CAIB 4 Exam | 105 Questions and Answers with
Complete Solutions 2025
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.
Complete Solutions 2025
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.
