Professional Documents
Culture Documents
BUSINESS POLICY
By
Vaibhav Arwade
Asst. Professor
Prestige Institute of
Management
Gwalior.
Meaning and Definition
Business Policy defines the scope within which
decisions can be taken by the subordinates in
an organization. It permits the lower level
management to deal with the problems and
issues without consulting top level
management every time for decisions.
Meaning and Definition
Business policies are the guidelines developed
by an organization to govern its actions. They
define the limits within which decisions must
be made.
Business policy also deals with acquisition of
resources with which organizational goals can
be achieved.
Business policy is the study of the roles and
responsibilities of top level management, the
significant issues affecting organizational
success and the decisions affecting
organization in long-run.
Nature of Business Policy
The study of the function and responsibilities of senior
management , the crucial problems that effect success in the total
enterprise and the decisions that determine the directions of
organization and shape its future.
Policy is the study of functions and responsibilities of senior
management related to those organizational problems which
effect the success of total organization
It deals with the future course of action that an organization has
to adopt.
It is concerned with mobilization of resources so the organization
can achieve its goals
Choosing between different alternatives available.
Features of Business
Policy
An effective business policy must have following
features-
1.Specific-Policy should be specific/definite. If it
is uncertain, then the implementation will
become difficult.
2.Clear-Policy must be unambiguous. It should
avoid use of jargons and connotations. There
should be no misunderstandings in following the
policy.
3.Reliable/Uniform-Policy must be uniform
enough so that it can be efficiently followed by
the subordinates.
Features of Business
Policy
4.Appropriate-Policy should be appropriate
to the present organizational goal.
5.Simple-A policy should be simple and easily
understood by all in the organization.
6.Inclusive/Comprehensive-In order to have
a wide scope, a policy must be comprehensive.
7.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.
EVOLUTION OF BUSINESS POLICY
*Qualitative projection
4.GOAL
A goal is a close ended attribute which is
precise and expressed in specific terms.
Eg.-To increase market share from 25% to
35%.
* Quantitative projection
5.Policies,Procedures and
Rules
Policy are guideline for action.
Policies are subdivided into Procedures (a
series of related steps) and Rules (courses of
action to be done under a given
circumstances)
6.Plans & Programmes
A programme is a broad term which includes
goal, policies, procedures and steps to put a
plan into action.
A plan may be implemented by a series of
programmes.
7.Tactics
Tactics are specific actions.
Eg.- A Co. plans for market expansion and for
that set up a regional marketing office, in
implementing this ,it may add or, devise
tactics of creating product awareness.
Forecasts
Estimates of future based on past and present
trends.
Quantification is done to map the trend.
9.Budgets
A plan statement for a given period of time in
future ,expressed in physical units.
It performs the essential task of resource
allocation.Eg.-Railway budget
Stratregy
The term strategy is derived from a Greek
word Strategos, which means generalship.
Thefore Strategy means the art of the general.
In business paralance, there is no definite
meaning assingned to strategy. Therefore
strategy could be
A plan or course of action or set of decision
rules making a pattern or creating a common
thread related to organisation's activity.
Contd
Related to pursuing those activities which
move an organisation from its current position
to a decided future state.
Concerened with the resources necessary for
implementing a plan or following a course of
action.
The planned or actual coordination of the
firms major goals and actions, in time and
space that continuously co-align the firm with
its environment.
Levels of Strategy
For many companies, a single strategy is not only
inadequate but also inappropriate. The need is for
multiple strategies at different levels. In order to
segregate different units or segments, each
performing set of activities, many companies
organise on the basis of operating divisions or
simply, divisions. These divisions may also be known
as
Profit centers or Strategic Business Units (SBUs).
as defined by Sharplin: SBU is any part of a business
organisation which is treated separately for strategic
management purpose
LEVELS OF LEVELS OF
MANAGEMENT STRATEGY
CORPORATE
CORPORATE OFFICE