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Latest L5M7 Exam Practice Questions

The practice questions for L5M7 exam was last updated on 2025-11-01 .

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Question#1

A strategy in which an organisation concentrates its resources on a narrow market or industry segment is which of Porter’s Generic Strategies?

A. Cost Leadership

B. Focus

C. Differentiation

D. Cost Certainty

Explanation:
Porter’s Focus Strategy involves targeting a niche market to meet unique needs better than competitors.
Short cited term: “focus C targeting a narrow market segment” (L5M7 Study Guide, p. 52).
Reference: CIPS L5M7 Study Guide, p. 52.

Question#2

Which of the following are incentives for suppliers to perform well on a contract? Select TWO.

A. Revenue-based pricing

B. Market-based pricing

C. Outcome-based pricing

D. Quality-based pricing

Explanation:
Revenue-based and Outcome-based pricing share financial benefits and performance gains, motivating suppliers to excel.
Short cited term: “gainshare, revenue and outcome pricing as supplier incentives.” (L5M7 Study Guide, p. 198)
Reference: CIPS L5M7 Study Guide, p. 198.

Question#3

Open-Book Costing relies on which of the following? Select TWO.

A. Finding the lowest cost

B. Splitting profit 50:50

C. Good communication

D. Transparency of costs and justifications

Explanation:
Open-Book Costing fosters trust and collaboration by ensuring both parties share detailed cost data and maintain open, transparent communication.
Short cited extract: “Open-book costing requires transparency and communication between partners.” (L5M7 Study Guide, p.193)
Reference: CIPS L5M7 Study Guide, p.193.

Question#4

Within the supply chain, which of the following is not considered a ‘flow’?

A. Materials flow

B. Information flow

C. Financial flow

D. Decision flow

Explanation:
Supply chains are characterised by three primary flows C materials, information, and finance.
“Decision flow” is not a recognised category.
Short cited term: “three main flows: material, information, finance.” (L5M7 Study Guide, p. 155)
Reference: CIPS L5M7 Study Guide, p. 155.

Question#5

In a supply chain, can a downstream supplier influence all aspects of quality including customer perception?

A. Yes C downstream suppliers have the most power in the chain

B. Yes C customer perception is derived from the supplier’s inputs and specification

C. No C customer perception is influenced by other functions such as marketing

D. No C a downstream supplier has no control over quality at all

Explanation:
A downstream supplier influences most aspects of quality but not customer perception, which is shaped by marketing and brand functions.
Short cited term: “except customer perception, influenced by marketing” (L5M7 Study Guide, p. 30).
Reference: CIPS L5M7 Study Guide, p. 30.

Exam Code: L5M7Q & A: 88 Q&AsUpdated: 2025-11-01

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