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CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions:

1. GlobalPharm Ltd, a pharmaceutical company, has engaged a third-party auditor to assess its compliance with regulatory standards. During the audit, the company identifies potential risks. What is the most significant challenge GlobalPharm Ltd might face when working with a third-party auditor?

A) Loss of operational control over manufacturing processes
B) Reputational damage if non-compliance issues are exposed
C) Lack of independence in the auditor's recommendations
D) Reduced decision-making authority within management

2. A group of small-scale coffee farmers in a rural village has been receiving the Fairtrade Premium for their products. During a recent community meeting, they discuss how to allocate the premium funds for the upcoming year. Which of the following projects would best align with the principles of the Fairtrade Premium in addition to the fair trade price?

A) Investing in building a community health clinic to improve access to healthcare for all villagers
B) Allocating the funds to one farmer to expand their personal farming business
C) Distributing the funds equally among the farmers to use as they see fit
D) Using the funds to subsidize private education for the children of the wealthiest farmers

3. EcoTech Solutions, a small business based in Canada, is exploring the possibility of developing its own environmental management system rather than adopting a widely recognized standard. What are two potential advantages of this approach? Select any TWO

A) It ensures compliance with local regulations and requirements
B) It may be simpler for customers to understand
C) It could result in lower implementation costs
D) This is a form of greenwashing

4. Which of the following best defines a cartel, and which party in the supply chain is most impacted by it?

A) A coalition of businesses to increase competition; primarily affects shareholders
B) A formal agreement between competing firms to set prices and limit production; primarily affects consumers
C) An informal agreement among suppliers to lower costs; primarily affects retailers
D) A collaboration between manufacturers to innovate; primarily affects suppliers

5. A seafood company in Country Z sources fish from a supplier employing migrant workers. An investigation reveals that the workers were charged excessive recruitment fees, leading to severe debt. Upon arrival, their passports were confiscated, and they were forced to work on fishing vessels for months without fair pay or rest. Those who attempted to leave or report the abuse faced threats of violence. Which labor rights violation best describes this situation?

A) Discrimination
B) Child labor
C) Forced labor
D) Sexual exploitation

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