CIPS Exam L4M8 Topic 11 Question 43 Discussion

Actual exam question for CIPS's L4M8 exam

Question #: 43
Topic #: 11

[All L4M8 Questions]

Explain how a lack of understanding of a global supplier's culture and ethical behavior could cost buying organization money.

AExplanation:
Organizational culture is made up of behaviors, traits, values and beliefs and these differ signifi-cantly across the globe. Gestures that may be positive in one country can be highly offensive in another. This culture could mean; for example, individualistic/collectivistic, masculine/feminine, uncertainty avoidance, power distance, Time perspective, indulgence/restraint.
When negotiating and forming contracts within the extended supply chain, it is important that the culture of the suppliers is understood to be compatible with the buying organization or else their might be loss of reputation, time, money material and equipment.
Also, being not aware of what is an acceptable ethically behavior in global sourcing can cost a buying organization. In some countries, bribery and kickbacks are a standard part of doing business. If procurement professional is not aware of the fact that some countries methods of doing business involves or expect kickbacks, for example, this could be costly to the organization and cancel out any savings that had originally been seen.
Cost of poor quality and rework: if the product or service quality is poor the organization may not satisfy it customers and this can lead to a loss of reputation in the market. For example, a residential building construction company contracting a supplier that supply would require home owners to reinstall a new door within three months. The organization would spend more funds in carrying out rework.
More administrative cost in contract management: an organization will have to manage it sup-pliers and the contracts to ensure they are delivering what they were contracted to do. A poor con-tract management is a waste in the process of delivery that can lead to loss of money. Also, to cor-rect this would cost the organizations administrative cost.

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by Felix at Sep 09, 2024, 08:04 PM

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2 months ago

I can definitely see how a lack of cultural awareness could lead to some costly mistakes. The bit about bribery and kickbacks being normal in some countries is especially eye-opening. Gotta do your homework, am I right?

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Trina

22 days ago

Doing proper research before engaging with global suppliers is key to avoiding costly mistakes.

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Derick

1 months ago

Absolutely, it's crucial to understand the ethical norms of different countries.

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Roosevelt

1 months ago

Yes, cultural differences can really impact business relationships.

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2 months ago

I think not understanding a global supplier's culture can lead to misunderstandings and conflicts.

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