REVISION MATERIAL
L4M6- SUPPLIER
RELATIONSHIPS
INSTRUCTIONS:
1. ANSWER ALL QUESTIONS
2. MARK “X” ON THE ALPHABETICAL LETTER
AGAINST THE CORRECT ANSWER FOR
MULTIPLE CHOICE QUESTIONS
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Liato communicated his organisation’s requirements by placing more
emphasis on what the products to be supplied should be capable of doing.
Sewagodimo the assistant procurement officer argued that giving the
supplier a tight specification centred on the accurate measurements, design,
colour and weight was appropriate.
1. What category of specification did Sewagodimo prefer to use?
a) Sample specification
b) Service level agreement
c) Outcome based specification
d) Conformance based specification
2. What category of specification did Liato prefer to use?
a) Sample specification
b) Service level agreement
c) Outcome based specification
d) Conformance based specification
3. Which specification category poses the lowest risk of product failure to
the buying entity?
a) The specification category used by Liato
b) The specification category used by Sewagodimo
c) Both
d) None of the above
4. Which among the following is a qualitative measure of buyer and
supplier relationship?
a) Communication
b) Cost
c) Delivery
d) Quality
5. What form of relationship is where the 'Buyer and supplier agree to
collaborate closely for the long term, sharing information and ideas for
development. There is a very high level of trust and the aim is to find
solutions that benefit both parties without detriment to either'.
a) Co- destiny
b) Single- sourced
c) Outsourcing
d) Partnership
6. The relationship spectrum goes from most distant to closer relationships.
What are the relationships at each end of this relationship spectrum?
a) Adversarial and outsourcing
b) Adversarial and partnerships
c) Adversarial and co destiny
d) Partnership and single sourced
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7. The table below presents Carter’s 10Cs; key performance indicators
(KPI) applicable when buying complex purchases. Use arrows to match
the descriptions to the correct KPI in table 1 below:
Table 1
KPI DESCRIPTION
Cost Measurement of the supplier’s financial
capability in terms of stability and gearing.
Cash Comparison of the total acquisition
package offered by each supplier
organization and not only the purchase
price Quoted.
Competence Measure of evidence for continuous
improvement and sustainable delivery,
Quality and reliability to reduce the risk of
supply failure or cut.
Capacity Measure the organization’s dedication to
Environmental systems, Quality, timely
delivery and process controls.
Consistency Measuring supplier’s technical capability
to produce the Quality and Quantity we
deserve, by considering availability of
machinery, financial resources and skilled
manpower.
Control Measuring the supplier’s ability of having
the relevant key personnel such as the
management, technical/production,
administrative and professional staff.
Commitment Measures the extent to which effective
management mechanisms and
Information Systems are available to
ensure all activities including those
associated with quality are managed in
the organization.
8. Which among the following are the four E's used to achieve of Value
for money in procurement and supply?
a) Economy
b) Economics
c) Efficient
d) Efficiency
e) Effectively
f) Effectiveness
g) Equity
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9. Deco is an organisation in which individuals are experts and the
organisation chart is flat. What type of organisation culture as per
Charles Handy’s model exists in Deco?
a) Person culture
b) Role culture
c) Task culture
d) Power culture
10. In examining the four main types of organisational culture, there are
three important qualifications. Which of the following is not one of
these?
a) Organisational cultures are unstable and change constantly
b) Several types of culture usually exist in the same organisation
c) Different cultures may predominate depending on the
headquarters and ownership of the company
d) Organisations change over time
11. A manufacturer of delivery drones is concerned with the change in
government in its dominant market and the new bill to establish a
regulator that has been tabled in the parliament. In addition, it is
worried about the weakness of the currency of its biggest export
market.
Identify which of the two factors that is of concern to the company in
its external environment analysis.
a) Political
b) Technology
c) Opportunity
d) Economic
e) Social
f) Threat
g) Legal
12. According to Porter, if an organization does not follow either a cost
leadership strategy or a differentiation strategy they are:
a) Hybrid
b) Stuck in the middle
c) Focused
d) Competitive.
13. In Porter's Generic Strategies model, a focus strategy involves:
a) Selling a limited range of products
b) Selling to a narrow customer segment
c) Selling to one region only
d) Selling simple products that are cheap to produce
14. Which of the following is a primary activity in Porter's value chain?
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a) Routines.
b) Control.
c) Marketing and sales.
d) Procurement.
e) Human resource management.
