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CIPS L4M2 Defining Business Need review best study guide 2024/25 update
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contains practice questions designed to mimic the real CIPS exam format, which is likely multiple-choice questions
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CIPS L4M2 Defining Business Need review best study guide 2024/25 update1. Fixed Cost (FC): Costs that remain the same irrespective of business activity orvolume
2. Variable Cost (VC): Costs that vary with the level of output
3. Market Factors: ObjectivesDrivers
Governance
Ownership
Commodity or Non-Commodity
4. Break-Even Point (BEP): When total costs are equivalent to sales revenue (afterthis, it is profit)
5. Solving a Problem: SCAMPER
Substitute
Combine
Adapt
Modify
Put to other uses
Eliminate Reverse
6. 3 Stages of the Priceberg: 1. TCA
2. Maintenance
3. Disposal
7. Identifying Business Needs - RAQSCI: RegulatoryAvailability
Quality
Service RequirementsCost
Innovation
8. Direct Costs: Directly associated with the production of a good or service e.g. acomponent
9. Indirect Costs: General running costs/Overheads
Costs not easily attributed to specific goods or services e.g. electricity
10. Semi-Variable Costs: Made up of fixed and variable costs
11. An industry is defined by...: A seller
12. A market is defined by...: A buyer
13. Straight Re-Buy: The purchase of an item that was purchased last time therewas a need rather
than considering an alternative
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, CIPS L4M2 Defining Business Need review best study guide 2024/25 update
E.g. Utilities, Raw Materials or Maintenance, Repair and Operational (MRO) items
14. Modified Re-Buy: The purchase of an item that was purchased previously butwith changes to the
specification or supplier
15. New Purchase: The purchase of an item for the first time
16. Closed Problem: These appear when something happens that should not havehappened
17. Open-Ended Problem: These are where something is stopping the achieve-ment of an objective
or blocking progress
18. Solving a Problem: 5 Whys
19. Return of Investment: A measure of profitability that indicates whether a gainor loss has been
generated compared with the initial cost
20. Types of Research: DeskField
RFI
21. Purchase Cost Analysis: The analysis of the cost of the individual materials,components and
activities that make up a purchased item
22. Purchase Cost Analysis Techniques:
23. Segmentation Model for PCA:
24. Attractiveness of Market Vs Account:
25. TCA Costs: Delivery
Resources
Purchase PricePO
Training
Testing
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