CPCU 520 Chapter 10 Exam Questions and Answers Already Passed Latest Update 2025-2026
Strategic management process - Answers The process an organization uses to formulate and
implement its business strategies
Mission statement - Answers A broad expression of an entity's goals
Three steps of a strategic management process - Answers Strategy formulation
Strategy implementation
Strategy evaluation
SWOT analysis - Answers 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 - Answers 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 - Answers an organizational structure in which departments are defined by
the operation they perform
Strategy implementation steps for Executives - Answers 1. Design the organizational structure
2. Determine the degree of centralization
3. Communicate
Multidivisional structure - Answers An organizational structure in which divisions are organized
into separate profit centers
Cost leadership - Answers A business level strategy through which a company seeks cost
efficiencies in all operational areas
Strategy implementation steps for mid level management - Answers 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 - Answers 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 - Answers 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 - Answers
Financial
Operational or Process - example: average cost to settle a claim
Human or behavior - OSPE
An insurer's success depends on its ability to __________________ - Answers analyze the changing
environmental factors and influences
Two methods used to analyze the environment an organization operates in - Answers SWOT
Five Force Model
Five forces model components - Answers Threat of new entrants
Threat of substitute products or services
Bargaining power of buyers
Bargaining power of suppliers
Rivalry among existing firms - pricing wars
Definition of the Five Forces model - Answers A method of evaluating the external environment
in which a company operates. Involves assessing five forces that drive competition
Four SWOT analysis components - Answers Strengths
Weaknesses
Opportunities
Strategic management process - Answers The process an organization uses to formulate and
implement its business strategies
Mission statement - Answers A broad expression of an entity's goals
Three steps of a strategic management process - Answers Strategy formulation
Strategy implementation
Strategy evaluation
SWOT analysis - Answers 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 - Answers 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 - Answers an organizational structure in which departments are defined by
the operation they perform
Strategy implementation steps for Executives - Answers 1. Design the organizational structure
2. Determine the degree of centralization
3. Communicate
Multidivisional structure - Answers An organizational structure in which divisions are organized
into separate profit centers
Cost leadership - Answers A business level strategy through which a company seeks cost
efficiencies in all operational areas
Strategy implementation steps for mid level management - Answers 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 - Answers 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 - Answers 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 - Answers
Financial
Operational or Process - example: average cost to settle a claim
Human or behavior - OSPE
An insurer's success depends on its ability to __________________ - Answers analyze the changing
environmental factors and influences
Two methods used to analyze the environment an organization operates in - Answers SWOT
Five Force Model
Five forces model components - Answers Threat of new entrants
Threat of substitute products or services
Bargaining power of buyers
Bargaining power of suppliers
Rivalry among existing firms - pricing wars
Definition of the Five Forces model - Answers A method of evaluating the external environment
in which a company operates. Involves assessing five forces that drive competition
Four SWOT analysis components - Answers Strengths
Weaknesses
Opportunities