15. Which of the following are primary activities in Porter's value chain?
a) Operations and outbound logistics.
b) Marketing and sales.
c) Human resource management and service.
d) Answers A& B.
16. Pareto is a positioning tool that can be used to separate critical few
suppliers from the trivial many.
a) True
b) False
17. Which of the following are the FOUR possibilities for competitive
advantage as suggested by Michael Porter?
a) Price, differentiation, cost focus and differentiation focus
b) Cost, differentiation, price focus and differentiation focus
c) Price, differentiation, cost focus and differentiation focus
d) Cost, differentiation, cost focus and core competences
18. Which TWO of the following characteristics apply to oligopoly?
a) Many small firms account for a high percentage of industry output.
b) A few large firms account for a high percentage of industry output.
c) The industry is often characterised by extensive non-price
competition.
d) There are no entry barriers
19. Perfect competition occurs in a market where there are many firms
each selling:
a) a competitive product.
b) a capital intensive product
c) a similar product
d) a unique product
e) an identical product
20. Deco is concerned with the recent downturn of the economy and is re-
evaluating its pricing decision. It has now decided to price its products
based on variable cost instead of full cost so as to keep its plant
operating. Which of the following pricing model is Deco using?
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a) Contribution pricing
b) Market skimming pricing
c) Marginal costing pricing
d) Differential pricing
21. Use arrows to match the business cycle stages to the description in the
table 3 below:
Table 3
Stage Description
Depression Consumption, production, profits
starts to fall; unemployment starts
to rise.
Recovery Consumer spending rises;
investment picks up; prices are
stable; profits and employment
start to rise and confidence grows.
Boom Low consumer demand;
production capacity is unused;
prices are stable or falling; business
profits are low; there is high
unemployment; and business
confidence is low
Recession Consumer spending is rising fast.
Production capacity is reached,
labour shortages, output only
increased by new investment in
labour-saving technology high.
22. A procurement Manager can manage stakeholders and get their best
contributions through working in teams. Apply Tuckman’s team
formation model to identify the stage at which team members begin
to assert themselves and test out roles, leadership, behavioural norms
and ideas?
a) Norming
b) Forming
c) Adjourning
d) Storming
e) Performing
23. The first action a procurement specialist should take when planning to
effectively manage stakeholders is to undertake stakeholder mapping.
Which of the following models is used to perform this process?
a) Force field analysis
b) Mendelow’s power interest matrix
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c) Carter’s 10Cs
d) Kraljic matrix
24. In connection to question 4 above, what is stakeholder mapping?
a) Process of identifying and classifying suppliers into four quadrants
bases on their product’s level of risk and expenditure to the
organisation
b) Process of identifying and classifying suppliers into four quadrants
bases on their level of interest and influence to the organisation
c) Process of ranking stakeholders beginning with the most important
to the least important
d) Process of determining the amount of dividends to be paid to each
shareholder
25. Identify the major forces analysed by the Cart Lewin’s Force Field
Analysis model when managing conflicts during a change program in
order to influence movement of stakeholders towards the intended
goal?
a) Restraining forces
b) Stakeholder interest
c) Stakeholder influence
d) Driving forces
26. Using Mendelow’s power interest matrix, which of the following would
be an appropriate strategy to manage a stakeholder who has both
high level of interest and influence on procurement plans?
a) Keep informed
b) Keep satisfied
c) Involve
d) Ignore
27. Which among the following is an example of connected stakeholder?
a) Government
b) Shareholders
c) Marketing function
d) Private Media
28. According to Kubler-Ross, suspicion, scepticism, frustration and isolation
are found ion which stage of the change process?
a) Anger & Depression
b) Acceptance & Integration
c) Anger & Denial
d) Shock & Denial
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29. Which among the following are considered as part of the seven areas
of waste identified by Taichi Ohno?
a) Inventory
b) Transportation
c) Motion
d) Machine
30. Which of the following are recognised conflict resolution approaches
when dealing with key internal stakeholders, where a resolution must
be agreed? Select TWO that apply
a) Avoiding
b) Compromising
c) Accommodating
d) Maintaining
e) Defending
31. Which of the following are the critical variables used by Thomas
Killman in his conflict resolution model?
a) Completion and avoidance
b) Competition and assertiveness
c) Cooperative and compromise
d) Mediation and arbitration
32. According to Kotter, which among the following is not a source of
resistance to change?
