[May 27, 2026] Today Updated L4M2 Exam Dumps Actual Questions

L4M2 exam dumps with real CIPS questions and answers

Preparing for the CIPS L4M2 exam requires a substantial amount of study and preparation. Candidates are advised to read widely, attend relevant training courses or webinars, and review past exam papers to familiarize themselves with the types of questions that may be asked. By achieving a successful result in L4M2 exam, candidates will demonstrate their ability to effectively define business needs, which is a critical component of successful procurement and supply chain management.

 

NEW QUESTION # 66
Which of the following factors might prompt an organisation to procure an alternative product? Select THREE that apply:

• A. Threat of retaliation
• B. Relative value to money between options
• C. Easy access to distribution channel
• D. Buying organisation's propensities to change
• E. Switching cost
• F. Brand loyalty

Answer: B,D,E

Explanation:
According to Michael Porter, the threat of substitution, is a function of three factors:
* The relative value/ price of a substitute compared to an industry's product
* The cost of switching to the substitute
* The buyer's propensity to switch
(Porter, Michael E.. Competitive Advantage: Creating and Sustaining Superior Performance (p. 278). Free Press. Kindle Edition.) Reference: CIPS study guide page 92-97 LO 2, AC 2.2

NEW QUESTION # 67
What is the contribution of marketing function to the development of specification?

• A. Marketing provides ideas on customer's taste and market trends
• B. Marketing ensures that procurement function doesn't involve in developing specification
• C. Marketing consults on technical requirements of the product
• D. Marketing ensures that conformance specification will never be used

Answer: A

Explanation:
Marketing plays a critical role in sales. The marketing department introduces products to the con-sumer, and creates strategic messaging that elevates appeal and ultimately drives sales. The feed-back and response from consumers is measured by the marketing team on a variety of levels. Ad-vertising is one means of seeing what performs and what does not perform. Marketers will note trends and demand in their specific markets. This plays into new product development, because the marketing team can work with product developers to create products based on that demand.
In development of specification, the role of marketing is largely the same. They provide the market insight so that right specification is developed and it matches the demands from customers.
Reference:
- CIPS study guide page 173-175
- Role of Marketing Management in New Product Development (chron.com)
LO 3, AC 3.4

NEW QUESTION # 68
Apple's CPO is planning a budget for purchasing carbon-free aluminium next year. There are 27.4 tonnes of aluminum in stock, while Apple will need 200 tonnes for production next year and double inventory for production in the following year. How much aluminum will Apple need to purchase in next year?

• A. 172.6 tonnes
• B. 227.4 tonnes
• C. 282.2 tonnes
• D. 117.8 tonnes

Answer: B

Explanation:
The quantity of aluminium Apple needs to buy is calculated as follows:
Quantity needed for production + the inventory needed at the end of the year - inventory at start of the year That formula is quantified as: 200 + 54.8 - 27.4 = 227.4 Reference: CIPS study guide page 103 LO 2, AC 2.3

NEW QUESTION # 69
Which of the following factors is most likely to be a barrier to new entrant in agriculture?

• A. Brand recognition
• B. Reputation within the industry
• C. High margins
• D. Capital requirement

Answer: D

Explanation:
Barriers to Entry to Agriculture: If stakeholders are going to address the need for new, conserva-tion-minded farmers, they must understand the barriers these farmers encounter when transitioning into the profession. A review of the literature revealed a number of barriers-most of them structural-to entry to agriculture. While each barrier is distinct, they are all interconnected. Though not an exhaustive list, the following barriers are ones that were most frequently mentioned in the literature:
- Access to Affordable Land
- Startup Capital
- Lack of Agricultural Knowledge and Experience
- Lack of Knowledge about Farm Business Planning
- Discrimination
- Student Loans
- Limited Access to Markets
- Affordable Housing and Affordable Healthcare
Source: Exploring the Barriers to Entry to Agriculture: Challenges Facing Beginning Farmers in North Carolina - Kelley Robbins-Thompson Reference: CIPS study guide page 80-81 LO 2, AC 2.2

NEW QUESTION # 70
A market has many buyers and suppliers. Loyalty is low and switching is common. Which market characteristic supports this behaviour?

• A. Supplier bargaining strength
• B. Barriers to market entry
• C. The availability of substitute products
• D. Increasing use of technology

Answer: C

Explanation:
Comprehensive and Detailed Explanation (from CIPS L4M2 - Market Dynamics) When substitute products are available, buyers can easily switch to alternatives, lowering loyalty and increasing price sensitivity.
Thus, Option C correctly identifies the key factor enabling frequent switching.
Relevant L4M2 references:
* "Impact of substitute products on buyer behaviour"
* "Porter's Five Forces - threat of substitutes"

NEW QUESTION # 71
To improve the productivity, Plantation Ltd is planning to purchase a tractor, which it has never bought before. The project must be quick to catch up with the next growing season. Leanne, a jun-ior procurement staff at the company, assumes that she could skip market analysis stage to save time. Is this assumption reasonable?

