CIPS Updated L4M6 Exam Questions and Answers by lorelai

Explanation

This is a threat of a new entrant. The competitor has now entered the washing machine market and is competing directly with you. This is not a threat of substitution as it is the same product. A substitution would be if they invented a new product that washed clothes and people started buying this instead of washing machines. There are many questions in the exam on Porter's 5 Forces - see p. 39

Explanation

This is a leverage supplier on the Kraljic Matrix; high cost impact and low risk impact. The diagram on p.20 gives the example of utility services such as electricity as a common leverage supplier. There are lots of questions on Kraljic in the exam - do revise this topic and ensure you understand each of the four quadrants of the matrix

Partnership arrangements promote shared responsibility and joint ownership of outcomes. CIPS highlights that partnerships typically involve:

Shared risks and rewards

Joint performance measurement

Continuous performance review

Collaborative problem resolution

Traditional contracts often place risk entirely on the supplier, rely on adversarial pricing, and use infrequent reviews. Therefore, risk sharing is a defining feature of a partnership.

L4M6 Reference:

Learning Outcome 3: Understand approaches to managing supplier relationships

Topic: Partnership characteristics and governance

CIPS L4M6 Study Guide – Risk allocation and collaboration

Comprehensive and Detailed Explanation:

Statement B:A strategic alliance is an agreement between two or more parties to pursue a set of agreed-upon objectives while remaining independent organizations. It is typically managed jointly by the partners to achieve mutual benefits without forming a new legal entity.Wikipedia

Statement C:In a joint venture, two or more parties create a new, separate legal entity by contributing equity, and they share in the revenues, expenses, and control of the enterprise. This new company is formed to undertake specific business activities.