Chapter 6 — Category Strategy Development
Analytic
47. Which of the following is not one of the examples of Porter’s threat of substitute products and services?
a.
Relative performance of substitutes.
b.
Relative price of substitutes.
c.
Switching costs.
d.
Buyer propensity to substitute.
e.
Economies of scale.
Easy
Bloom’s: Remembering
Analytic
48. All of the following are examples of Porter’s power of buyers except _____.
a.
buyer concentration
b.
exit barriers
c.
price sensitivity
d.
brand identity
e.
buyer volume
Easy
Analytic
49. Which of the following is not one of the examples of Porter’s power of suppliers?
a.
b.
c.
d.
e.
Easy
Bloom’s: Remembering
Analytic
50. In supplier analysis, _____ requires identifying critical performance criteria and identifying relative competitive
performance.
a.
benchmarking
b.
make/buy analysis
c.
insourcing/outsourcing analysis
d.
Porter’s Five Forces analysis
Chapter 6 — Category Strategy Development
e.
cost analysis
Easy
Analytic
51. The _____ is a solicitation document that is used by organizations to obtain general information about services,
products, or suppliers and is used generally before a specific requisition of an item is issued.
a.
e-RA
b.
PO
c.
RFP
d.
RFI
e.
RFQ
Moderate
Analytic
52. The goal of _____ is to be able to understand, identify, and exploit cost savings opportunities that may have been
overlooked by business unit managers or even by suppliers in bringing the products and services to the appropriate
location.
a.
Marketing research
b.
Make-buy analysis
c.
Value chain analysis
d.
Price analysis
e.
Cost analysis
Moderate
Analytic
53. [A] _____ is required to identify the specific capabilities and financial health of key suppliers that are in the supply
base or that may not currently be in the supply base.
a.
Make-buy analysis
b.
supplier evaluation scorecard
c.
Price analysis
d.
Portfolio analysis
e.
Supplier research
Easy
Analytic
54. [A] _____ is a tool to structure and segment the supply base and is used as a means of classifying suppliers into one of
four types.
a.
Supplier scorecard
b.
Portfolio analysis
c.
Make-buy analysis
d.
Price analysis
e.
Value chain analysis
Easy
Analytic
55. Which of the following is not one of the four categories found in a portfolio analysis matrix?
a.
Critical.
b.
Routine.
c.
Leverage.
d.
Commodity.
e.
Bottleneck.
Easy
Analytic
56. All of the following are goals for a strategic category except _____.
a.
develop a competitive advantage
b.
support and leverage the supplier’s core competencies
c.
develop best-in-class suppliers
d.
support the company’s overall strategy
e.
simplification of the procurement process using electronic tools
Moderate
Analytic
57. Which of the following is not one of the goals for sourcing a routine commodity?
a.
Reduce the number of items through substitution.
b.
Elimination of small volume spend.
c.
Conduct of a detailed negotiation to improve supplier capability.
d.
Elimination of duplicate SKUs.
e.
Simplification of the procurement process using electronic tools.
Chapter 6 — Category Strategy Development
58. A _____ has a high volume of internal consumption, is readily available, is important to the business, and represents a
significant proportion of spend.
a.
leverage commodity
b.
portfolio commodity
c.
critical commodity
d.
routine commodity
e.
bottleneck commodity
59. A _____ has unique requirements or niche suppliers, yet is significant to the business.
a.
critical commodity
b.
bottleneck commodity
c.
matrix commodity
d.
routine commodity
e.
leverage commodity
60. In supplier evaluation, different aspects of _____ include management’s commitment to continuous process and
quality improvement, its overall professional ability and experience, its ability to maintain positive relationships with its
workforce, and its willingness to develop a closer working relationship with the buyer.
a.
management capability
b.
process and design capabilities
c.
financial condition and cost structure
d.
planning and control systems
e.
environmental regulation compliance
61. In supplier evaluation, a _____ includes those systems that release, schedule, and control the flow of work in an
organization.
a.
logistics system
b.
cost accounting system
c.
traffic management system
d.
planning and control system
e.
warehouse management system
62. In the _____ of the process of supplier segmentation, the supplier views the buyer as a core customer, as the size of
the account is significant to the supplier, and the account is also important from a strategic perspective.
a.
COMMODITY segment
b.
DEVELOP segment
c.
EXPLOIT segment
d.
NUISANCE segment
e.
CORE segment
63. In the _____ of the process of supplier segmentation, the attractiveness of the buyer as a customer is significant and
important to the supplier, but perhaps the historical volume of business with the buyer has been relatively low.
a.
EXPLOIT segment
b.
CORE segment
c.
DEVELOP segment
d.
PRICE segment
e.
NUISANCE segment
64. In the _____ of the process of supplier segmentation, suppliers have a significant portion of the buyer’s spend but do
not view the buyer as an important customer.
a.
NUISANCE segment
b.
COMMODITY segment
c.
DEVELOP segment
d.
EXPLOIT segment
Chapter 6 — Category Strategy Development
e.
CORE segment
Moderate
Analytic
65. In the _____ of the process of supplier segmentation, the supplier views the buyer as an unimportant customer, and to
make the situation worse, the volume the buyer has with this supplier is insignificant to the supplier.
a.
