internal benchmarking

Competitive benchmarking

Internal audit

Site visit

QUESTION 27
What is the contribution of marketing function to the development of specification?

Marketing ensures that conformance specification will never be used

Marketing ensures that procurement function doesn’t involve in developing specification

Marketing provides ideas on customer’s taste and market trends

Marketing consults on technical requirements of the product

QUESTION 28
Due to the growth of consumer electronics market, semiconductor industry develops exponentially. However, the industry is dominated by a dozens of manufacturer. Chipset need to be built in factories with highly controlled environments. New chip factories cost billions of dollars and can take two years to build. Right now, factories are running at full capacity, which produce almost perfect yields, meaning basic chipset can be made for less than a dollar and more advanced versions for not much more. What are the barriers to new entrants in the semiconductor industry?
1. Poor industry growth
2. High set-up costs
3. Economies of scale
4. Low switching costs

2 and 4 only

3 and 4 only

2 and 3 only

1 and 4 only

QUESTION 29
XYZ Ltd is a large supermarket chain which operates mainly in the UK and Europe. Their custom-ers are increasingly concerned about sustainability. Therefore, procurement manager is required to source the products from suppliers who have good environmental performance. Which of the fol-lowing can be an assurance that the supplier has procedures and policies to enhance its environmental performance?

ISO 14001:2015 certificate

ISO 13485:2016 certificate

ISO 22716:2007 certificate

ISO 9001:2015 certificate

QUESTION 30
Andrew is responsible for procurement of capital assets at Lumber Ltd. He is devising new business case for the purchase of a new band saw. The purchase price of the saw is $50,000. Andrew estimates that the machine will generate $10,000 per year of net cash flow. What is the payback period of this band saw?

10 years

5 years

3 years

4 years

QUESTION 31
Sealines Inc is developing its fleet of cargo ships. The company is planning to build a new ship powered by natural gas. Brian, the procurement manager at Sealines, suggests the project team to develop a through-life specification before engaging with the supplier. Is this a correct approach?

Yes, decommissioning and disposal costs will not be accounted in this approach

Yes, this approach will lower the total cost of ownership

No, a ship is used only once, through-life management is unnecessary

No, the company just needs to select the lowest bidder

QUESTION 32
A consulting firm in London had previously had static budgets. They were set once and locked in for the year. This resulted in departments meeting their budgets early and doing virtually nothing the rest of the accounting period. To address this imbalance, the company tossed out the static budget and developed a new one for each department of the next 18 months. And each month, real sales figures are analyzed against the plan and the budget is adjusted accordingly. Then the company adds another month into the budgeting plan. What type of budget this company is using?

Activity-based budget

Rolling budget

Incremental budget

Zero-based budget

QUESTION 33
A buying organisation may not have technical capability to produce a highly complex specification. Which of the following are sources of information that can be used to create the specification? Select TWO that apply

Standard terms and conditions

Name cards

Industry standards

Suppliers’ know-how

Constitution

QUESTION 34
Which of the following is the purpose of benchmarking?

To identify and adapt the best practices to improve organisation’s performance

To copy other organisation’s intellectual properties, processes and practices

To coerce all suppliers to sacrifice their profit

To resist continuous improvement

QUESTION 35
Warwickshire Ambulance Service (WAS) is an NHS Trust. It operates throughout Warwickshire and the neighbouring areas. It has three core areas of activity, namely the provision of Emergency Ambulance Services, routine Patient Transport Services, and Logistic Medical Services. The agency is working towards higher service level through benchmarking. Which of the following is the benefit of benchmarking to WAS?

Benchmarking is a panacea for all WAS’s problems

It will help WAS create performance standards derived from an analysis of the best in business

It helps WAS identify better ways to deliver service through a cookbook process

It will help WAS analyse the competitors in the industry

QUESTION 36
Which of the following are considered as direct costs in a construction company? Select TWO op-tions

Raw materials

An employee is hired to work on a project, either exclusively or for an assigned number of hours

The materials and supplies needed for the company’s day-to-day operations.

