What is a disadvantage of including qualitative KPIs into a contract? A . They can lead to poor supplier performance
B. They pull focus from the more important quantitative KPIs
C. They are hard to measure
D. They make the buyer seem weak
The correct answer is ‘They are hard to measure’ p.103
A doctor’s surgery requires a complex database system to manage all of its patients data, which is highly sensitive. The system also needs to link to other departments of the health service such as physiotherapy and intensive care. The Manager of the surgery is considering outsourcing the management of the database to an IT company .
What is the Manager’s main motivation for doing this? A . The supplier is an expert in their field
B. This will result in economies of scale
C. This will free-up internal resources
D. This will result in cost-savings
The reason for outsourcing in this example is that the IT firm is an expert in their field. The requirement is complex and important and this is the reason why it is not being delivered in-house. The other answers given CAN be reasons for out-sourcing, but don’t relate to this example. For a full list of reasons a company could use outsourcing see p. 4-5
The Queen Victoria is a traditional British pub which serves a range of alcoholic beverages. It has a partnership relationship with a local brewery which supplies several types of beer and cider. Logistics is a key concern for the Queen Victoria as deliveries must be made when there is room in the cellar to store the barrels of beer and cider. In what ways could the logistics risk be reduced? A . Using several suppliers instead of one
B. Batch ordering
C. Sharing up-to-date information
D. Issuing POs electronically.
The logistics risk can be reduced by ‘Sharing up-to-date information’. If the Pub tells the supplier when it’s running low, they can then time the deliveries more accurately. P. 136. A lot of the questions on the ‘Partnerships’ chapters of the book are common-sense questions like this. It involves reading the question and using logic, rather than relying on your knowledge of procurement. If you found this question easy C that’s a good sign for the exam.
In the public sector, there are many sources of information that a buyer can use to identify a suitable supplier .
Which of the following could be used? Select THREE A . Intranet
D. Internal stakeholders’ knowledge
E. Procurement Platforms
The correct answers are; tradeshows, internal stakeholders’ knowledge and e-procurement platforms. Intranet is incorrect as this is an internal system so you wouldn’t find information on external suppliers on here the careful not to confuse intranet with internet). OJEU is also incorrect; this is the platform on which tender opportunities in the public sector are published- its not a list of suppliers.
Grey Stone Memorial Hospital is a private medical facility which has an idea for a vaccine to a deadly disease, but does not have the capacity to make the vaccine itself. It is
considering partnering with a well-known pharmaceutical company in order to bring the vaccine to market .
What is the biggest risk to Grey Stone? A . Intellectual Property Rights
B. Increased Costs
C. Low quality product
D. Uninformed stakeholders
The correct answer is ‘Intellectual Property Rights’. Grey Stone will need to share its idea for the vaccine with the pharmaceutical company and this is risky if there is no trust between the parties. See p.134 for more information on Risks of Partnerships.
Brian Air is a company that is trying to break into the air transport market .
Which of the following could be barriers to entry for Brian Air? Select THREE A . economies of scale
B. access to capital
C. licences and permits
D. health and safety
E. ethical sourcing
Barriers to entry are economies of scale (in the air travel industry you can’t just start off small and grow), access to capital (you need to already have a lot of money to buy airplanes) and licences and permits (you need to ensure you have the correct licences to fly planes). These are listed on p.41. Other barriers include; strong brand identity already dominant in the market, high switching costs for buyers, access to distribution networks and government policy.
Agile Cars Ltd is creating a ‘lean’ business model which involves receiving deliveries of components only when they are required .
Which of the following ‘wastes’ is being removed from the business? A . Transportation
This would reduce inventory (holding stock). Inventory is considered a business waste because it costs money to store stuff (e.g. paying the rent on a warehouse, electricity to light it up etc). If you can reduce the need to store materials and components on site- you reduce costs. You also save time because you get deliveries when you need them- you don’t need to allow for staff unpacking things, storing them away, then going back to them later when they need them. For more information on the 7 Business Wastes see p.70. This comes up in a couple of modules, so it’s worth remembering.
According to Mendelow, there are four ways stakeholders can be managed, depending on the amount of power they have, and how interested they are in your project .
What are these four categories? A . Keep satisfied, keep informed, minimal effort, no effort
B. Manage closely, manage loosely, keep satisfied, keep informed
C. Minimal effort, manage closely, keep informed, keep satisfied
D. Keep informed, keep happy, keep satisfied, keep notified
The four categories are; Minimal effort, manage closely, keep informed, keep satisfied. You can see the Matrix on p.81. An easy way to remember this is there are 2 Ms and 2 Keeps. And these sit on opposite sides of the matrix.