BUSINESS POLICY MEANING OF BUSINESS POLICY Business Policy is the study of the functions and responsibilities of senior management,

the crucial problems that affect success in the total enterprise and the decisions that determine the direction of the organisation and shape its future. The problems of policy in business, like those of policy in public affairs, have to do with the choice of purposes, the moldings of organizational identity and character, the continuous definition of what needs to be done, and the mobilization of resources for the attainment of goals in the face of competition or adverse circumstance. It covers many aspects of business policy. Firstly, it is considered as the study of functions and responsibilities of the senior management related to those organizational problems which affect the success of the total enterprise. Secondly, it deals with the determination of the future course of action that the organisation has to adopt. Thirdly, it involves a choice of purposes and defining what needs to be done in order to mould the character and identity of the organisation. Lastly, it is also concerned with the mobilization of resources by the help of which the organisation can achieve its goals. The senior management consists of those managers who are primarily responsible for longterm decisions and carry designations such as Chief Executive, President, General Manager, or Executive Director. These are the persons who are not concerned with the day-to-day problems but are expected to devote their time and energy for thinking and deciding about the future course of action. Business policy, with its concern for determination of the future course of action, lays down a long-term plan which the organisation then follows. The senior management, while determining the future course of action, have a mental picture of the type of organisation they want their company to become. In deciding about the future course of action, the senior management are confronted with a wide array of decisions and actions that could possibly be taken. The senior management exercise a choice, depending on the given circumstances, and which, in their opinion, would lead the organisation towards a specific direction. Moving in a predetermined direction, the organisation attains the planned identity and character. Organisational decisions are not made in isolation and managerial actions cannot be taken without providing the resources necessary for them. The senior management, while deciding about the future course of action, concern themselves with the resources- financial, material and human that would be required for the implementation of the long-term plans. EVOLUTION OF BUSINESS POLICY The Genesis of Business Policy The origins of business policy can be traced back to 1911, when Harvard Business School

introduced an integrative course in management aimed at the creation of general management capability. This course was based on case studies which had been in use at the school for instructional purposes since 1908. However, the real impetus for introducing business policy in the curriculum of business schools (as management institutes or departments are known in the US) came with the publication of two reports in 1959. The Gordon and Howell report, sponsored by the Ford Foundation, recommended a capstone course of business policy which will give students an opportunity to pull together what they have learned in the separate business fields and utilize this knowledge in the analysis of complex business problems. The Pierson report, sponsored by the Carnegie Foundation and published simultaneously, made a similar recommendation. In 1969, the Americal Assembly of Collegiate Schools of Business, a regulatory body for business schools, made the course of business policy a mandatory requirement for the purpose of recognition. During the last four decades, business policy has become an integral part of management curriculum. From the US, the practice of including business policy in the management curriculum spread to other parts of the world. Evolution Based on Managerial Practices The development in business policy as arising from the use of planning techniques by managers. Starting from day-to-day planning in earlier times, managers tried to anticipate the future through preparation of budgets and using control systems like capital budgeting and management by objectives. With the inability of these techniques to adequately emphasise the role of future, long-range planning came to be used. Soon, long-range planning was replaced by strategic planning, and later by strategic management: a term is currently used to describe the process of strategic decision making. Strategic management is the theoretical framework for business policy courses today. Policy-making became the prime responsibility of erstwhile entrepreneurs who later assumed the role of senior management. The Indian Scenario Formal management education started in India in the late fifties and gained an impetus with the setting up of the Indian Institutes of Management (IIMs) and the Administrative Staff College of India in the early sixties. In the formative years of the IIMs, the curriculum and philosophy of management education were borrowed substantially from the Americal business schools. The IIM, Ahmedabad based its teaching methodology on the Harvard model of developing and using case studies as the major tool. With the setting up of three more IIMs at Bangalore, Calcutta and Lucknow and the creation of university departments, management education has experienced an unparalleled growth in the last three decades. The All India Management Association, New Delhi, which is a national body for the promotion of scientific management in India, and offers a popular correspondence course in management,

