CAIB 4 Exam Questions with Correct Answers

CAIB 4 Exam Questions with Correct Answers What are the two approaches to planning? Explain each - Answer-1) Top Down Planning - Management provides the mission, strategies, and objectives for the brokerage 2) Bottom Up Planning - Management provides the mission and broad strategies. Leaves the objectives, goals and activities to business units. What are the advantages and disadvantages of top down planning? - AnswerAdvantages: Management feels in control and in charge of decision making. Disadvantages: hard to get buy-in from employees What are the advantages and disadvantages of bottom up planning? - AnswerAdvantages: business units have ownership and buy in. Disadvantages: Management feels less in control, there may be resistance to changes made to the plan by management. Why is Top Down planning not suitable for a small organization. - Answer-Stifles innovation, slows decisions, managers need to know too much, What are the four characteristics of a plan? - Answer-1) Simplicity 2) Practicability 3) Severability 4) Flexibility Explain Simplicity (2 points) - Answer-The plan should be explainable in simple terms. The plan should be implemented without extensive training while employees continue their day to day operations. Explain Practicability - Answer-The plan must be realistic Explain severability (2 points) - Answer-The parts of a plan must be separate and identifiable. Each business unit must see how to apply it to their area Explain flexibility - Answer-A good plan must allow for modification as it is implemented. Explain the difference between a strategic plan and an action plan - Answer-Strategic plans are broad and cover 3-5 years. Action plans give specific activities to support SP. They apply to a particular unit and cover 1-3 years, typically one year. How many components of a strategic plan are there? - Answer-Seven. What are the first three components of a strategic plan? - Answer-a) Scanning the external environment. b) Scanning the Internal Environment c) Matching strengths and weaknesses to opportunities and threats. Explain "scanning the external environment" and its two sub categories. - AnswerScanning the external environment looks at the competitive environment and attempts to identify opportunities and threats. They look at the distant environment and near environments. Explain the distant environment. - Answer-Factors that are critical to the survival of the brokerage, but over which it has no control. Example: Hard and soft markets. Changes to laws. Technology.