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  1. Home
  2. CIPS Certification
  3. L5M5 Exam
  4. CIPS.L5M5.v2025-11-24.q71 Dumps
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Question 61

How do Fair Trade organizations protect raw material producers from economic hardship?

Correct Answer: B
Choice B- Fair Trade ensures producers receive a guaranteed minimum price or local living wage for their goods, providing financial security and protection against market fluctuations. This is the correct answer.
Incorrect answer:
Choice A- This is important for community development but does not directly address the immediate economic stability of producers.
Choice C- Although improving working conditions is a key component of Fair Trade, it does not directly protect producers from economic hardships related to pricing or income stability.
Choice D- Labeling products as Fair Trade can help attract ethical consumers, but it doesn't directly protect producers from unstable economic conditions.
Reference:
LO-3.3; Page 295; The World Fair Trade Organization (WFTO) and its principles and Charter of Fair Trade and implications for procurement and supply
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Question 62

Labour standards facilitate international trade and there are international regulations to secure this. Is this statement TRUE?

Correct Answer: C
Comprehensive and Detailed Explanation From Exact Extract of Documents:
The correct answer is that labour standards vary from country to country. According to the L5M5 study guide (p.85), while international conventions exist (e.g., ILO conventions), there is no single binding international law regulating labour standards across all nations. Instead, each country enforces its own rules regarding wages, hours, and working conditions. Some countries have strict protections, while others may have weak or poorly enforced standards. Therefore, procurement professionals must apply due diligence and supplier audits when sourcing internationally, as ethical risks arise in jurisdictions with lower labour protections.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.85
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Question 63

A discrimination claim has been filed against ASDA Stores Ltd, a leading UK retailer. The claimant alleges discrimination based on skin color and religion, violating the Equality Act 2010. If the claim is successful, what is the maximum compensation award?

Correct Answer: D
Choice D- For a breach of Equality Act 2010, there is no limit on the award of compensation in a discrimination claim. Thus is the correct answer.
Incorrect answer:
Choice A - 90 days' pay per employee is an award relating to dismissal on grounds of redundancy not discrimination.
Choice B - The average award for unfair dismissal is around £10,000 only not discrimination.
Choice C -The maximum penalty that employers had to pay for non-compliance with national living wage law is £20,000 per worker, which is not concerned with discrimination.
Reference:
LO-1.3; Page 40; Role of EDI in securing ethical and sustainable procurement and supply arrangements
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Question 64

During the transition period at the end of a contract, which of the following is usually the most difficult or complicated to organise?

Correct Answer: D
Comprehensive and Detailed Explanation From Exact Extract of Documents:
Knowledge transfer and Intellectual Property (IP) rights are often the most difficult elements to manage during contract termination. The L5M5 study guide (p.241) explains that physical assets and documents can be returned easily, but IP rights and tacit knowledge (e.g., processes, experience, trade secrets) are harder to transfer and may be contested between parties. Disputes may arise over ownership of IP developed during the contract. Procurement professionals must establish clear exit strategies early in the contracting process to address these issues and avoid disputes at termination. This ensures continuity and protects business interests while maintaining ethical standards.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.241
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Question 65

What forms of organisation form the Ethical Trading Initiative (ETI)? Select THREE

Correct Answer: A,D,E
Comprehensive and Detailed Explanation From Exact Extract of Documents:
The Ethical Trading Initiative (ETI) is a leading alliance focused on improving working conditions in global supply chains. The L5M5 study guide (p.260) explains that ETI membership comprises:
Private businesses (such as retailers and brands),
Non-Governmental Organisations (NGOs), and
Trade Unions.
This tripartite approach enables collaboration between commercial, labour, and social interests to improve standards. Governments are not direct members, although their legislation can influence ethical trading. Public sector bodies may adopt ETI principles but are not core members. ETI's Base Code, founded on ILO conventions, outlines key principles including no forced labour, freedom of association, and fair working conditions.
Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.260
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