CAIB 4 - Book Practice Questions with 100% Correct Answers

CAIB 4 - Book Practice Questions with 100% Correct Answers What are the similarities between a strategic plan and an action plan? - Answer- They are both critical steps in the success of a brokerage They both flow from the mission statement They both use the same process (top down/bottom up) What are the differences between a strategic plan and an action plan? - Answer- strategic plans are for three to five years; action plans are for one year strategic plans apply to the brokerage as a whole; action plans apply to a particular business unit action plans are much more detailed than strategic plans Explain the advantages and disadvantages of top-down and bottom-up approaches to planning. - Answer- Top-Down Approach o Management is firmly in control o May fail because employees don't buy into it Bottom-Up Approach o Employees set the plan - buy-in o Management feel that they are not in control The combination of both approaches, with open communication throughout the process, is the key to effective and successful planning. When evaluating an operating affiliation why would the following be an important consideration? a) Exclusivity b) Fees - Answer- Exclusivity; Many of the organizations with which a brokerage can affiliate are in one way or another exclusive. Often it is this exclusivity that makes the organization attractive to the brokerage. It is important that the following questions be asked; How many other brokerages in the immediate marketing area will be permitted to join? What is the legal nature of the exclusivity? How tight is the contract in describing the rights of an affiliated brokerage to a particular territory? What is the reputation of those brokerages already participating in the program? If the brokerage is seeking prestige and image from the affiliation, this can be derived only if others participating are up to the standards described by the sponsoring organization. When evaluating an operating affiliation why would the following be an important consideration? a) Exclusivity b) Fees - Answer- Fees; A major factor in determining whether to affiliate is the cost of the affiliation and whether the services offered are worth the price being charged. All costs should be known in advance so that there will be no surprises once the affiliation has been formed. Some brokerages effectively structure their brokerages as a functional organization. Discuss why it is a difficult form to implement effectively - Answer- Employees will find that they have more than one boss, so that in areas of overlapping authority they may be given conflicting or inconsistent instructions