Deck 7: Purchasing and Business Strategy

Question 1

Which of the following is generic strategy to sustain profitability? 

A) High pricing. 
B) Product differentiation. 
C) Cost cutting. 
D) Mergers.

Answer 1

  B

Question 2

Which of the following is a potential source from which competitive advantage could be derived in the purchasing domain? 

A) Superior skills. 
B) Buying a product at the cheapest price. 
C) Buying a product efficiently. 
D) Buying a product effectively.

Answer 2

  A

Question 3

Which of the following should be considered when assessing a company's competitive position? 

A) Human resource management. 
B) Suppliers. 
C) Infrastructure. 
D) Marketing.

Answer 3

  B

Question 4

Which of the following is not an element in SWOT analysis? 

A) Analysing strengths. 
B) Analysing weaknesses. 
C) Identifying opportunities. 
D) Identifying time constraints.

Question 5

Which of the following is a quadrant in the Market Growth-Market Share Matrix? 

A) Question marks. 
B) Potential successes. 
C) Sitting ducks. 
D) Angry tigers.

Question 6

Which of the following is not a primary activity element in the Value Chain? 

A) Human resource management. 
B) Outbound logistics. 
C) Operations management. 
D) Marketing.

Question 7

Which of the following should be considered when assessing a company's competitive position? 

A) Human resource management. 
B) Economic conditions. 
C) Customers. 
D) Marketing.

Question 8

Which of the following is a potential route to growth as identified by Ansoff (1980)? 

A) Product development. 
B) Divestment. 
C) Partnership. 
D) Globalisation.

Question 9

Which of the following is not a quadrant in the Market Growth-Market Share Matrix? 

A) Dogs. 
B) Stars. 
C) Cash cows. 
D) Angry tigers.

Question 10

Which of the following is not an element in the Value Chain? 

A) Inbound logistics. 
B) Outbound logistics. 
C) Product performance. 
D) Marketing.

Question 11

Which of the following is generic strategy to sustain profitability? 

A) Cost leadership. 
B) Cost cutting. 
C) Stick to the knitting. 
D) Divestment.

Question 12

Which of the following is a potential route to growth as identified by Ansoff (1980)? 

A) Partnership. 
B) Divestment. 
C) Market development. 
D) Globalisation.

Question 13

Which of the following is not a support activity element in the Value Chain? 

A) Human resource management. 
B) Outbound logistics. 
C) Technology development. 
D) Procurement.

Question 14

Which of the following is a potential route to growth as identified by Ansoff (1980)? 

A) Market penetration. 
B) Divestment. 
C) Partnership. 
D) Globalisation.

Question 15

Which of the following should be considered when assessing a company's competitive position? 

A) Human resource management. 
B) Economic conditions. 
C) New entrants. 
D) Marketing.

Question 16

Which of the following should be considered when assessing a company's competitive position? 

A) Human resource management. 
B) Economic conditions. 
C) Political decisions. 
D) Substitute products.

Question 17

Which of the following is a potential route to growth as identified by Ansoff (1980)? 

A) Divestment. 
B) Globalisation. 
C) Partnership. 
D) Diversification.

Question 18

Which of the following should be considered when assessing a company's competitive position? 

A) Human resource management. 
B) Direct competitors. 
C) Legislation. 
D) Marketing.

Question 19

Which of the following is a potential source from which competitive advantage could be derived in the purchasing domain? 

A) Superior technology. 
B) Superior power resources over suppliers. 
C) Buying a product efficiently. 
D) Average knowledge of markets and supply chains.

Question 20

Which of the following is a potential source from which competitive advantage could be derived in the purchasing domain? 

A) Superior technology. 
B) Buying a product at the cheapest price. 
C) Buying a product efficiently. 
D) Historically superior codified knowledge of markets and supply chains.

Question 21

Which of the following best explains 'resource-dependency theory'? 

A) Business success is primarily achieved through deploying a company's external resources. 
B) Business success is primarily achieved through deploying a company's internal resources. 
C) Business success is primarily achieved through efficiency gains. 
D) Business success is primarily achieved through deploying a company's external and internal resources.

Question 22

Which of the following is not a generic strategy to sustain profitability? 

A) Cost leadership. 
B) Product differentiation. 
C) Focus. 
D) Cost cutting.

Question 23

Which of the following best explains the resource-based view of the firm? 

A) Business success is primarily achieved through deploying a company's unique resources. 
B) Business success is primarily achieved through fierce competition. 
C) Business success is primarily achieved through cost cutting. 
D) Business success is primarily achieved through luck.

Question 24

Which of the following best explains 'commodity strategies'? 

A) A clear and detailed picture of a company's future purchasing spending. 
B) A plan of action to reduce purchasing spending. 
C) A plan of action to address past supplier difficulties. 
D) A plan of action to reduce dependency on suppliers.

