A written business policy communicates your company's expectations about appropr

iate employee work performance. Policy illustrates the acceptable performance bo

undaries while simultaneously addressing the employees' needs. Some employers pr
efer a written policy that covers every conceivable situation; others prefer no
written policy, whereby management decides each case as the situation merits. Fi
nd the ideal balance when creating a business policy for your business.
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Balance
The ideal business policy encourages individual productivity without making the
employee feel as though you micromanage him. According to Entrepreneur magazine,
neither an extremely detailed nor a nonexistent business policy create a highly
productive work environment. Put your business expectations in writing, so empl
oyees know how to meet your requirements. Address employee goals, and tell him h
ow you expect him to achieve the goals. Once communicated, faithfully enforce, m
anage and update your business policies.
Job Descriptions
Include in your business policy a description of each position in the organizati
on. Employees must understand their role and how they will interact with others
within the organization. Each employee should understand how their work impacts
others in the company. Make the reporting structures clear both inside the depar
tment, between departments and company wide. Once employees understand their res
ponsibilities, hold them responsible for their work performance. The AME Info we
bsite describes business policies as "the strategic link between the company's v
ision and its day-to-day operations." A well-written business policy allows for
management guidance in business operations without constant intervention by mana
gement.
Related Reading: IT Security and the Importance of Policies and Procedures
Liability
All employees, including managers, must understand the acceptable behavior bound
aries at work. Entrepreneur magazine states that when employees misbehave on the
job, the employer may be held liable for how that situation affects clients, in
dividuals or other employees. A written business policy with clear behavioral ex
pectations helps establish that you do not approval of and are not contributing
to the employee's bad behavior. The lack of a written business policy can lead t
o litigation.
Consequences for Violations
Establish rules that address any violations of your business policy. Stating the
consequences for violating business policy puts the employee on notice and also
increases the employer's options for effectively dealing with behaviors contrar
y to policy. Decide what behaviors mandate an immediate dismissal and what behav
iors will trigger a disciplinary approach, and clearly outline the steps involve
d in your disciplinary procedure. From policy, the employee understands the disc
iplinary process. When possible, improve the employee's future performance and t
he company's employee retention rate by helping the employee strengthen a flawed
performance, rather than losing him as a valued member of your team
Definition of Business Policy
Business Policy defines the scope or spheres within which decisions can be taken
by the subordinates in an organization. It permits the lower level management t
o deal with the problems and issues without consulting top level management ever
y time for decisions. Business policies are the guidelines developed by an organ
ization to govern its actions. They define the limits within which decisions mus
t be made. Business policy also deals with acquisition of resources with which o
rganizational goals can be achieved. Business policy is the study of the roles a
nd responsibilities of top level management, the significant issues affecting or
ganizational success and the decisions affecting organization in long-run.
Features of Business Policy
An effective business policy must have following features-
Specific- Policy should be specific/definite. If it is uncertain, then the i
mplementation will become difficult.
Clear- Policy must be unambiguous. It should avoid use of jargons and connot
ations. There should be no misunderstandings in following the policy.
Reliable/Uniform- Policy must be uniform enough so that it can be efficientl
y followed by the subordinates.
Appropriate- Policy should be appropriate to the present organizational goal
.
Simple- A policy should be simple and easily understood by all in the organi
zation.
Inclusive/Comprehensive- In order to have a wide scope, a policy must be com
prehensive.
Flexible- Policy should be flexible in operation/application. This does not
imply that a policy should be altered always, but it should be wide in scope so
as to ensure that the line managers use them in repetitive/routine scenarios.
Stable- Policy should be stable else it will lead to indecisiveness and unce
rtainty in minds of those who look into it for guidance.
Difference between Policy and Strategy
The term policy should not be considered as synonymous to the term strategy. The dif
ference between policy and strategy can be summarized as follows-
Policy is a blueprint of the organizational activities which are repetitive/
routine in nature. While strategy is concerned with those organizational decisio
ns which have not been dealt/faced before in same form.
Policy formulation is responsibility of top level management. While strategy
formulation is basically done by middle level management.
Policy deals with routine/daily activities essential for effective and effic
ient running of an organization. While strategy deals with strategic decisions.
Policy is concerned with both thought and actions. While strategy is concern
ed mostly with action.
A policy is what is, or what is not done. While a strategy is the methodolog
y used to achieve a target as prescribed by a policy.
