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CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions (Q118-Q123):

NEW QUESTION # 118
A group of small-scale coffee farmers in a rural village has been receiving the Fairtrade Premium for their products. During a recent community meeting, they discuss how to allocate the premium funds for the upcoming year. Which of the following projects would best align with the principles of the Fairtrade Premium in addition to the fair trade price?

A. Distributing the funds equally among the farmers to use as they see fit
B. Investing in building a community health clinic to improve access to healthcare for all villagers
C. Allocating the funds to one farmer to expand their personal farming business
D. Using the funds to subsidize private education for the children of the wealthiest farmers

Answer: B

Explanation:
Choice B- This option aligns with the principles of Fair Trade, as the premium is intended to support projects that benefit the community as a whole, fostering development and sustainability.
Incorrect answer:
Choice A- While this might seem fair at first glance, the Fairtrade Premium is not meant for personal distribution. Its purpose is to fund collective projects that benefit the entire community, such as infrastructure, education, or health initiatives.
Choice C- This option does not align with the principles of equity and inclusivity. Fair Trade encourages using the premium to benefit the entire community, particularly the most vulnerable and marginalized groups, rather than focusing on individuals who are already advantaged.
Choice D- Providing funds to a single farmer for personal business expansion is not in line with the collective approach of Fair Trade. The premium is intended to address community-wide challenges and improve the shared resources and infrastructure for all.
Reference:LO-3.3; Page 305; Fairtrade standards that affect the workplace and producers and their implications for procurement and supply

NEW QUESTION # 119
Which of the following best defines a cartel, and which party in the supply chain is most impacted by it?

A. An informal agreement among suppliers to lower costs; primarily affects retailers
B. A coalition of businesses to increase competition; primarily affects shareholders
C. A formal agreement between competing firms to set prices and limit production; primarily affects consumers
D. A collaboration between manufacturers to innovate; primarily affects suppliers

Answer: C

Explanation:
Choice A- This accurately describes a cartel. Firms collude to manipulate the market, resulting in higher prices and limited availability of goods. Consumers are directly impacted as they pay more and have fewer choices. Thus Choice A is the correct answer.
Incorrect answer:
Choice B- This describes a scenario more akin to cooperative pricing or collusion among suppliers, but it doesn't capture the essence of a cartel. While it could affect retailers by changing supply costs, it misses the focus on competition and pricing control typical of cartels.
Choice C- This option suggests a positive collaborative effort aimed at innovation, which is not characteristic of cartels. Cartels are generally about restricting competition rather than fostering innovation. Suppliers might be indirectly affected, but it doesn't align with cartel behavior.
Choice D- This is the opposite of what a cartel does. Cartels reduce competition by collaborating to control prices and production. While shareholders may be affected by cartel activities, the primary impact is felt by consumers and the market as a whole.
Reference:
LO-1.1; Page 43; Issues impacting ethical and sustainable procurement and supply: modern slavery, bribery, corruption, fraud and human rights infringements

NEW QUESTION # 120
Abed, the CEO of a manufacturing firm, plans to introduce an ESG policy. During a board meeting, concerns were raised about potential employee resistance to the initiative. What could be the most likely cause of this resistance?

A. Negative publicity
B. ESG policies require change which the employees are afraid of
C. ESG policies require extra resources in both time and money
D. A good ESG strategy promotes innovation

Answer: B

Explanation:
Choice D- ESG policies require change and many employees are worried by change. Thus D is the correct answer!
Incorrect answer:
Choice A- ESG agendas increases business reputation and does not negatively publicize.
Choice B- Requiring extra resources is a matter of the management and does not concern the employees.
Choice C- Promoting innovation is a positive effect of ESG policies and leads to more engaged employees.
Reference:
LO-1.1; Page 7; Analyze the application of ethical and ESG (Environmental, Social and Governance) factors in supple chains

NEW QUESTION # 121
What is the primary purpose of a supplier code of conduct?

A. To define the penalties for non-compliance in supplier contracts
B. To ensure suppliers take full responsibility for product quality
C. To outline the payment terms and delivery schedules for suppliers
D. To establish the expectations and standards for supplier behavior and practices

Answer: D

Explanation:
Choice B- A supplier code of conduct sets clear guidelines on ethical, social, environmental, and legal responsibilities that suppliers are expected to follow. Therefore B is the correct answer.
Incorrect answer:
Choice A- This is not the primary purpose of a supplier code of conduct. While the code may mention consequences for non-compliance, its primary focus is on establishing ethical and operational standards rather than detailing penalties.
Choice C- Payment terms and delivery schedules are typically included in contractual agreements, not in a supplier code of conduct. The code focuses more on ethical and sustainability standards rather than logistical or financial details.
Choice D- While product quality may be a part of a supplier's responsibilities, it is usually addressed in specific quality agreements or technical specifications rather than the supplier code of conduct. The code primarily deals with broader principles such as ethical labor practices, environmental impact, and compliance with laws.
Reference:
LO-2.2; Page 184; Monitoring Contract Performance

NEW QUESTION # 122
A Fair Trade-certified coffee cooperative located in a rural area is undergoing an audit to assess its compliance with Fair Trade standards. During the audit, several non-compliance issues are identified, requiring immediate corrective action to align with International Labour Organization (ILO) standards.
For each identified breach, match the corresponding Fair Trade Principle with the most relevant ILO Standard by selecting the appropriate option and placing it in the table below.
Breach 1: Workers in the coffee processing plant are exposed to prolonged noise levels during their shifts. However, many employees do not have or are not using proper hearing protection, raising serious concerns about potential hearing damage.
Breach 2: A significant number of workers, particularly local laborers, receive wages below the living wage threshold. This has resulted in financial hardship for their families, despite the cooperative's Fair Trade certification.
Breach 3: The cooperative is engaged in environmentally harmful waste disposal practices, frequently dumping waste into nearby streams. This has led to increasing concerns among local communities and environmental advocacy groups regarding the negative impact on the local ecosystem.
Breach 4: The cooperative exhibits gender-based employment disparities, where women are not appointed to certain roles, particularly managerial and supervisory positions. Additionally, the required uniforms for these roles fail to accommodate women, further restricting their opportunities due to health and safety regulations.

A. No discrimination, gender equity, freedom of association: Employers must ensure gender equality in hiring practices and provide equal opportunities for all workers, regardless of gender.
B. Good working conditions: Workers must be provided with a safe working environment that meets all health and safety standards, including protective equipment
C. Respect to the environment: Employers must adopt practices that reduce environmental impact and ensure that the working environment does not harm the local ecosystem
D. Fair Payment: Workers must receive fair wages that meet the minimum living wage requirements.

Answer: A,B,C,D

Explanation:

Good Working Conditions → A) Workers must be provided with a safe working environment that meets all health and safety standards, including protective equipment. The Fair-Trade principle of good working conditions emphasizes that workers should have access to a safe, healthy, and supportive work environment. ILO Principle A aligns with this by requiring safety measures such as protective equipment to ensure worker well-being. Fair Payment → C) Workers must receive fair wages that meet the minimum living wage requirements.

NEW QUESTION # 123
......

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