• A. Yes, the company has extensive experience in purchasing tractor
• B. Yes, Leanne just needs to purchase the tractor from her friend's company
• C. No, the company assesses supplier's performance solely based on market analysis
• D. No, market analysis will inform the company of the pricing as well as latest technology trends

Answer: D

Explanation:
Market analysis is a stage in CIPS Procurement and Supply Cycle. This stage informs the purchaser about the number of suppliers, the average pricing, and product trends. Even urgent purchase should undergo market analysis. Without undertaking this stage, the buying organisation may not purchase the right product, or they may purchase at higher price.

NEW QUESTION # 72
Which of the following standards specifies requirements for a quality management system?

• A. ISO 22000:2018
• B. ISO 27001
• C. ISO 14001:2015
• D. ISO 9001:2015

Answer: D

Explanation:
ISO 9001:2015 specifies requirements for a quality management system.
ISO 14001:2015 specifies the requirements for an environmental management system that an or-ganization can use to enhance its environmental performance. ISO 14001:2015 is intended for use by an organization seeking to manage its environmental responsibilities in a systematic manner that contributes to the environmental pillar of sustainability.
ISO 22000:2018 specifies food safety management systems - Requirements for any organization in the food chain ISO 27001 provides requirements for an information security management system.
LO 3, AC 3.1

NEW QUESTION # 73
An example of a direct cost is ...

• A. Office cleaning
• B. An overhead expense
• C. Raw material
• D. Rent for premises

Answer: C

NEW QUESTION # 74
Is ISO 14000 a series of environmental standards?

• A. No, it is a series of risk management standards including achieving objectives
• B. No, it is a series of quality standards including continuous improvement
• C. Yes, it is a series of environmental standards including life cycle analysis
• D. Yes, it is a series of information security standards including financial information

Answer: C

Explanation:
Comprehensive and Detailed Explanation (paraphrased from CIPS L4M2 content) CIPS L4M2 describes key international standards that can be used in specifications.
* ISO 14000 series - focuses on environmental management systems. It includes frameworks and guidance to help organisations reduce negative environmental impacts, comply with regulations, and continually improve environmental performance. Typical concepts include:
* Environmental policy and planning
* Environmental performance monitoring
* Life cycle thinking / analysis
By contrast:
* ISO 9000 series - quality management and continuous improvement.
* ISO 27000 series - information security.
* ISO 31000 - risk management.
So:
* Option B is correct: ISO 14000 is about environmental standards and explicitly includes life cycle analysis / life cycle considerations.
* The other options incorrectly associate ISO 14000 with quality, information security, or risk management.
Specifications in procurement can reference ISO 14000 requirements to embed environmental sustainability criteria into supplier requirements.
Relevant CIPS L4M2 areas:
* Use of standards (ISO 9000, ISO 14000 etc.) in specifications
* Environmental management and sustainability requirements
* Life cycle and environmental performance in defining business needs

NEW QUESTION # 75
Which of the following specific markets engage in creation, liquidation and change of ownership of stock?

• A. Agriculture
• B. Manufacturing
• C. Construction
• D. Financial
• E. Retail

Answer: D

Explanation:
According to Investopedia, the financial services sector provides financial services to people and corporations. This segment of the economy is made up of a variety of financial firms includ-ing banks, investment houses, lenders, finance companies, real estate brokers, and insurance com-panies. As noted above, the financial services industry is probably the most important sector of the economy, leading the world in terms of earnings and equity market capitalization. Large conglomerates dominate this sector, but it also includes a diverse range of smaller companies.
According to the finance and development department of the International Monetary Fund (IMF), financial services are the processes by which consumers or businesses acquire financial goods. For example, a payment system provider offers a financial service when it accepts and transfers funds between payers and recipients.
This includes accounts settled through credit and debit cards, checks, and electronic funds transfers.
Companies in the financial services industry manage money. For instance, a financial advi-sor manages assets and offers advice on behalf of a client. The advisor does not directly provide investments or any other product, rather, they facilitate the movement of funds between savers and the issuers of securities and other instruments. This service is a temporary task rather than a tangible asset.
Financial goods, on the other hand, are not tasks. They are things. A mortgage loan may seem like a service, but it's actually a product that lasts beyond the initial provision. Stocks, bonds, loans, commodity assets, real estate, and insurance policies are examples of financial goods.
Reference: CIPS study guide page 79-80
LO 2, AC 2.1

NEW QUESTION # 76
Company A sells a product for $100. The total unit variable costs are $60. Fixed costs as in its ac-count are
$20,000. How many products does the company have to sell to achieve break-even point?

