L4M2 Exam Dumps : Defining Business Needs

Comprehensive and Detailed Explanation (paraphrased from CIPS L4M2 content)

In CIPS L4M2, a business case is defined as the document or analysis that:

Sets out the need or problem,

Identifies and compares options (including “do nothing”),

Assesses the costs, benefits, risks and impacts of each option,

Provides a clear recommendation supported by evidence.

Its primary purpose is to provide decision-makers with a justification for investment or change, based on a structured evaluation.

Thus:

Option A – correctly describes the main purpose: assessing costs and benefits of options.

Options B, C and D – these are decisions or outputs that might be informed by a business case, but they are not what a business case “allows” by definition.

Approving sourcing strategies or supplier lists is normally part of procurement governance, influenced by the business case but not the same as it.

Approving final spend is a financial approval decision that follows from the business case evaluation.

Relevant CIPS L4M2 areas:

Structure and purpose of a business case

Option appraisal, costs, benefits and risk analysis

The role of the business case in justifying external sourcing

Explanation

According to Michael Porter, the threat of substitution, is a function of three factors:

• The relative value/ price of a substitute compared to an industry’s product

• The cost of switching to the substitute

• The buyer’s propensity to switch

(Porter, Michael E.. Competitive Advantage: Creating and Sustaining Superior Performance (p. 278). Free Press. Kindle Edition.)