has also recently induced a course on business policy in the curriculum. The contents of the curriculum, teaching methodology, etc. for business policy course varies among institutions. Different nomenclature used for the course title include, besides business policy; corporate planning, corporate strategy and planning, management policy and, lately, strategic planning or strategic management. The course contents of Indian system of management are drawn heavily from foreign, mostly Americal literature, the Indian system of management can be developed, based an Indigenous research but the dependence on Americal sources will have to be accepted. The Nature of Business Policy The Business Policy nature has the following features:(i) It is the process of upgrading its product mix. (ii) It promote joint ventures with other concerns. (iii) It promote divested from one business to another due to price hikes due to heavy Taxes/Duties on its present product remeting in losses to business. (iv) It promote major expansion programe. (v) From the happenings reported above, we see that when a company either upgrades its product mix, promotes a joint venture, divests in another company, undertakes an expansion programme or takes such similar action having a long-term impact on its future operations and status, it is the result of senior management decisison-making. The senior management, in any organisation, is primarily responsible for guiding the future course of action and providing a sense of direction. Toward these ends, business policy attempts to inculcate in one the capability for senior management. Importance of Business Policy Business policy is important as a course in management curriculum and as a component of executive development programmes for middle-level managers preparing to move up to the senior management level. A study of business policy fulfils the needs of management students as well as those of middle-level managers. To highlight the importance of businees policy, we consider four areas where this course proves to be beneficial. From sthe viewpoint of the Course itself Business policy seeks to integrate knowledge and experience gained in various functional areas of management. It enables the learner to understand and make sense of the complex interaction that takes place between different functional area. Business policy deals with the constraints and complexities of the real-life business. In contrast, the functional area courses are based on a structured, specialized and well-developed body of knowledge resulting from the simplification of the complexity of the overall taks and responsibilities of management.

For the development of a theoretical structure of its own, business policy cuts across the narrow functional boundaries and draws upon a variety of sources; other courses in management curriculum and from a wide variety of disciplines like economics, sociology, psychology, demography, political science, etc. In doing so, business policy offers a very broad perspective to its learners. Business policy makes the study and practice of management more meaningful as one can view business decision-making in its proper perspective. For instance, in the context of business policy, a short-term gain for a department or a sub-unit is willingly sacrificed in the interest of the long-term benefit that may accrue to the organisation as a whole. For the Understanding of Business Environment Regardless of the level of management where a person is, business policy creates an understanding of how policies are formulated. This helps in creating an appreciation of the complexities of the environment that the senior management faces in policy formulation. By gaining an understanding of the business environment, managers become more receptive to the ideas and suggestions of the senior management. Such an attitude on the part of managers makes the task of policy implementation simpler. By being able to relate the environmental changes to policy changes within the organisation, managers feel themselves to be a part of a greater design. This helps in reducing their feelings of isolation. For Understanding the Organisation Business policy presents a basic framework for understanding strategic dicision-making while a person is at the middle level of management. Such a framework, combined with the experience gained in working in a specialized functional area, enable a person to make preparations for handling general management responsibilities. This benefits the organisation in a variety of ways. Business policy, like most other areas of management, brings to the organisation and also to its managers, the benefit of years of distilled experience in strategic decision-making. Case study, which is the most common pedagogical tool in business policy, provides illustrations of real-life business strategy formulation and implementation. For personal Development A study of business policy offers considerable scope for personal development. It is a fact of organizational life that the different sub-units within an organisation have varying value and importance at different times. It often happens that a company which adopts a productionorientation as a matter of policy gradually shifts emphasis to marketing, may be due to

increased competition. Executives within the production departments have lesser opportunities for career advancement as compared to their colleagues in marketing in the changed situation. In this case, it is beneficial for an executive to understand the impact of policy shifts on the status of ones department and on the position he or she occupies. In extreme cases, many positions become redundant due to policy shifts and retrenchment is inevitable. Business India cautions executives, especially those who work for multinationals. It says that persons who have devoted their lives working for one company suddenly f ind bewildering changes at head offices in the UK and US and adds that reorganizations and changes at the top level can have a dramatic impact on individuals. It is only too common for divisions of a company to be shut down worldwide, or to be sold off to another company. An understanding of business policy enables the executives to avail an opportunity or avoid a risk with regard to career planning and development. For a career choice, a study of policy provides adequate grounding for understanding the macro factors and their impact at the micro level. By gaining an understanding of such an impact, an executive is better placed to identify growth areas. For instance, in the current business situation in India, a career in computer industry, especially in software, would offer better personal growth opportunities than, say, in the steel industry. Business policy, offers a unique perspective to executives to understand the senior managements viewpoint. With such an understanding, the chances of a proposa l made or an action taken by an executive being appreciated by senior managers is decidedly better. An interesting by-product of business policy course is the theoretical framework provided in the form of the strategic management model. The applicability of this model is not limited to business alone. It can be applied to organizations like services, educational institutions, family, government, public administration and to many other areas. In fact, the model provides powerful insights in dealing with policy-making at the macro level as well as at an individual level through self-analysis. The importance of business policy stems from the fact that it offers advantages to an executive from multiple sources. Apart from the intangible benefits, an executive gains an understanding of the business environment and the organisation he or she works in. Such an understanding can help considerably in career planning and development. Purpose of Bussiness Policy The purpose of business policy is three-fold: (1) To integrate the knowledge gained in various functional areas of management; (2) To adopt a generalist approach to problem-solving; and (3) To understand the complex interlinkages operating within an organisation through the use