NUISANCE segment
b.
CORE segment
c.
EXPLOIT segment
d.
DEVELOP segment
e.
None of the above.
Moderate
Analytic
66. A/An _____ may be used as a decision support tool in which the sourcing team assigns a weight to the different
categories and develops a numerical score for each supplier in each category, thereby developing a final performance
score.
a.
make-buy analysis
b.
portfolio analysis matrix
c.
reverse auction
d.
e-catalog
e.
supplier selection scorecard
Moderate
Analytic
67. A/An _____ has demonstrated its performance capabilities through previous purchase contracts and, therefore,
receives preference during the supplier selection process.
a.
commodity supplier
b.
preferred supplier
c.
sole source supplier
d.
new supplier responding to a RFQ
e.
marginal supplier
Easy
Analytic
68. A/An _____ is a formal request for the suppliers to prepare bids, based on the terms and conditions set by the buyer.
a.
RFQ
b.
purchase order
c.
RFI
d.
supplier analysis
e.
e-RA
Easy
Bloom’s: Remembering
Analytic
69. Buying firms use competitive bidding when _____ is a dominant criterion and the required items or services have
______ specifications.
a.
price….unique
b.
delivery….unique
c.
product performance….straightforward
d.
design….unique
e.
price….straightforward
Moderate
Bloom’s: Understanding
Analytic
70. Competitive bidding is most effective when all of the following conditions apply except when _____.
a.
the buying firm can provide qualified suppliers with clear descriptions of the items or services to be purchased
b.
volume is high enough to justify the cost and effort
c.
the firm does not have a preferred supplier
d.
the item is new or technically complex, with only vague specifications
e.
None of the above conditions apply to competitive bidding.
Moderate
Bloom’s: Remembering
Analytic
71. Face-to-face negotiation is best when all of the following conditions apply except when _____.
a.
the item is new or technically complex, with only vague specifications
b.
the purchase requires agreement about a wide range of performance factors
c.
the firm does not have a preferred supplier
d.
the buyer requires the supplier to participate in the development effort
e.
the supplier cannot determine risks and costs without additional input from the buyer
Chapter 6 — Category Strategy Development
Moderate
Analytic
72. A _____ is used in regularly scheduled review meetings with suppliers, so that deficiencies in performance can be
noted, discussed, and acted upon.
a.
supplier scorecard
b.
make-buy analysis
c.
competitive bidding process
d.
portfolio analysis
e.
cost analysis
Easy
Analytic
73. _____ is the process of determining the appropriate number and mix of suppliers to maintain.
a.
Make-buy analysis
b.
Competitive bidding
c.
Supply base optimization
d.
Portfolio analysis
e.
Price analysis
Easy
Analytic
74. Which of the following is not true in regards to low-cost country sourcing?
a.
Low-cost country sourcing can be used to access new markets or to gain access to the same suppliers that are
helping global companies become more competitive.
b.
Although there has been a strong push to source from emerging BRIC countries in search of lower costs, there
has also been a strong push toward sourcing in these countries because of local content requirements
established by governments in these areas.
c.
Global sourcing is an opportunity to gain exposure to product and process technology, increase the number of
available sources, satisfy countertrade requirements, and establish a presence in foreign markets.
d.
Some buyers source globally to introduce competition to domestic suppliers.
e.
Firms are highly experienced with global business processes and practices, and there are many personnel
qualified to develop and negotiate with global suppliers or manage material pipelines.
Moderate
75. _____ is a simultaneous engineering approach that occurs between buyer and seller and seeks to maximize the benefits
received by taking advantage of the supplier’s design capabilities.
a.
Supplier development
b.
Early supplier design involvement
c.
Total cost of ownership
d.
Supplier relationship management
e.
Supply base optimization
Easy
Analytic
76. _____ is the process of identifying cost considerations beyond unit price, transport, and tooling.
a.
Total cost of ownership
b.
Price analysis
c.
Make-buy analysis
d.
Portfolio analysis
e.
Low-cost country sourcing
Easy
Analytic
77. Which of the following elements is false regarding Phase 1, Basic Beginnings, of supply management strategy
development?
a.
Quality/cost teams.
b.
Longer-term contracts.
c.
Volume leveraging.
d.
Supply-base consolidation.
e.
Early sourcing.
Easy
Analytic
78. Which of the following elements is false regarding Phase 2, Moderate Development, of supply management strategy
development?
a.
e-RAs.
b.
Ad hoc supplier alliances.
Analytic
Chapter 6 — Category Strategy Development
c.
International sourcing.
d.
Global supply chains with external customer focus.
e.
Supply-base optimization.
79. Which of the following elements is false regarding Phase 3, Limited Integration, of supply management strategy
development?
a.
Supplier quality focus.
b.
Global sourcing.
c.
Ad hoc supplier alliances.
d.
Volume leveraging.
e.
Long-term contracts.
80. Which of the following elements is true regarding Phase 4, Fully Integrated Supply Chains, of supply management
strategy development?
a.
Cross-functional sourcing teams.
b.
Cross-enterprise decision making.
c.
Quality/cost teams.
d.
International sourcing.
e.
Total cost of ownership.