Advertising and marketing communication

Clerical assistants who maintain the office

QUESTION 37
Buyers in the same industry with the same understanding of relative value and price may still make different decisions about whether to switch. Which of the following factors may prompt a buying organization to incline toward substitute products?
1. There is potential for backward integration
2. Access to financial resources
3. The switching cost is high
4. The substitute fits organisation’s strategy

1 and 4 only

3 and 4 only

1 and 2 only

2 and 4 only

The threat of substitution is a function of three factors:
* The relative value/ price of a substitute compared to an industry’s product
* The cost of switching to the substitute
* The buyer’s propensity to switch
Buyers with different circumstances and in different industries do not all have equal propensities to substitute when faced with a comparable economic motivation. Differences in their circumstances lead buyers to respond to a given relative value to price (RVP) and switching cost differently. While such differences might be treated as factors that modify RVP or switching costs, it is more helpful in practice to isolate them.
Resources. Substitution often involves up-front investments of capital and other resources. Access to such resources will differ from one buyer to another.
Risk Profile. Buyers often have very different risk profiles, the result of such things as their past history, age and income, ownership structure, background and orientation of management, and nature of competition in their industry. Buyers prone to risk taking are more likely to substitute than buyers that are risk-averse.
Technological Orientation. Buyers experienced with technological change may be less concerned with some kinds of substitution risks, while extremely aware of others that a less technologically sophisticated buyer would be oblivious to.
Previous Substitutions. The second substitution may be easier for a buyer than the first, unless the first substitution has been a failure. The buyer’s uncertainties over undertaking a substitution may have diminished if a past substitution has been successful, or risen if a past substitution has led to difficulties. In the soft drink industry, this seems to have worked to the benefit of aspartame.
Intensity of Rivalry. Buyers under intense competitive pressure and searching for competitive ad-vantage will tend to substitute more quickly to gain a given advantage than those that are not.
Generic Strategy. The RVP of a substitute will have different significance depending on the com-petitive advantage that industrial, commercial, or institutional buyers are seeking or the value of time and particular performance needs of the household buyer. A substitute that offers a cost saving will tend to be of more interest to a cost leader than a differentiator, for example.
Many of these factors that shape the buyer’s propensity to substitute will be a function of the particular decision maker who is involved in the purchase decision.
Porter, Michael E.. Competitive Advantage: Creating and Sustaining Superior Performance (p. 278-289). Free Press. Kindle Edition.
Reference:
LO 2, AC 2.2

QUESTION 38
When devising a business case for purchasing a new copier, Maria analyses its whole-life costs as following:

Though cost generating activities are identified, she has not categorised the costs. What is the total value of copier’s end of life costs?

$450

$75

$150

$300

QUESTION 39
Which of the following are most likely to increase the buyer’s bargaining power?
1. Buyers are price sensitive
2. High set-up cost for new entrants
3. Threat of forward integration is high
4. Threat of backward integration is significant

3 and 4 only

2 and 3 only

1 and 4 only

2 and 4 only

QUESTION 40
A procurement team is categorising their purchased items into four quadrants of Kraljic’s supply chain portfolio matrix. They realise that there are some low-value items which come from very few suppliers in the market. The organisation is critically dependent on these suppliers. The team plans to reduce the dependence by finding alternative sources. Is this a right course of action?

Yes, the organisation needs to reduce the supply risks

No, the organisation should run competitive biddings to exploit the competition

No, there is no way to escape this dependency

Yes, this action will dramatically increase the supplier’s bargaining power

QUESTION 41
Which of the following is the best definition of target costing?

The net present cost of the purchase or project and all future revenues flowing from it discounted back to the present time.

The total of all costs in acquiring goods or services from the inception of the demand for them until their safe and satisfactory delivery at the point required.

The cost of a product after analysing its components step by step

A product cost estimate derived from a competitive market price.

QUESTION 42
Which of the following can directly affect labour variance? Select TWO that apply:

Wage rate per hour

Inflation

Company’s budget

Overhead expenditure

Overtime

QUESTION 43
Which type of specification is less time-consuming to develop?

Outcome-based specification

Design specification

Conformance specification

Technical drawings

CIPS L4M2 (Defining Business Needs) Exam is a certification exam designed for procurement and supply chain professionals who are seeking to enhance their knowledge and skills in defining business needs. L4M2 exam is part of the Chartered Institute of Procurement and Supply (CIPS) Level 4 Diploma in Procurement and Supply program, which is a globally recognized qualification for procurement professionals. L4M2 exam covers various topics, such as understanding business requirements, identifying stakeholders, and developing a business case, among others.

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