CIPS Category Management - L5M6 Exam Practice Test
Randoxx Ltd is a manufacturing company which has four main categories of expenditure:
* Category 1: The market of this category is highly innovative and has rapidly changed over the past five years. There are many suppliers who provide similar products at similar price points.
* Category 2: This category of spend is for highly specialised products and it is important to Randoxx that the products are carbon neutral. Because of this, there is a reduced number of suppliers who provide products to this category and Randoxx has little influence over the price that they pay.
* Category 3: This category of spend is for natural resources which are only found in very few parts of the world. Because of this Randoxx imports all of these items from one country abroad and currency fluctuations have a huge impact on the profit margin of this category spend.
* Category 4: This is a highly technical product which has a patent. It is used in the creation of laptops and phones and it would be impossible to make these with a different product. Due to the growing population Randoxx forecasts that demand for this product will increase.
Task:
Complete the table below by identifying each category's Porter's Force driver and STEEPLE factor challenge. Each response should be used only once.
* Category 1: The market of this category is highly innovative and has rapidly changed over the past five years. There are many suppliers who provide similar products at similar price points.
* Category 2: This category of spend is for highly specialised products and it is important to Randoxx that the products are carbon neutral. Because of this, there is a reduced number of suppliers who provide products to this category and Randoxx has little influence over the price that they pay.
* Category 3: This category of spend is for natural resources which are only found in very few parts of the world. Because of this Randoxx imports all of these items from one country abroad and currency fluctuations have a huge impact on the profit margin of this category spend.
* Category 4: This is a highly technical product which has a patent. It is used in the creation of laptops and phones and it would be impossible to make these with a different product. Due to the growing population Randoxx forecasts that demand for this product will increase.
Task:
Complete the table below by identifying each category's Porter's Force driver and STEEPLE factor challenge. Each response should be used only once.
Correct Answer:
Explanation:
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Category 1: Highly innovative, many suppliers with similar products at similar price points
* Porter's Force: Competitive Rivalry - High
* STEEPLE Factor: Technological
Explanation (150-200 words):
Category 1 operates in a market that is highly innovative and subject to rapid technological change.
Innovation means suppliers are constantly developing new features or solutions, making technology the primary STEEPLE factor. Additionally, because there are many suppliers offering similar products at similar price points, competitive rivalry is intense. Buyers can switch easily, and suppliers must compete aggressively on features, pricing, and differentiation.
This combination of high rivalry and technological change creates both opportunity and risk for Randoxx.
On one hand, innovation drives new solutions that can be leveraged; on the other hand, it increases pressure to manage supplier relationships strategically. Randoxx must monitor technological trends closely while maintaining competitive sourcing strategies to manage this highly dynamic category.
(Ref: CIPS L5M6 Study Guide - Porter's Five Forces, p.112-116; STEEPLED Analysis, p.109)
The sale of ice-cream, bikinis and sunglasses usually follows which demand pattern?
Correct Answer: C
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Which of the following parts of a SWOT analysis summarise activities and characteristics which are internal to the business? Select TWO.
Correct Answer: A,D
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According to studies completed by Reeves, Moose and Venema in 2014, which of the following was proven to be true with regards to the BCG matrix?
Correct Answer: C
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What is a 'black swan' event?
Correct Answer: B
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Which of the following forms of historical data can be used to inform Category Management expenditure?
Select THREE.
Select THREE.
Correct Answer: A,B,C
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Which of the following are legal aspects of a contract a Procurement Manager should know?
Correct Answer: A,C,E
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In which section of a balance sheet would you find the term "goodwill"?
Correct Answer: C
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Which of the following are benefits of Category Management? Select THREE.
Correct Answer: B,D,E
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Tulipa Ltd is a manufacturer of vegan frozen food. It saw significant market growth for three years, but in the last two years market share has remained stable despite no new entrants. Which stage in the lifecycle is the vegan frozen food market?
Correct Answer: B
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