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? - Answer -
Advantages: 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? - Answer -
Advantages: 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. - Answer -
Scanning 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. Explain the near environment. - Answer -Factors over which a brokerage does have control. Example: Clients and prospects, market segment targeted, direct competitors. What are the three types of profiling within Near environment scans? - Answer -
Competitor, market, and client profiling. Competitor: Size, financial condition, and location of head office. Market: Total market, market segments where they compete, and the market portion that they serve. Client: Find a clear understanding of the nature and characteristics of a brokerage's clients. Explain SWOT and the needed actions given the four scenarios - Answer -If there is a weakness where there is a threat - Immediate Attention If there is a weakness where there is an opportunity - Resources should be allocated to capitalize later. If there is a strength where they is a threat - No action needed If there is a strength where there is an opportunity - it should be immediately capitalized on Recite the vision statement - Answer -Protection of assets by protecting what is near and dear to our clients Recite the value statement - Answer -We seek and encourage innovative solutions to problems that deliver results for our clients.
Advantages: 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? - Answer -
Advantages: 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. - Answer -
Scanning 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. Explain the near environment. - Answer -Factors over which a brokerage does have control. Example: Clients and prospects, market segment targeted, direct competitors. What are the three types of profiling within Near environment scans? - Answer -
Competitor, market, and client profiling. Competitor: Size, financial condition, and location of head office. Market: Total market, market segments where they compete, and the market portion that they serve. Client: Find a clear understanding of the nature and characteristics of a brokerage's clients. Explain SWOT and the needed actions given the four scenarios - Answer -If there is a weakness where there is a threat - Immediate Attention If there is a weakness where there is an opportunity - Resources should be allocated to capitalize later. If there is a strength where they is a threat - No action needed If there is a strength where there is an opportunity - it should be immediately capitalized on Recite the vision statement - Answer -Protection of assets by protecting what is near and dear to our clients Recite the value statement - Answer -We seek and encourage innovative solutions to problems that deliver results for our clients.