a) Top Management Support
b) Parochial self-interest
c) Misunderstanding and lack of trust
d) Low tolerance of change
33. In the context of procurement and supply, risk management is
concerned with which of the following?
a) Demand risk
b) Supply risk
c) Financial risk
d) Competition risk
34. The response to a risk identified as low likelihood but high impact should
be to?
a) Terminate
b) Treat
c) Ignore
d) Create a contingency plan
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35. The correct response to a risk that is classified as low impact and low
probability of occurrence is:
a) Terminate
b) Treat
c) Ignore
d) Create a contingency plan
36. Use arrows to link the descriptions to the correct conflict resolution
method in teams in the table 2 below:
Table 2
Method Description
Avoiding trying to satisfy the other person’s
concerns at expense of your own
Accommodating trying to satisfy your concerns at the
expense of others
Compromising trying to find an acceptable settlement
that only partially satisfies both people’s
concerns
Competing trying to find a win-win solution which
completely satisfies both people’s
concerns
Collaborating sidestepping the conflict
Engaging a third party expert to guide
stakeholders through to an agreement
37. Paul & associates enjoyed a good commercial relationship with
Sewagodimo steel Manufacturers for five years until the economy of
the country started to show indicators of recession. Sewagodimo Steel
Manufactures was then sold to Swart Co initially a competitor who later
decided to terminate the relationships with Paul & Associates who is
believed to have been failing to remit payments according to
agreement as adopted by the new supplier. Which among the
following could be the reason for termination of relationships? Identify
Two.
a) Completion of performance
b) Relation violation
c) Economic reason
d) Change of ownership
38. Which among the following are two characteristics of partnering
relationships?
a) Joint performance measurement
b) Co- maker ship of products
c) Win- lose for the buying entity
d) Early supplier involvement
39. The first stage of the partnership lifecycle is
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a) Initiation
b) Introduction
c) Start
d) Embryonic
40. The decision about which type of partnership is appropriate will
depend upon:
a) Strength and number of Drivers and facilitators both partners have.
b) Spend and risk for the buyer only
c) External and Internal Environment for both partners
d) Company strategy and Procurement maturity
Mini- Case Study- Application of the Kraljic portfolio matrix
Buying entity A takes advantage of its spending power in the market and
decides to use competitive bidding as sourcing strategy because the items
are of high spend and low supply risk. Buying entity B intends to purchase
High spend, high supply risk items while buyer C chose to buy items as and
when required without any future commitments with suppliers. Use the
information in this Mini- case study to answer the following questions:
41. Which of the buying entity is best suited to engage into a partnership
relationships with the supplier?
a) Entity A
b) Entity B
c) Entity C
d) Entity A and B
42. Which quadrant do we place products bought by entity C?
a) Routine
b) Leverage
c) Strategic
d) Bottleneck
43. Which of the buying entities offer greater opportunity to maximise
profit?
a) Entity A
b) Entity B
c) Entity C
d) Entity A and C
44. Which quadrant do we place products bought by entity A?
a) Routine
b) Leverage
c) Strategic
d) Bottleneck
45. The Kraljic matrix would suggest that partnerships may be suitable for:
a) Leverage
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b) Bottleneck
c) Strategic
d) Routine
46. Which among the following is a reason for failure of partnership?
Identify two.
a) Availability of resources
b) Lack of value-added benefits
c) Logistics and distance barriers
d) Effective conflict management
47. Partnership arrangements may be suitable where there is:
a) Restricted markets
b) Growing markets
c) Fast Changing technology
d) Stable technology
e) A need for new products and services
f) Technically complicated supplies
g) Many suppliers
h) Low
46. Which of the following is a situation best suited for an alliance?
a) Price Volatility
b) Synergistic collaborative design opportunities
c) Demand Volatility
d) High switching likelihood with high switching costs
e) No Partnership Alliance capable supplier for the item
46. Partnership arrangements may be suitable where there is:
a) Restricted markets
b) Growing markets
c) Fast Changing technology
d) Stable technology
e) A need for new products and services
f) Technically complicated supplies
g) Many suppliers
h) Low risk
47. Which of the following are outcomes that collaborative relationships
tend to foster
a) Longer term contracts
b) Short term contracts
c) More suppliers
d) Reduction of risk for suppliers
e) Reducing total costs
f) A focus on price
g) Improvement of processes
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h) Use of international standards
48. A key difference between a partnering relationship and traditional
relationships is:
a) No tendering
b) No contract
c) No disagreements
d) No Negotiations
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