CPCU 520 Chapter 10 Questions and Answers| New Update with 100% Correct Answers
Strategic management process The process an organization uses to formulate and
implement its business strategies
Mission statement A broad expression of an entity's goals
Three steps of a strategic management process Strategy formulation
Strategy implementation
Strategy evaluation
SWOT analysis A method of evaluating the internal and external environments by assessing
an organization's internal strengths and weaknesses and its external opportunities and threats
Strategy formulation steps 1. Internal analysis (SWOT)
2. develop long term strategies and organizational goals
3. determine strategies at different levels of the organization (who, what and when)
Functional structure an organizational structure in which departments are defined by the
operation they perform
Strategy implementation steps for Executives 1. Design the organizational structure
2. Determine the degree of centralization
3. Communicate
Multidivisional structure An organizational structure in which divisions are organized into
separate profit centers
, Cost leadership A business level strategy through which a company seeks cost efficiencies in
all operational areas
Strategy implementation steps for mid level management 1. Create a roadmap of the
specific processes, tasks and responsibilities necessary to disseminate the corporate strategy
2. Communicate clearly throughout the organization
3. Assign specific responsibilities, tasks, authority and accountability
4, Allocate adequate resources for successful implementation
5. Manage variances between goals and interim periods
Strategy evaluation Establish standards
Create and apply measures
Compare actual results to standards
Evaluate and implement corrective actions if goals are not met
Example of steps in a control process applied to Underwriting Establish standard - Annual CR
under 100
Create and apply measures - monthly reports
Compare actual to standard - measure monthly
Evaluate corrective action if needed
Three categories of organizational controls that can be used to monitor goals Financial
Operational or Process - example: average cost to settle a claim
Human or behavior - OSPE
An insurer's success depends on its ability to __________________ analyze the changing
environmental factors and influences
Strategic management process The process an organization uses to formulate and
implement its business strategies
Mission statement A broad expression of an entity's goals
Three steps of a strategic management process Strategy formulation
Strategy implementation
Strategy evaluation
SWOT analysis A method of evaluating the internal and external environments by assessing
an organization's internal strengths and weaknesses and its external opportunities and threats
Strategy formulation steps 1. Internal analysis (SWOT)
2. develop long term strategies and organizational goals
3. determine strategies at different levels of the organization (who, what and when)
Functional structure an organizational structure in which departments are defined by the
operation they perform
Strategy implementation steps for Executives 1. Design the organizational structure
2. Determine the degree of centralization
3. Communicate
Multidivisional structure An organizational structure in which divisions are organized into
separate profit centers
, Cost leadership A business level strategy through which a company seeks cost efficiencies in
all operational areas
Strategy implementation steps for mid level management 1. Create a roadmap of the
specific processes, tasks and responsibilities necessary to disseminate the corporate strategy
2. Communicate clearly throughout the organization
3. Assign specific responsibilities, tasks, authority and accountability
4, Allocate adequate resources for successful implementation
5. Manage variances between goals and interim periods
Strategy evaluation Establish standards
Create and apply measures
Compare actual results to standards
Evaluate and implement corrective actions if goals are not met
Example of steps in a control process applied to Underwriting Establish standard - Annual CR
under 100
Create and apply measures - monthly reports
Compare actual to standard - measure monthly
Evaluate corrective action if needed
Three categories of organizational controls that can be used to monitor goals Financial
Operational or Process - example: average cost to settle a claim
Human or behavior - OSPE
An insurer's success depends on its ability to __________________ analyze the changing
environmental factors and influences
