Pass the CIPS CIPS Level 5 Advanced Diploma in Procurement and Supply L5M6 Questions and answers with CertsForce

The correct answer is Maturity. In the industry lifecycle model, markets evolve through stages: birth, growth, maturity, and decline. Tulipa Ltd initially saw high growth, reflecting the growth stage, where demand is rising, and market share is expanding. However, for the past two years, share has plateaued, suggesting the market has stabilised, which is a key characteristic of the maturity stage.

At maturity, the market is often saturated, with limited opportunities for expansion. Competition becomes more intense, innovation slows, and firms compete largely on efficiency, branding, or incremental improvements. Unlike decline, the market is still viable and profitable, but growth rates are flat.

The study guide also introduces an intermediate stage called shakeout, occurring between growth and maturity, where weaker competitors exit. Tulipa’s situation has passed growth but has not yet entered decline, making maturity the correct classification.

[Ref: CIPS L5M6 Study Guide, p.175 – Industry Lifecycle and Procurement Strategy]

The correct answer is Inducement, which is not one of Cialdini’s principles. The seven principles are:

Reciprocity – people return favours.

Commitment/Consistency – people stick with commitments.

Social Proof/Consensus – people follow others.

Authority – people respect expertise.

Liking – people are influenced by those they like.

Scarcity – people value what is limited.

Unity – people are influenced by shared identity.

Cialdini’s framework is widely applied in procurement negotiations and stakeholder management. For instance, demonstrating scarcity can strengthen a supplier’s case for urgency, while using authority enhances credibility during negotiations.

Understanding these principles allows category managers to influence stakeholders and suppliers effectively, building alignment and driving successful outcomes.

[Ref: CIPS L5M6 Study Guide, p.66 – Cialdini’s Principles of Persuasion]

The Pareto Principle, also known as the 80/20 Rule, states that around 80% of outcomes are generated by 20% of inputs. In category management, this means that a small number of categories often account for the majority of total spend. Identifying these high-impact categories allows procurement professionals to focus resources where they deliver the most value. For example, managing a few strategic or high-spend categories rigorously may yield more savings and risk reduction than spreading efforts across all categories equally. The principle reinforces the need for prioritisation and focus in procurement strategies. While Six Sigma and Porter’s Five Forces are useful tools in other contexts, they are unrelated to spend distribution. Applying Pareto effectively helps organisations achieve better results with limited resources by focusing on what matters most.

Making ethics and compliance a priority [B] ensures supplier selection considers regulatory and social responsibility aspects.

Communicating values across the supply chain [C] builds alignment and accountability.

A and D are incorrect because having a CSR policy doesn’t guarantee practice, and low-cost country sourcing does not automatically mean non-compliance.

[Ref: CIPS L5M6 Study Guide, p.107 – Ensuring compliance in supply chains]

Within the Boston Consulting Group [BCG] Matrix, a Cash Cow represents a product or business unit that holds a high market share in a low-growth market. These products typically generate strong and stable cash flows because they dominate their markets with little new competition. Although growth opportunities are limited, these units require minimal investment and often fund other parts of the business.

For example, a well-established soft drinks brand in a mature market is a classic cash cow. While sales are stable and market share is high, growth potential is low due to saturation. This differs from:

Stars [high share, high growth] which require significant investment.

Question Marks [low share, high growth] which may or may not succeed.

Dogs [low share, low growth] which are often candidates for divestment.

In category management, identifying cash cows helps procurement teams prioritise efficiency and cost management, ensuring these categories remain profitable without heavy strategic input.

[Ref: CIPS L5M6 Study Guide, p.117 – BCG Matrix and procurement strategy]

A Category Board [sometimes called a Category Council or Committee] is a cross-functional group of stakeholders responsible for overseeing the development and implementation of a category strategy. It brings together representatives from procurement, finance, operations, and other relevant departments to ensure that sourcing decisions align with overall business objectives.

While boards may also review spending or risk, their main role is strategic governance. They provide input into category planning, approve strategies, resolve conflicts, and ensure stakeholder buy-in. This collaboration is essential, as category management is a cross-functional discipline that cannot succeed if procurement operates in isolation.

Options A and B are too narrow, while option D is unrealistic—no body can “mitigate all risks.” Instead, the board ensures risks are recognised and addressed within the strategy.

The study guide highlights the importance of such structures in embedding category management within an organisation’s governance framework.

[Ref: CIPS L5M6 Study Guide, pp.614 – Category Boards and governance in category management]

Buyer strength increases when order volumes are large, as this gives leverage in negotiations and can improve pricing and terms. The other options do not necessarily strengthen buyer power.