3 Questions, 3 Answers
September/October 2011, eSide Supply Management Vol. 4, No. 5
In every edition, eSide offers three sample questions — and answers — from the CPSM® Diagnostic Practice Exam to help you prepare to pursue your CPSM® certification. First, answer all three questions; then, scroll down to the "3 Answers" section to find out how you fared.
Question #1: All of the following are generally true about global (as opposed to domestic) negotiations EXCEPT
(A) the implications of gift-giving are different
(B) it usually takes less time to negotiate a contract
(C) an interpreter may be required
(D) buyers and sellers become acquainted on a social basis
Question #2: Which of the following exchange rates are set by governments?
(A) Differential and floating
(B) Fixed and differential
(C) Variable and differential
(D) Variable and floating
Question #3: Which of the following is LEAST likely to be an element of a business plan?
(A) Human resources evaluation
(B) Marketing strategy development
(C) Raw material availability study
(D) Risk identification
Question #1: Option B is correct because there is no direct correlation between global versus domestic negotiations and the time needed. Also, the added complexities of global negotiations may tend to lengthen the process rather than shortening it, since customs (Options A and D) and language differences (Option C) might require extra preparation.
References: ISM Professional Series (Book 1 — Foundation of Supply Management), page 299; The Supply Management Handbook (7th Edition), pages 40-42.
Question #2: Option B is correct because governments set the fixed and differential exchange rates, but floating and variable rates are determined by market forces. Differential exchange rates differ from fixed rates because they are specific to the nature of the goods and services imported, rather than fixed for all transactions involving global imports.
References: CPSM® Study Guide, 1st Edition (Book 2 — Effective Supply Management), page 19; ISM Professional Series (Book 1 — Foundation of Supply Management), pages 309-314; ISM Professional Series (Book 2 — Effective Supply Management Performance), pages 105-106.
Question #3: Option C is correct because raw material availability is not one of the seven key areas defined in business planning. Those areas are: business overview, marketing plan, market strategy (Option B), management and human capital (Option A), operations capabilities, financial plan, and critical business risks (Option D).
References: CPSM® Study Guide, 1st Edition (Book 3 — Leadership in Supply Management), pages 13-17; ISM Professional Series (Book 3 — Leadership in Supply Management), pages 148-149.
For more information on ISM's professional credentials, visit the Institute's website.
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