Business policy basically deals with decisions regarding the future of an ongoin
g enterprise. Such policy decisions are taken at the top level after carefully e
valuating the organizational strengths and weaknesses in terms of product price,
quality, leadership position, resources etc., in relation to its environment. O
nce established the policy decisions shape the future of a company channel the a
vailable resources along desired lines and direct the energies of people working
at various levels towards predetermined goals. In a way, business policy implie
s the choice of purposes, the shaping of organizational identity and character t
he continuous definition of what is to be achieved and the deployment of resourc
es for achieving corporate goals.
Some useful definitions of Business Policy
1) A business policy is an implied overall guide setting up boundaries that supp
ly the general limit and direction in which managerial action will take place.
2) A business policy is one, which focuses attention on the strategic allocation
of scarce resources. Conceptually speaking strategy is the direction of such re
source allocation while planning is the limit of allocation
3) A business policy represents the best thinking of the company management as t
o how the objectives may be achieved in the prevailing economic and social condi
tions
4) A business policy is the study of the nature and process of choice about the
future of independent enterprises by those responsible for decisions and their i
mplementation
5) The purpose of a business policy is to enable the management to relate proper
ly the organizations work to its environment. Business policies are guides to act
ion or channels to thinking.
Business policies generally have a long life. They are established after a caref
ul evaluation of various internal and external factors having an impact on the f
irms market standing As and when circumstances change in a major way the firm is
naturally forced to shift gears, rethink and reorient its policies. The World Oi
l crisis during the 70s has forced many manufacturers all over the globe to reve
rse the existing practices and pursue a policy of manufacturing fuel efficient c
ars. Therefore, policies should be changed in response to changing environmental
and internal system conditions.
Types of policies
There are many types of policies marketing policies, financial policies, product
ion policies, personnel policies to name a few in every organization. Within eac
h of these areas more specific policies are developed. For example, personnel po
licies may cover recruitment, training, promotion and retirement policies. Viewe
d from a systems angle, policies form a hierarchy of guides to managerial thinki
ng. At the top of level policy statements are broad. The management is responsib
le for developing and approving major comprehensive company policies. Middle man
agers usually establish less critical policies relating to the operation of thei
r sub units. Policies tend to be more specific at lower levels. The managers job
is to ensure the consonance of these policies, each must contribute to the objec
tives of the firms and there should be no conflict between sub system policies.
Although it is customary to think of policies as written statements it is not ne
cessarily the case. For example a firm may simply decline to consider handicappe
d employees in the selection of new personnel. In effect, this becomes an effect
ive policy even though the company has never verbalized its position.
more at http://www.citeman.com/11809-nature-of-business-policy.html#ixzz37nBuEQD
E
1
P
olicy Issues for Business: A Reader
aims to provide undergraduate and
postgraduate students of business, economics and management, including
those studying for the MBA, with a critical analysis and discussion of policy
issues relating to business.
The key objectives that this book endeavours to achieve include the recogni-
tion of the vital importance of policy for businesses, individuals and nations a
nd an
appreciation of the rationale for policy. It offers a critical evaluation of the
link
between different theoretical perspectives and policy and an in-depth understand
-
ing of selected policy issues. The book places business within the context of it
s legal,
technological, economic and socio-cultural environment.
What is the relevance of policy to business?
Why is it important to study policy as part of ones study of business? Policy set
s
the rules of the game by which businesses have to play. But why do we need rules
anyway? Shouldnt the operation of the free market obviate the need for any rules?
Who sets these rules? Do these rules promote the interests of some more than of
others? Can governments and policy makers improve the performance of economies
beyond what may be generated by the free play of spontaneous market forces?
It is questions such as the above that a study of policy seeks to answer. No
market economy can operate without the establishment and enforcement of certain
minimal rules such as those relating to property rights. But often, for markets
to
work effectively, much more than these minimalist rules are required. This const
i-
tutes the domain of economic and business policy.
One can hardly overstate the importance of policy. As Stiglitz demonstrates
in Chapter 1 of this book, if policy makers get it wrong, whole nations can be
destroyed. Equally, if policy makers get it right, this can enormously facilitat
e
business growth and socio-economic welfare.
A neglected subject?
Despite the critical importance of policy for business, the study of business
and management these days seems to neglect a proper study of policy. This is
perhaps because the focus of business and management studies tends to be on
NTRODUCTION
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the operations of the individual business. But, as mentioned above, a businesss
purposes and actions can be considerably influenced by the industry, national an
d
international policy regime in which it operates. Businesses also need not be, a
nd
indeed are often not, passive reactants to the policy framework; they play a vit
al role
in shaping policy. It is hence important that any study of business and manageme
nt
should include a systematic study of the subject of policy. This book is designe
d for
such a purpose. We hope to stimulate the study of policy as a regular and integr
al
part of business and management studies. This book endeavours to provide
resources for such a purpose by collating some key readings in policy. There is
presently a dearth of such a compendium; we hope that this book will go some way
in fulfilling this need.
