CAIB 4 Exam 1 Questions with Correct
Answers
What are the two approaches to planning? Explain each
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?
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?
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.
Stifles innovation, slows decisions, managers need to know too much,
What are the four characteristics of a plan?
1) Simplicity
2) Practicability
3) Severability
4) Flexibility
Explain Simplicity (2 points)
,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
The plan must be realistic
Explain severability (2 points)
The parts of a plan must be separate and identifiable.
Each business unit must see how to apply it to their area
Explain flexibility
A good plan must allow for modification as it is implemented.
Explain the difference between a strategic plan and an action plan
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?
Seven.
What are the first three components of a strategic plan?
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.
, 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.
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.
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?
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
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
Answers
What are the two approaches to planning? Explain each
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?
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?
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.
Stifles innovation, slows decisions, managers need to know too much,
What are the four characteristics of a plan?
1) Simplicity
2) Practicability
3) Severability
4) Flexibility
Explain Simplicity (2 points)
,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
The plan must be realistic
Explain severability (2 points)
The parts of a plan must be separate and identifiable.
Each business unit must see how to apply it to their area
Explain flexibility
A good plan must allow for modification as it is implemented.
Explain the difference between a strategic plan and an action plan
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?
Seven.
What are the first three components of a strategic plan?
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.
, 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.
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.
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?
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
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