Question 25

Which of the following best describes a high supply risk? 

A) Sourcing from one supplier with an alternative source of supply. 
B) Sourcing from one supplier without an alternative source of supply. 
C) Sourcing from multiple suppliers. 
D) Sourcing from ten suppliers with an alternative source of supply.

Question 26

Which of the following best describes 'strategic products'? 

A) High-tech, low volume products which are often supplied at customer specification. 
B) Low volume products not supplied at customer specification. 
C) High-tech, high-volume products which are often supplied at customer specification. 
D) Standard products not supplied at customer specification.

Question 27

What are the two variables used in Kraljic's (1983) purchasing portfolio approach? 

A) Purchasing impact on the bottom line of the company and supply risk. 
B) Purchasing and demand risk. 
C) Purchasing impact on suppliers and profits. 
D) Purchasing impact on the bottom line of the company and distribution risks.

Question 28

Which of the following is a generic strategy to sustain profitability? 

A) Cost cutting. 
B) Special offers. 
C) Profit maximisation. 
D) Focus.

Question 29

Which of the following are enabling processes following the view of Monczka? 

A) Establish supplier lists. 
B) The identification of all costs. 
C) Develop purchasing and supply chain measurements. 
D) The identification of all customers.

Question 30

Which of the following are enabling processes following the view of Monczka? 

A) Establish customer lists. 
B) Establish timescales. 
C) The identification of premises requirements. 
D) Establish human resource development and training.

Question 31

Which of the following best describes Kraljic's (1983) approach to commodity strategies? 

A) Purchasing managers develop differentiated strategies towards their supply markets. 
B) Purchasing managers develop undifferentiated strategies towards their supply markets. 
C) Purchasing managers do not need to develop strategies towards their supply markets. 
D) Purchasing managers need to develop differentiated strategies towards their customers.

Question 32

Which of the following best explains 'strategic cost management'? 

A) The identification of all costs, cost drivers and strategies aimed at reducing or eliminating costs through the supply chain. 
B) The identification of all costs, cost drivers and strategies aimed at reducing or eliminating errors. 
C) The identification of all costs aimed at reducing or eliminating costs through the supply chain. 
D) The identification of all costs, cost drivers and strategies aimed at reducing or eliminating costs through the distribution chain.

Question 33

Which of the following best describes the way in which strategic management processes and enabling processes should be conducted? 

A) Both in parallel. 
B) Sequentially, strategic management processes first. 
C) Sequentially, enabling processes first. 
D) Both after a customer analysis.

Question 34

Which of the following must a company pay attention to when pursuing purchasing excellence? 

A) Strategic management processes. 
B) Operational management processes. 
C) Tactical management processes. 
D) Supplier Costs.

Question 35

Which of the following best explains 'non-core competences'? 

A) Those activities common to most companies. 
B) Those activities that do not contribute to sustainable competitive advantage. 
C) Those activities which are not primary activities in the value chain. 
D) Those activities essential to delivery of the company's outputs.

Question 36

Which of the following best describes a low supply risk? 

A) Sourcing from one supplier with an alternative source of supply. 
B) Sourcing from many suppliers and switching costs are high. 
C) Sourcing from one supplier with an alternative source of supply. 
D) Sourcing from many suppliers and switching costs are low.

Question 37

Which of the following are enabling processes following the view of Monczka? 

A) Establish globally integrated and aligned purchasing and supply chain strategies and plans. 
B) The identification of all costs. 
C) The identification of premises requirements. 
D) The identification of all customers.

Question 38

Which of the following best explains 'leveraging world class supply base management'? 

A) Increase business with historical suppliers. 
B) Increase business with local suppliers. 
C) Increase business with the cheapest suppliers. 
D) Increase business with suppliers who perform best.

Question 39

Which of the following best explains 'core competences'? 

A) Those activities through which a company gains a market share. 
B) Those activities through which a company achieves sustainable competitive advantage. 
C) Those activities through which a company achieves profitability. 
D) Those activities essential to the delivery of the company's outputs.

Question 40

Which of the following best explains 'supplier development and quality management'? 

A) Suppliers required to achieve quality accreditation. 
B) Suppliers encouraged to diversity. 
C) Suppliers challenged to provide new ideas for improvement. 
D) Suppliers invited to contribute to strategic planning processes.

Question 41

Which of the following is a criterion for differentiating between customers? 

A) Benchmarking. 
B) Customer attractiveness. 
C) Audit. 
D) First respondent wins the order.

Question 42

Which of the following is a characteristic of 'performance-based partnership'? 

A) Thorough selection of supplier. 
B) A joint venture. 
C) Customers rate your performance. 
D) Suppliers and distributors working together.

Question 43

Which of the following best describes 'Dutch windmill'? 