• A. 0
• B. 1
• C. 2
• D. 3

Answer: B

Explanation:
Break even point = Fixed costs/(Price-variable cost). In this case, break even point = 20,000/(100-60) = 500

NEW QUESTION # 77
To strengthen its market presence, ABC Group decided to develop a new product. A cross-functional team was formed to discuss the scope and the functions of the product. They will also survey the potential customers to see what they like, what they love, and what they dislike. What is this process called?

• A. Value engineering
• B. Product standardisation
• C. Cash flow analysis
• D. Value analysis

Answer: A

Explanation:
As you can see from the scenario, ABC Group is developing the new product. It might be using value engineering. The latter sentences confirm this: the cross-functional team in ABC is mapping the functions and surveying the customers. Their method is known as Kano model.

NEW QUESTION # 78
An IT department has tasked procurement to help produce a conformance specification for new company laptops. Which factor is common within a conformance specification?

• A. Meets the specification standard
• B. Allows flexibility in the offering
• C. Meets the operational requirements
• D. Tends to be short and specific

Answer: A

Explanation:
Detailed Explanation:
Conformance specifications outline specific technical standards or requirements that a product must meet.
These ensure uniformity and compliance but do not allow flexibility for suppliers to innovate. Reference:
CIPS Level 4, Specification Standards.

NEW QUESTION # 79
As the lead procurement manager you have been asked to compile a business case for a large project. Which of the following should you include in the business case?
* Costs and risks
* List of large suppliers
* Business benefits
* Informal recommendation

• A. 1 and 4 only
• B. 1 and 3 only
• C. 2 and 3 only
• D. 2 and 4 only

Answer: B

Explanation:
Comprehensive and Detailed Explanation (from CIPS L4M2 - Business Case Development) A robust business case must:
* Quantify costs and risks (financial, operational, environmental).
* Identify and justify business benefits (savings, value, compliance, performance).
Supplier lists or informal notes are not appropriate inclusions.
Thus, Option A (1 and 3 only) is correct.
Relevant L4M2 references:
* "Structure and content of a business case"
* "Cost, risk, and benefit evaluation in justification"

NEW QUESTION # 80
It could be argued that wherever possible, specifications should be more output and outcome focused. Why is this?

• A. So that a specific branded product is provided
• B. To reduce the number of options available
• C. So that they can be amended easily after contract award
• D. To allow as many suppliers as possible to respond

Answer: D

NEW QUESTION # 81
Which of the following is the structured approach for defining customer requirements and translating them into technical specification?

• A. Thomas-Kilmann model
• B. Mendelow's matrix
• C. Quality function deployment
• D. Kano model

Answer: C

Explanation:
Quality function deployment (QFD) is a method to transform qualitative user demands into quantitative parameters, to deploy the functions forming quality, and to deploy methods for achieving the design quality into subsystems and component parts, and ultimately to specific elements of the manufacturing process.
Kano model of excitement and basic quality (Kano et al, 1984; Berger et al, 1993; Matzler et al, 1996) brings a different perspective for the analysis of improvement opportunities in products and services because it takes in consideration the asymmetrical and non-linear relationship between performance and satisfaction. The Kano model classifies customers requirements in five categories: basic requirements, performance requirements, attractive requirements, indifferent requirements and reverse requirements.
Mendelow's Matrix is a tool that may be used by an organisation to consider the attitude of their stakeholders at the start of a project or when they are setting out strategic objectives.
The Thomas Kilmann model identifies two dimensions when choosing a course of action in a con-flict situation, these are assertiveness and cooperativeness. Assertiveness is the degree to which you try to satisfy your own needs. Cooperativeness is the degree to which you try to satisfy the other person's concerns.
Reference: CIPS study guide page 32
LO 1, AC 1.2

NEW QUESTION # 82
One of the disadvantages of using standards in specification is that...

• A. Standards tend to be rigid and they often don't encourage innovation
• B. Standards lengthen the time to produce a specification
• C. Standards tend to be inaccurate and ambiguous, causing confusion among suppliers
• D. Standards don't allow the buyers to add health and safety requirements into the specification

Answer: A

Explanation:
Using standards in specification is very convenient. They reduce the time and effort to produce. They tend to be very accurate with correct technical terminologies. They are well recognised and accepted by a wide range of suppliers and buyers. However, since a standard is very specific, complex and lengthy, it requires a lot of time to be drafted and approved. Therefore, standard tends to be static and don't encourage innovation. It may also not accommodate latest technology and trends.
Reference: CIPS study guide page 125
LO 3, AC 3.1

NEW QUESTION # 83
James Hunter has received a price increase request from a supplier with its justification. The supplier has requested the price increase because there has been an increase in staff sickness absence. James has reviewed the original contract and found a buyer provision for 'risk for additional resource.' This is the first year the supplier has experienced a resource issue. What should James do?

