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CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions (Q41-Q46):
NEW QUESTION # 41
The Rampal Power Station, a 1320 MW coal-fired power plant, has recently faced accusations of poor health and safety standards in the workplace. Workers have reported being forced to work without safety masks, exposing them to air pollution. If Rampal Power Station fails to improve its health and safety standards, which of the following is the most likely primary consequence?
- A. Complexity in calculating insurance coverage
- B. Destruction of the environment
- C. Acquisition of poor quality materials from suppliers
- D. Loss of reputation
Answer: D
Explanation:
Choice B - Loss of reputation and damage to brand is a primary consequence of poor safety standards in the workplace for the power plant.
Incorrect answer:
Choice A - This option suggests that poor health and safety standards might lead to a decrease in the quality of materials sourced. While safety issues can affect worker performance and productivity, they do not directly relate to the quality of materials acquired from suppliers. Poor health and safety standards are more likely to impact employee morale and retention rather than the procurement process.
Choice C -Environmental effect is an indirect consequence for Rampal power plant but more so to the locals living there and natural habitat. If health and safety standards are not improved, it could lead to environmental issues, but this would be a broader consequence rather than a primary one related to workplace conditions.
Choice D-Although in cases of workers injury or death, calculating insurance would be complex, as not all injury and health related costs are covered by insurance, like sick pay, lost time, fines etc. But this is more of a secondary internal challenge and not a primary consequence of the power plant.
Reference:
LO-1.3; Page 99-100; Health and safety standards
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NEW QUESTION # 42
Nahid Cotton Mills Ltd, a leading manufacturer and exporter of high-quality knitting and cotton yarn in Bangladesh, aims to expand internationally and grow its global market to increase profits. The STEEPLED analysis tool can help assess various macro-environmental factors affecting the business. Which of the following factors fall under the social element of this analysis?
- A. Waste management initiatives
- B. Fashion and trends led by local celebrities
- C. Level of corruption and bribery present
- D. Inflation and interest rates
Answer: B
Explanation:
Choice A- Waste management initiatives is an Environmental factor. Choice B- Fashion and trend led by celebrities is a social factor as a it includes different lifestyles, types of family, culture, values and religions. Therefore is the correct answer. Choice C- Is an economic factor. Choice D- Corruption and bribery is a part of government idealogy and policies thus is a political factor. Reference: LO-1.2; Page 55; Use of STEEPLED analysis to explain the factors driving globalization
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NEW QUESTION # 43
Company X's CSR initiatives focus on community support through profit donations to local charities, organizing employee volunteer days, and providing scholarships for underprivileged students. In contrast, its ESG practices prioritize environmental sustainability by reducing its carbon footprint with renewable energy, cutting waste by 20% in five years, and promoting leadership diversity.
What distinguishes Company X's CSR initiatives from its ESG practices?
- A. CSR initiatives are mandatory for compliance, while ESG practices are optional
- B. CSR initiatives only involve philanthropic activities, whereas ESG practices focus solely on environmental sustainability
- C. There is no distinction; both CSR and ESG are the same
- D. CSR initiatives emphasize community support, while ESG practices target environmental sustainability and governance improvements
Answer: D
Explanation:
Choice A- Correct Answer. This option accurately reflects the difference between CSR and ESG. The CSR initiatives are centered on community support and philanthropic efforts (like donations and volunteer programs) which are basically factors at a top level, while the ESG practices focus on quantifiable goals related to environmental impact and governance structures (such as reducing carbon emissions and ensuring diversity in leadership).
Incorrect answer:
Choice B- This option is misleading. CSR initiatives are generally voluntary efforts that companies undertake to demonstrate social responsibility, while ESG practices can be driven by regulatory requirements in some sectors, but they are often also voluntary. Many companies adopt ESG standards to attract investors and manage risk, but it's not accurate to categorize CSR as mandatory.
Choice C- This option oversimplifies both concepts. While CSR often includes philanthropic activities, it can also involve ethical labor practices, community engagement, and more. Similarly, ESG encompasses environmental, social, and governance factors, not just environmental sustainability. Therefore, this option doesn't capture the full scope of either concept.
Choice D- This option is incorrect. While CSR and ESG are related and can overlap, they are distinct concepts. CSR focuses more on a company's ethical obligations and contributions to society, while ESG refers to specific metrics like KPI's to assess a company's impact on environmental and social issues and its governance practices.
Reference:
LO-1.1; Page 5, Analyze the application of ethical and ESG (Environmental, Social and Governance) factors in supple chains
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NEW QUESTION # 44
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. 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
- 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. 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
Answer: C
Explanation:
Choice B- 'Commercial organisations' commit an offence if they, or any person associated with them, bribes another person intending to obtain or retain business or a business advantage. The purpose of the expenditure is key, not necessarily the amount or what is being purchased. The extent to which the expenditure is incidental is also a factor. An itemised invoice providing a breakdown of the expense will be useful, along with further enquiries of the supplier. As there is no price breakdown, it is a valid reason to suspect the expense and is a form of bribe.
Incorrect answer:
Choice A- It is an offence to bribe another person or to be bribed. As per Bribery Act 2010, failing to prevent a bribe being paid to obtain or retain business or a business advantage is an offence. In this situation, the policy regarding acceptance of gifts was ahered to and is not bribery.
Choice C- Bribing a foreign official is an offence under the Bribery Act 2010. It is important to determine whether the fee is genuine or not; it should be accompanied with official notices and a receipt for payment. As the official informs it is a "standard processing fee" with documentary eveidence like a money receipt, it is not a case of bribery.
Choice D- As the requirement for the buying organisation was to detail environtmetal protection measures for a tender, the buying organisation has the right to reject bidders on this basis. This is not a form of bribery in any way.
Reference:
LO-1.1; Page 47-48; Issues impacting ethical and sustainable procurement and supply: modern slavery, bribery, corruption, fraud and human rights infringements
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NEW QUESTION # 45
Which of the following is an example where long-term availability of supplies is prioritized over short-term gains?
- A. Reducing quality standards in the short term, accepting that customer rejections will increase in the long term
- B. Choosing a new supplier that is initially more expensive than others in the market to expand the supply base and develop market capacity
- C. Selling products manufactured to lower quality standards, resulting in lower unit prices
- D. Cutting costs in the short term, ultimately leading to a reduced range and variety of suppliers in the market
Answer: B
Explanation:
Choice C- Using a new supplier that is more expensive in the short-term than others in the market, to expand the supply base and to develop capacity in the market is an example of where long-term availability of supplies would be more important than short-term gains. This decision focuses on building relationships and capacity for the future, prioritizing sustainability over immediate cost savings. This is the correct answer.
Incorrect answer:
It is important to consider the broader concept of supply chain management when weighing up short term commercial benefits vs long term availability.
Choice A and B- Lowering quality in every aspect leads to a customer rejects and negative brand publicity. There will be no long term supplies required as customers won't buy the product.
Choice D- Variety reduction involves reducing the number of different solutions used to fulfil the same need. When considering developing a procurement strategy for a new category, it is common to find that there is a variety of different standards and solutions employed across an organization to fulfil broadly the same need. The solution is not sustainable.
Reference:
LO-1.4; Page 114-116; Short term commercial gains and long term availability
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NEW QUESTION # 46
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