A) Supplier's customer portfolio. 
B) Combination of buyer's purchasing portfolio and supplier's customer portfolio. 
C) Combination of buyer's purchasing portfolio and customer portfolio. 
D) Buyer's purchasing portfolio.

Question 44

Which of the following is not a segment in the 'Dutch windmill'? 

A) Core. 
B) Development. 
C) Exploitation. 
D) Supplementary.

Question 45

Which of the following best describes 'competitive bidding'? 

A) No long-term supply contracts. 
B) One supplier is invited to bid. 
C) Buying at a high price. 
D) Buying cheaply.

Question 46

Which of the following is a characteristic of the 'Development segment' of the 'Dutch windmill'? 

A) Buyer can easily switch from one supplier to another. 
B) Supplier in a dominant position versus its customers. 
C) Supplier in weak position needing to compete with other suppliers for orders. 
D) Suitable for building long-term relationships.

Question 47

Which of the following best describes 'Quality assurance'? 

A) Minimising complaints. 
B) Keeping up the methods and procedures of quality management. 
C) Continuous improvement. 
D) Achieving a quality award.

Question 48

Which of the following best describes 'quality system'? 

A) Combination of buyer's quality assurance and supplier's quality assurance. 
B) Collection of methods and procedures used for quality management. 
C) Quality awards. 
D) Customer complaint monitoring.

Question 49

Which of the following is a characteristic of the 'Exploitation segment' of the 'Dutch windmill'? 

A) Buyer can easily switch from one supplier to another. 
B) Supplier in a dominant position versus its customers. 
C) Supplier in weak position needing to compete with other suppliers for orders. 
D) Suitable for building long-term relationships.

Question 50

Which of the following is a criterion for differentiating between customers? 

A) Benchmarking. 
B) History. 
C) Supplier's competitive position. 
D) Market share.

Question 51

Which of the following are characteristics of 'bottleneck products'? 

A) They represent a relatively limited value but there is only one supplier. 
B) They represent a relatively high value and there is only one supplier. 
C) They represent a relatively high value and there are many suppliers. 
D) They represent a relatively limited value and there are many suppliers.

Question 52

Which of the following is not a supplier strategy? 

A) Partnership. 
B) Competitive Bidding. 
C) Secure Supply. 
D) First respondent wins the order.

Question 53

Which of the following are characteristics of 'leverage products'? 

A) They represent a relatively small share of the end product's cost price. 
B) They represent a relatively large share of the end product's selling price. 
C) They represent a relatively small share of the end product's selling price. 
D) They represent a relatively large share of the end product's cost price.

Question 54

Which of the following are characteristics of 'leverage products'? 

A) Sourcing from one supplier at standard quality grades. 
B) Sourcing from many suppliers at standard quality grades. 
C) Sourcing from one supplier at variable quality grades. 
D) Sourcing from many suppliers at variable quality grades.

Question 55

Which of the following is a characteristic of the 'Core segment' of the 'Dutch windmill'? 

A) Buyer can easily switch from one supplier to another. 
B) Supplier in a dominant position versus its customers. 
C) Supplier in weak position needing to compete with other suppliers for orders. 
D) Suitable for building long-term relationships.

Question 56

Which of the following is a supplier strategy? 

A) Benchmarking. 
B) Category Management and e-Procurement solutions. 
C) Audit. 
D) First respondent wins the order.

Question 57

Which of the following is a characteristic of the 'Nuisance segment' of the 'Dutch windmill'? 

A) Buyer can easily switch from one supplier to another. 
B) Supplier in a dominant position versus its customers. 
C) Supplier in weak position needing to compete with other suppliers for orders. 
D) Suitable for building long-term relationships.

Question 58

Which of the following are characteristics of 'leverage products'? 

A) They are bought in single volumes. 
B) They are bought infrequently. 
C) They are bought at large volumes. 
D) They are bought at small volumes.

Question 59

How many business-to-business relationships are contained in a 'Dutch windmill'? 

A) 4. 
B) 8. 
C) 12. 
D) 16.

Question 60

Which of the following are characteristics of 'routine products'? 

A) They have a small value per item and there is only one supplier. 
B) They have a high value per item and there are many suppliers. 
C) They have a high value per item and there is only one supplier. 
D) They have a small value per item and there are many suppliers.

Question 61

Which of the following is a level of 'worldwide sourcing' according to Monczka et al.(2005)? 

A) Engage in international purchasing as needed. 
B) Always purchasing from outwith the EU. 
C) Identification of the cheapest supplier regardless of country of origin. 
D) Utilisation of cheap labour countries to supply.

Question 62

Which of the following best describes the objective of 'global sourcing'? 

A) The global exploitation of efficiencies in the delivery of a product or service. 
B) Always purchasing from outwith the EU. 
C) Identification of the cheapest supplier regardless of country of origin. 
D) Utilisation of cheap labour countries to supply.