Is policy akin to strategic management?
Strategic management is currently an important and popular element in business
and management studies. Just as firms need to be managed strategically, so too i
n
many ways do other economic units such as industries, regions, nations and the
international economy. Traditionally, aspects of governance relating to these ec
o-
nomic units have been referred to as policy. But, if we wished, we could also refe
r
to these as strategic management. The objectives underlying the strategic manage-
ment of firms and the strategic management (policy governance) of regions, indus
-
tries or nations have considerable similarity. In both cases, the aim is conscio
usly
and purposefully to plan for the long term, to integrate and co-ordinate diverse
elements, and to try to achieve a degree of control over the environment and the
future. A simple reaction to spontaneous market forces does not constitute strat
egic
management at the level of the firm; nor does it constitute policy governance at
the
level of the industry, region, nation or the world.
If policy can be thought of as strategic management at a supra-firm level, why
is it that while the subject of strategic management is so popular in business a
nd
management studies, the subject of policy suffers from relative neglect? We have
already discussed one possible reason for this: the focus of business and manage
-
ment studies currently tends to be on the individual organization. The other pro
b-
able reason for this has perhaps to do with the current economic and political
climate of
laissez-faire
. While strategic management at the level of the firm is the
responsibility of private entrepreneurs, many of the policy tasks are the respon
si-
bility of local, regional, national or international governmental bodies. Many t
oday
seem to believe that governments are incapable of doing anything right. So, the
argument goes, even though policy may in principle be capable of improving upon
market-mediated outcomes, in practice governments are likely to fail to deliver.
This, however, is perhaps too pessimistic a view of the role that policy can pla
y. As
this book demonstrates, policy makers can play a highly useful role in improving
INTRODUCTION
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economic performance. It is also critical to remember that while policy failures
can carry significant costs, these costs may be outweighed by the costs of marke
t
failures that would occur in the absence of policy intervention. Not all policy
is
formulated and implemented by governments anyway: employer associations, trade
unions, charities, clubs, regional associations all can play an important role i
n the
policy arena.
Conflicting theories, conflicting policies
One must bear in mind the distinction between a descriptive and a theoretical tr
eat-
ment of any subject. It is one thing to describe a policy, it is quite another t
o under-
stand its rationale. Policies can only be properly understood in the context of
their
underpinning theoretical perspectives. But often there is more than one theory t
hat
explains any business phenomenon, and these theories may offer conflicting per-
spectives. Consequently, policy prescriptions are often quite sensitive to the n
ature of
ones theoretical position about how the world works. This implies that any serious
study of policy must be accompanied by an investigation of the various theoretic
al
perspectives that relate to the business phenomenon under study. This is the
approach that this book follows, offering a diversity of theoretical perspective
s on
the policy issues under consideration.
Self-interest, prejudice, ideology
Policy making is rarely neutral in terms of its consequences for economic parti-
cipants. It is hence unlikely that those affected will view the analysis that un
derpins
policy making in a dispassionate, even-handed or fair fashion. Peoples preference
s
for one theoretical standpoint over the other may be coloured, consciously or
unconsciously, by the nature of economic, political and ideological consequences
that follow for themselves or for their communities. Are academics likely to be
truly
neutral, however, untouched by motives of personal gain or by prejudice? Concern
has been voiced, for example, that the close links that exist in some countries
between the faculty of business schools and senior management in organizations
pose the danger that academic discourse may be influenced such that it takes
greater cognisance of the concerns of senior management than of the other stake-
holders in the firm. Following a similar logic, it is possible to argue that aca
demics
working in the developed world may come to very different policy analysis and
conclusions than academics working in developing nations. This points to the nee
d
for the exercise of the utmost vigilance when evaluating policy, and the need to
consider critically a variety of perspectives.
INTRODUCTION
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Do values and culture matter?
