CIPS L4M6 Exam With Confidence Using Practice Dumps

Comprehensive and Detailed Explanation:

The Kraljic Matrix is a strategic tool used to segment the supply base and develop differentiated purchasing strategies based on two key dimensions:

Profit Impact (Level of Spend):This refers to the financial significance of the item or service to the organization. High expenditure items have a greater impact on profitability and thus require more strategic sourcing approaches.

Supply Risk (Market Structure):This pertains to the complexity and dynamics of the supply market, including factors like the number of suppliers, market competitiveness, and potential for supply disruptions. Understanding the market structure helps in assessing the risk associated with sourcing particular items.

By analyzing these two factors, organizations can categorize their purchases into four quadrants—non-critical, leverage, bottleneck, and strategic items—and tailor their sourcing strategies accordingly.

Explanation

A product with an ‘inelastic price’ means that consumption doesn’t really depend on how much it costs. So you could increase the price of alcohol and cigarettes and people would tend to still buy them. A product with an elastic price means that a change in price would have a large affect on the number of people who bought the item. See p.95 for more details on price elasticity.

Explanation

This is 'cost focus' - Kinky Boots is both focusing on being a cost leaser (by providing the cheapest products) and focusing on a niche market (drag queens). When these two strategies are combined it is called 'cost focus'. There's a couple of questions on Porter's Generic Strategies in the exam- there's a useful diagram of this on P.13