Get CIPS L3M1 Exam Practice Questions - Real and Updated

Answer : B, C

Exchange rate fluctuations and escalating materials costs can both substantially impact on a contract price. Where a contract has been drafted to allow for it, the price may be adjusted in line with some pre-agreed mechanism or formula to make the price paid more equitable.

Quality problems of the supplier's own making and shareholders seeking extra profit - neither being uncommon - are not seen as being grounds for adjusting price (upwards).

I should mention that price adjustment clauses can result in prices being adjusted either upwards or downwards, or not at all, depending on circumstances.

Answer : D

The answer is 'not-for-profit', meaning 'third sector' (charities, co-operatives, NGOs, etc). This is not the same as 'public sector'. You should be clear on this terminology.

Answer : C

Exchange rate - the rate at which the currencies are exchanged. This rate can vary frequently, some-times several times per hour, depending on circumstances.

The interest rate is the rate charged on loans - the cost of borrowing.

The base rate is the basic interest rate used for agreeing loans within an economy. This rate is nor-mally set by the government or the central bank. Loans within that economy will usually be at a higher rate than the base rate, often much higher.

The equilibrium rate (more commonly 'equilibrium price') is the rate at which supply and demand meet, not necessarily related to currency.

Answer : B

Competitive rivalry within an industry.

This can be quite an important point, and why I have such a dislike of the less formal title for the model - the model is about entire industries, not just about a single firm - this is commonly misun-derstood by students (and sadly, some tutors) - and the original Porter title - 'Industry Structure Analysis' - helps us understand that, I think. I find this tool of analysis to be very helpful in under-standing behaviour within sectors, despite criticism of the model and its age from some commenta-tors

The other answers shown are mere fictions.

Answer : A

Because a wide range of organisations (or even individuals) may respond to an open tender, consid-erable administrative resource may have to be devoted to analysing offers.