Analysis of business policy issues is based to a very considerable degree on
economic theory and analysis. It is therefore important that we pay special atte
ntion
to the assumptions that, overtly or covertly, underlie theorizing in the discipl
ine
of economics. Casson (Chapter 4) points out that many theories in economics are
based, explicitly or implicitly, on the assumptions that economic agents are exc
lu-
sively selfish and exclusively materialistic. Human beings are assumed neither t
o
care about the welfare of others, nor to care about non-material sources of sati
s-
faction (such as emotional or spiritual satisfaction). Neo-classical economics
argues that the working of the competitive market ensures that when such selfish
and money-minded individuals try to maximize their rewards, the competitive
process generally generates an outcome that is in everybodys collective interest.
As Adam Smith pointed out, our dinner comes not from the butchers generosity
but from his self-interest. Being exclusively selfish, and being exclusively mat
eri-
alistic, is consequently no bad thing. Casson points out that such ideas are bas
ed
on an incomplete understanding of how a market economy works. For many
markets to work efficiently, a considerable degree of integrity and trust is req
uired.
An economic system that is able to invoke and make use of a high level of trust,
integrity and character is likely to perform far more efficiently and effectivel
y
compared to a system that lacks these cultural attributes. But if trust and soci
al
norms are important for the functioning of a market economy, then this, in addi-
tion to leading us to question the assumptions of economic theor y, also poses
important issues for policy. How are trust and honesty in a society to be create
d
and maintained, for example? And what role can policy play in this regard? This
book argues that policy should no longer be seen to be limited to the manipula-
tion of economic variables. Given the vital importance of cultural factors to th
e
economy and society at large, culture must be given its due consideration by
policy makers.
Is policy democratic?
How democratic is the formulation and choice of policy? There seem to be
presently a number of impediments to having genuine democracy in the policy
arena. On the one hand, many policy decisions are currently made by policy
experts, bureaucrats or politicians without sufficient democratic scrutiny. Stigli
tz
(Chapter 1), for example, draws attention to the lack of transparency and accoun
t-
ability that surrounds decision making by the International Monetary Fund, even
though the policies that emanate from this organization have major consequences
for millions of people world-wide. Genuine democracy is also often hindered by
the electorates lack of sufficient knowledge of policy. If the fundamentals of po
licy
were more widely known, this would probably generate a higher quality of debate
INTRODUCTION
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on many policy issues. Governments would then have less of a pretext to refer
important policy issues to the experts, and the expert advice would be subject to
closer and wider scrutiny. The media also need to rethink their vital responsibi
lities
in this regard.
Structure of the book
The book begins by outlining the significance and rationale for policy in a mark
et
economy (Section 1: Policy: Significance and Rationale). Since it is unfeasible to
explore in detail all the various aspects of business related policy in a single
book,
we have had to be selective in our choice of policy topics. Consequently, the re
main-
der of the book explores some of the key dimensions of business policy making. I
n
Section 2, Competition Policy, we analyse policies that aim to maintain the right
degree and kind of competition in a market economy. The acceleration in national
and cross-border mergers and acquisitions since the 1990s has made a considera-
tion of such competition issues very pertinent and urgent. In Section 3, Science,
Technology and Innovation Policy, we broaden our concern from the regulatory
role of policy to the facilitative and supportive functions of policy. Why do we
need
to have a policy on science, technology and innovation? Shouldnt the free market
take care of these matters? Is it more important to have such science and techno
-
logy policies in developing countries than in developed ones? In Section 4,
International Trade and Investment Policy, we investigate why policy is required a
t
the supra-national level with respect to the international dimension of economic
activity. The increased pace of globalization since the 1980s raises a number of
questions about both the pace and the character of globalization that we are cur
-
rently witnessing, and how (if at all) we should be trying to regulate or influe
nce
this process. While the importance of international policy is increasing, policy
issues at the sub-national level, such as at the regional level, are becoming mo
re
important too. This is the subject of inquiry in Section 5, Regional Policy. The
increased integration of the global economy seems to be, in many ways,
accentuating rather than diminishing the distinctiveness of geographic regions.
The
final section, Section 6, Environmental Policy, explores another important dimen-
sion of policy: that relating to the natural environment. With ever-increasing e
nvi-
ronmental degradation, the need for urgent action in this policy area is becomin
g
increasingly obvious to all, but reaching agreement here has proved to be highly
dif-
ficult so far. If some experts on climate change are to be believed, then time m
ay
be running out. But, as we shall see, environmental policy cannot be meaningfull
y
considered without looking at many of the other policy areas, such as internatio
nal
trade and investment policy and policy on science, technology and innovation. Th
is
means that the whole subject of policy is assuming critical importance and urgen
cy
indeed the very survival of our planet may depend on the wisdom with which we
exercise our policy options.
