Business Policy

Business Policies are guidelines developed by an organization to govern its actions.  The policies are the framework within which all decisions must be made.  Business policy defines the scope within which decisions can be made by the lower level executives and subordinates.  These decisions can be made without reference to the top level management to deal with day-to-day problems/routines on their own.

Business policy also deals with acquisitions of resources with which an organization’s objectives and goals can be achieved.  Business Policy also defines the roles and responsibilities of top level management, the significant issues that affect the organization’s success and the decisions affecting the organization in the long run.

Main features of the Business Policy:

• Specificity:  Policy should be clear, lucid and specific.  Lack of clarity or uncertainty could lead to improper implementation of policy.
• Reliability/Uniformity: Policy must be unambiguous.  Unnecessary jargons and connotations should be avoided.  Misunderstandings should not creep in to adhere to the policy.
• Appropriateness:  Policy should be appropriate to the organizational goals.
• Simplicity: Policy should be simple in language for everyone to understand and follow.
• Inclusivity/Comprehensiveness: Policy should be comprehensive to cover the full gamut of organizational requirements.
• Flexibility: Policy should be flexible for application and operation. It should be wide in scope for managers and middle level officers to implement them routinely.
• Stability: Policy must be stable, so that indecisiveness and uncertainty can be eliminated when looking for guidance.

Difference between Policy and Strategy:

• Policy is different from strategy and they are not inter-changeable in use.
• Policy is a blue-print of the organization for day-to-day routine activities; while strategy refers to those organizational decisions which have not been dealt with before in the same form.
• Policy formulation is the responsibility of top management; strategy formulation and implementation is done by senior and middle level management.
• Policy is routinely practiced for efficient and effective running of the organization;      strategy deals with strategic decisions.
• Policy is concerned with thoughts and action; strategy is mostly action.
• A policy is what is and what is not done; strategy is the methodology used to achieve a target as enunciated by policy.

Business Policy is a basic document on which the whole organization revolves and evolves.

 Questions:

• Define Business Policy.
• Discuss the main features of a good Business Policy.