CAIB 4 TEST PAPER 2026 QUESTIONS WITH
ANSWERS GRADED A+
◉ 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.
ANSWERS GRADED A+
◉ 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.