INTRODUCTION
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INTRODUCTION TO BUSINESS POLICY MBA Notes
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BUSINESS POLICY, Objectives of Business Policy, Purpose of Business Policy
INTRODUCTION TO BUSINESS POLICY
Definition of Business Policy:
Business Policy as defined by Christensen and others is the study of the function
s and responsibilities of senior Management, the external probles that affect su
ccess in the total enterprise and the decisions that determine the direction of
the organization 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 for th
e moulding of organizational identity and character, the continuous definition o
f what needs to be done, and the mobilization of resources for the attainment of
goals in the face of competition or adverse circumstances.
Scope:
The above comprehensive definition covers many aspects of business policy.
It is considered; as the study of functions and the responsibilities of the
senior management related to those organizational problems, which affect the suc
cess of the total enterprise.
It deals with the determination of the future courses of the action that the
organization has to adopt.
It involves a choice of purposes and defining what needs to be done in order
to mould the character and identity of the organization.
It is concerned with the mobilization or resources by the help of which the
organization can achieve its goals.
Importance of a Business Policy:
A. From the view point of 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 sen
se of the complex interaction that takes place between different functional area
s.
Business policy deals with the constraints and complexities of the real life
business.
Business policy offers a very broad perspective to its learners.
Business policy makes the study and practice of management more meaningful a
n done can view business decision making in its proper perspective.
B. For the understanding of Business Environment:
Regardless of the level of management Business Policy creates an understandi
ng of how policies are formulated. This helps in creating an appreciation of t
he complexifies of the environment that the senior management faces in the polic
y 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 the managers makes the task of policy implementation si
mpler.
By being able to relate the environmental changes to policy changes within t
he organization, mangers feel themselves to be a part of a greater design. This
helps in reducing their feelings of isolation.
C For understanding the organization:
Business policy presents a basic frame work for understanding strategic deci
sion making while a person is at the middle level of the management.
Business policy brings to the organization and to its managers the benefit of
years of distilled experience in strategic decision making.
An understanding of Business policy may lead to an improvement in job perfor
mance.
D. For personal Development:
It is beneficial for an executive to understand the impact of policy shifts
on the status of ones department and on the position be occupies.
Business policy enables the executives to avail an opportunity or avoid a ri
sk with regard to career planning and development
Business policy offers a unique perspective to executives to understand the
senior management viewpoint
An interesting by-product of business policy course is the theoretical frame
work, provided in the form of strategic management model. This model provides p
owerful insights in dealing with policy-making at the macro level as well as at
an individual level through self-analysis.
Purpose of Business policy:
The purpose of business policy is three fold:
To integrate the knowledge gained in various functional areas of management
To adopt a generalist approach to problem-solving and
To understand the complex inter-linkages operating within an organization th
rough the use of systems approach to decision making and relating them to change
s taking place in the external environment
Objectives of Business Policy:
A. In terms of knowledge:
The learner has to understand the various concepts like strategy, polices, p
lans and programmes etc.
Knowledge about the environment (external & internal) and how it affects the
functioning of an organization is vital in understanding business policy. Throu
gh the tools of analysis and diagnosis a learner can understand the environment
in which the firm operates.
Information about the environment helps in the determination of the mission,
objective and strategies of a firm.
Through the knowledge gained in business policy, the learner is able to visu
alize how the implementation of strategies can take place.
To survey the literature and learn about the searches taking place in the fi
eld of Business Policy is also an important knowledge objective.
B. In terms of skills:
The attainment of knowledge should lead to the development of skills so as t
o apply what is learnt.
The study of business policy should enable a student to develop analytical a
bility and use it to understand the situation in a given case or incident
Business policy study should lead to the sills of identifying factors releva
nt in decision-making. The analysis of strengths and weakness of an organization
the threats and opportunities present in the environment and the suggestion of
appropriate strategies and policies from the core content of general management
decision making.
Increases the mental ability of learners and enables learners to link theory
with practice.
Case analysis as a part of business policy study, leads to the development o
f oral as well as written communication skills.
C. In terms of attitude:
Development of generalist attitudes enables the learner to approach and asse
ss a situation from all possible angles.
Dealing in a comprehensive manner, a generalist is able to function under co
nditions of partial ignorance by using his judgement and infusion.
To possess a liberal attitude and be receptive to new ideas, information and
suggestions is important for a general manager to act like a professional manag
er.
An important attitudes is to go beyond and think when faced with a problematic
situation developing a creative and innovative attitude is the hall mark of a g
eneral manager.