CIPS L3M1 - Procurement and Supply Environments

Explanation

The answer is uncertainty avoidance. Even if you have never heard of Hofstede, you can select the correct answer based on the explanation given in the QUESTION NO:.

Although the word 'culture' does not appear in the syllabus, much of Learning Outcome 3.0 can be seen as referring to culture. Some understanding of culture, both organisational culture and national culture is essential to human interactions in the procurement and supply environment. Check out Geert Hofstede's website to learn more about his work.

Explanation

To the lay person, they may look the same.

However, for a procurement professional, a fixed price may be altered in some circumstances eg 'fixed price with incentive', 'fixed price with exchange rate adjustment', etc.

A firm price on the other hand cannot be altered, and is the price which will be paid under the con-tract.

An earlier text by Patrick Behan on government contracting refers.

Explanation

It was Milton Friedman who promoted this view in the second half of the 20th century. This view is now less popular than it was. 'The business of business is business' is another famous quote from Professor Friedman, meaning profit maximisation is what business should be concerned with, not broader social or welfare issues. This thinking takes the view that governments can legislate as nec-essary to cater for society's needs, funding such activities from taxation placed on successful profit-able businesses.

Milton Keynes is a place in UK; J M Keynes was a famous economist who took a different view to Friedman's and John Milton is a famous 17th century English poet.

Explanation

The correct answer is to provide services. However, some other secondary factors may come into play. For example, some public sector organisations may be encouraged to boost national prestige eg airports, airlines; or they may be used as job creation schemes.

Explanation

We are now aware that the cost of externalities to society are considerable. A simple example would be that proximity to flow of motor vehicles is likely to increase ill-health requiring state-funded medical services where they exist, to treat at state (taxpayers') expense those who become ill. In the UK the number of people affected this way is believed to be numbered in the tens of thousands an-nually. Thus some businesses' cost structures do not reflect their true cost to society.

Another example would be the discharge of untreated waste into rivers or the sea, where the com-panies undertaking these activities may not be contributing financially to the cleaning up required.

In future years there is likely to be much debate about this, as some people will attempt to find ways to make companies pay the full cost of running their businesses.

Explanation

'Retention' - from the word 'retain', meaning to 'keep in place', 'hold back', 'keep possession of' something (Concise Oxford Dictionary, fifth edition) . In this case, 5% of the contract price.

Explanation

Gross National Product; Gross Domestic Product.

Seen by some commentators as outdated measures, although it's difficult to know what they should / would be replaced by.

Explanation

All answers are correct. Each of these areas can create safety hazards for people in the workplace, and so in many countries government legislation has been passed to make these topics subject to regulation.

For example, within the UK, it is mandatory for employers to provide compulsory training for em-ployees who may be involved in lifting heavy items, and there are limits placed on the weight which can be handled by any one person. In many cases, mechanised lifting equipment is used to aid or replace humans.

Explanation

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

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.