• A. Accept the price increase
• B. Request additional budget
• C. Review the request in three months
• D. Reject the price increase

Answer: D

Explanation:
Detailed Explanation:
Given that the provision for 'risk for additional resource' exists and this is the first occurrence, James should reject the price increase as the supplier should account for these risks in their pricing. Reference: CIPS Level
4, Contract Management and Cost Control.

NEW QUESTION # 84
A procurement manager is requested to source a major component. She needs information on sup-pliers' direct and indirect cost, fixed and variable costs to prepare for negotiations. Therefore, she collects 17 annual reports from potential suppliers who are competing in the same industry. In order to estimate an approximate value of fixed and variable costs in that industry, which of the following technique should be adopted by the procurement manager?

• A. Total cost of ownership
• B. Variance calculation
• C. Line of best fit
• D. Open-book costing

Answer: C

Explanation:
Public annual reports can be a source of information that helps the procurement professional to analyse an industry's cost and revenue using the line of best fit. Line of best fit is one of the most important outputs of regression analysis. Regression refers to a quantitative measure of the relationship between one or more independent variables and a resulting dependent variable. Regression is of use to professionals in a wide range of fields from science and public service to financial analysis.
In this case, by collecting and analysing 17 annual reports, the procurement manager can find the line of best fit which goes approximately through the middle of the data points with an equal num-ber of data points above and below it.
The slope of the line of best fit is the approximate variable costs the industry. The easiest way to calculate it is to take a point at the right-hand end of the line of best fit and note its cost and output levels. Divide the cost by the output and this gives and approximate figure for the cost per unit of output or variable cost. This gives an approximate value for the industry fixed and variable costs.
Reference: CIPS study guide page 99-100
LO 2, AC 2.3

NEW QUESTION # 85
Which of the following problems may be identified as open-ended problems? Select TWO that apply:

• A. A cyber attack takes down whole company's IT system
• B. Logistics costs incur a large portion in wholesale prices
• C. Shortage of key medicines in healthcare industry
• D. The suppliers don't comply with the company's policy on underage labour.
• E. Engine failures cause flight cancellations.

Answer: B,D

Explanation:
Open-ended problem is something stopping the achievement of an objective or blocking progress. To solve this type of problems, procurement professional should find a way to unblock the block-age. In the above question, high logistics cost is an obstacle to cost cutting objective while suppli-er's incompliance prevents the company to achieve its sustainable objective.
Reference:
LO 1, AC 1.1

NEW QUESTION # 86
Which of the following are the fair and reasonable comparators in price analysis? Select TWO that apply:

• A. Cost driver
• B. Strike price
• C. Competitive bidding
• D. Pricing formula
• E. Price indices

Answer: D,E

Explanation:
Price Analysis is the process of deciding if the asking price for a product or service is fair and rea-sonable, without examining the specific cost and profit calculations the vendor used in arriving at the price. It is basically a process of comparing the price with known indicators of reasonableness. When adequate price competition does not exist, some other form of analysis is required. Some reasons that could affect adequate price competition are: specifications are not definitive, tolerances are restrictive, or production capacity limits those eligible to bid.
Examples of other forms of price analysis information include:
* Analysis of previous prices paid
* Comparison of vendor's price with the in-house estimate
* Comparison of quotations or published price lists from multiple vendors
* Comparisons with government agencies (such as GSA in the US) published prices A strike price is the set price at which a derivative contract can be bought or sold when it is exercised. For call options, the strike price is where the security can be bought by the option holder; for put options, the strike price is the price at which the security can be sold. Strike price is also known as the exercise price.
A cost driver is the direct cause of a cost and its effect is on the total cost incurred. For example, if you are to determine the amount of electricity consumed in a particular period, the number of units consumed determines the total bill for electricity. In such a scenario, the number of units of electricity consumed is a cost driver.
Reference: CIPS study guide page 35
LO 1, AC 1.2

NEW QUESTION # 87
......

One of the primary objectives of the CIPS L4M2 exam is to equip learners with the skills and knowledge to define business needs accurately. This involves understanding the needs of the business, identifying gaps, and developing strategies to address those gaps. L4M2 exam also covers the importance of engaging with stakeholders to ensure that the business needs are fully understood and that solutions are developed collaboratively.

 

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