of systems approach to decision-making and relating them to changes taking place in the external environment. In order to make the study of business policy purposeful, the specific obujectives need to be defined. Objectives of Business Policy The objectives of business Policy can be derived from the purpose of business policy and can be explained in following terms:A) Objectives in terms of knowledge (1) The learners in business policy have to understand the various concepts involved. Many of these concepts like strategy, policies, plans and programmes are encountered in functional area courses too. It is imperative to understand these concepts in the context of business policy. (2) Knowledge about the environment external and internal and how it affects the functioning of an organisation is vital in understanding business policy. Through the tools of analysis and diagnosis, a learner can understand the environment in which a firm operates. (3) Information about the environment helps in the determination of the mission, objectives and strategies of a firm. The learner can understand the environment in which a firm operates. (4) Implementation of strategy is a complex issue and is invariably the most difficult part of strategic management. Through the knowledge gained in business policy, the learner is able to visualize how the implementation of strategies can take place. (5) To learn that problems in real-life business are unique and so are their solutions is an enlightening experience for the learners. The knowledge component of such an experience stresses the generalization of approach to be adopted in problem-solving and decision-making. With a generalized approach, it is possible to deal with a wide variety of situations. The development of this approach is an important objective to be achieved in terms of knowledge. (6) To survey the literature and learn about the researches taking place in the field of business policy is also an important knowledge objective. B) Objectives in Terms of Skills (1) The attainment of knowledge should lead to the development of skills so as to apply what is learnt. Such application takes place by an analysis of case studies and their interpretation and by an analysis of the business events taking place around us. (2) The study of business policy should enable a student to develop analytical ability and use it to understand the situation in a given case or incident.

(3) Further, business policy study should lead to the skills of identifying factors relevant in decision-making. The analysis of strengths and weaknesses of an organisation, the threats and opportunities present in the environment, and the suggestion of appropriate strategies and policies form the core content of general management decision-making. (4) The above objectives, in terms of skill, increase the mental ability of learners and enables them to link theory with practice. Such an ability is important in managerial decision-making where a large number of factors have to be considered at once to suggest appropriate action. (5) Case analysis, as a part of business policy study, leads to the development of oral as well as written communication skills. C) Objecttives in Terms of Attitude 1. The attainment of knowledge and skill objectives should lead to the inculcation of appropriate attitude among the learners. The most important attitude, developed through the course, is that of a generalist. The generalist attitude enables the learner to approach and assess a situation from all possible angles. 2. Dealing in a comprehensive manner, a generalist is able to function under conditions of partial ignorance by using his or her judgement and intuition. Typically, case studies provide only a glimpse of the overall situation and a case analyst frequently faces a frustrating situation of working with less than the required information. Experience has shown that managers, specially in the area of long-range planning, have to work with incomplete information. A specialist would tend to postpone or avoid a decision under such conditions but a generalist could go ahead with whatever information is available. In this way, he or she acts like a practitioner rather than a perfectionist. 3. To possess a liberal attitude and be receptive to new ideas, information and suggestions is important for a general manager. Dogmatism with regard to techniques is to be replaced with a practical approach to decision-making for problem-solving. In this way, a general manager acts like a professional manager. 4. An important attitude is to go beyond and think when faced with a problematic situation. Developing a creative and innovative attitude is the hallmark of a general manager who refuses to be bound by precedents and stereotyped decisions. The objectives of business policy, in terms of knowledge, skills and attitude could be further extended to the area of behaviour and performance. Having attained the objectives in the classroom, or in an executive development programme, the learner is expected to exhibit appropriate behaviour and good performance on the job. The structure of business policy, built through theoretical study and exposure to case studies, needs to be strengthened further through accumulation of experience as one moves up the managerial ladder. The richness and variety of experiences encountered in real-life business offer opportunities of testing,

validating, and replicating the mental images and models developed in business policy course. Such an approach imparts an added impetus to the development of general management capability which is the sine qua non for a manager who wishes to succeed in his or her job and make a meaningful contribution to the organisation he or she works for. From the above we have seen that objectives of business policy can be set in terms of the knowledge gained, skills acquired, and attifude in calculated through study, which offers a basis for building up a mental structure which can help in a systematic aggregation of experiences when an executive is working at middle level. Such a stracture help in the creation of general management capability.