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CIPS L6M9 Exam - Topic 3 Question 23 Discussion

XYZ Ltd is a perfume manufacturer based in France. They have created a new perfume and research has shown that demand for the perfume will outstrip supply. The Chief Operating Officer (COO) and the Chief Financial Officer (CFO) are meeting to discuss this. The COO believes that the organisation needs to reallocate resources in order to meet demand. Are there any exceptions to when this may be the case?
C) Yes - there are occasions when an organisation would choose not to fulfil customer demand
A) No - organisations should always aim to meet customer demand or resources will be underutilised
B) No - this would negatively affect the profit the organisation could make
D) Yes - there are exceptions, but these are always outside of the organisation's control

CIPS L6M9 Exam - Topic 3 Question 23 Discussion

Actual exam question for CIPS's L6M9 exam
Question #: 23
Topic #: 3
[All L6M9 Questions]

XYZ Ltd is a perfume manufacturer based in France. They have created a new perfume and research has shown that demand for the perfume will outstrip supply. The Chief Operating Officer (COO) and the Chief Financial Officer (CFO) are meeting to discuss this. The COO believes that the organisation needs to reallocate resources in order to meet demand. Are there any exceptions to when this may be the case?

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Suggested Answer: C

While organisations generally try to fulfil customer demand, there are times when they strategically choose not to. A common reason is maintaining a premium image---limiting supply can increase desirability and justify a higher price. For example, luxury brands often limit product availability. (See p.169)


by Bettyann at May 15, 2026, 04:06 PM

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Jeff
11 hours ago
Always meet demand, or you're losing money!
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Derick
6 days ago
I recall that meeting demand isn't always the best move financially, so maybe B has some merit, but I still feel uncertain about it.
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Colby
11 days ago
I practiced a similar question where the focus was on resource allocation, and I think there are definitely exceptions, so I lean towards C or D.
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Josphine
16 days ago
I'm not entirely sure, but I think there are cases where fulfilling demand could lead to quality issues, which might support option C as well.
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Annamae
2 months ago
I remember discussing how sometimes companies might prioritize long-term strategy over immediate demand, so I think C could be right.
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