Plans and

Policies
Functional Strategies
Deals with a relatively restricted plan
designed to achieve objectives in a specific
functional area, allocation of resources among
different operations within that functional area
and coordination among different functional
areas for optimal contribution to the
achievement of the business and corporate
level objectives.
 Vertical Fit Horizontal Fit
Congruence and Congruence and
coordination coordination among
among strategies different strategies
at same level.
at different level.
 Corporate Level strategies

Business Level Strategies

Functional-Level Strategies

Marketing
Plan & Financial
Policies Plan & Operational
Policies Plan & HRM
Policies Plan & Information
Policies Management
Plan &
Policies
Functional Plans and
Policies
Functional strategies defined in terms
of functional plans and policies-plans or
tactics to implement business
strategies- are made within the
guidelines set at the higher levels.
PLANS are made to select a course of
action while POLICIES are required to
act as guidelines to action
Need for Functional Plans
and Policies
To implement strategic decisions by all parts of an
organization;
To control activities in different functional areas of
business;
To reduce time spent by functional managers in
decision making
To handle similar situations occurring in different
functional areas in a consistent manner;
Coordination across the different functions takes
place
 Financial Plans and
Policies
1. Sources of Funds: Capital Mix Decisions: Capital
structure, procurement of capital and working capital
borrowings, reserves and surplus, relationship with
lenders, banks and financial institutions.

2. Usage of Funds: Investment or asset-mix decisions:

Capital investment, fixed asset acquisition, current
assets, loan and advances , dividend decisions etc.

3. Management of Funds: The system of finance,

accounting and budgeting, cash, credit and risk
management, cost control and reduction etc.
 Marketing Plans and
Policies
1. Product: quality, features, choice of models ,
brand names, packaging etc.
2. Pricing: Discount, mode of payment,
allowances, payment period, credit terms etc.
3. Place: Channels to be used, transportation,
logistics and inventory storage management
and coverage of markets etc.
4. Promotion: Advertising, personal selling, sales
promotion and publicity.
 Operations Plans and Policies
 Production system - capacity, location, layout, product or service design,
work systems, degree of automation, extent of vertical integration.

 Operations Planning and control – aggregate production planning;

materials supply; inventory, cost and quality management; and maintenance
of plant and equipment.

 Research and development- product development, personnel and facilities,

level of technology used, technology transfer and absorption, technological
collaboration and support.
 Personnel Plans and Policies
 Personnel System - manpower planning, selection,
development, compensation, communication and appraisal.

 Organizational and employee characteristics – corporate

image, quality of managers, staff and workers, perception about
and image of the organization as an employer, availability of
development opportunities for employees, working conditions.

 Industrial Relations – union-management relationship,

collective bargaining, safety, welfare and security, employee
satisfaction and morale.
Information Management Plans and
Policies
 Acquisition and retention of information- sources, quantity,
quality and timeliness of information, retention capacity and
security of information.

 Processing and synthesis of information – database

management, computer systems, software capability and the
ability to synthesize information.

 Integrative, Systemic and supportive factors – Availability of

IT infrastructure, its relevance and compatibility to organizational
needs, upgradation of facilities, willingness to invest in state-of-
the-art systems, availability of computer professionals and top
management support.
 Plans and Policies of Public
sector banks
The public sector banks (the State Bank group and the
nationalized banks) had to face a tough challenge when
the new private sector banks made their entry in early
nineties.

The new banks had the benefit of starting on a clean

slate and had started with state-of-the-art technology
which in turn helped them save on man power costs and
provide better services.

The older banks had not kept up-to-date with

technology and were facing competition of this kind for
the first time.
Introduction of new products and services: new products
include debit cards, credit cards, international cards, special
deposits, demat accounts and any-where-banking. Some of the new
services include round-the-clock phone-banking, Automated Teller
Machines (ATMs), inter-city, inter-branch banking, net-banking and
bill payment services.
Computerisation and networking of branches: Many of these
branches were also networked so that their customers could be
offered ‘any-time, any-where’ banking services.
Risk Management and Capital Adequacy: Many public sector
banks were saddled with large non-performing assets (NPAs) and
suffered from low capital adequacy. Banks have since put in place
stringent Risk Management Systems to address not only credit risk,
but also market risk and other operational risks.
References
http://www.etstrategicmarketing.com/Smmarch-ap
http://www.financialexpress.com/news/sbi-plans-m
http://www.thehindubusinessline.com/2007/09/07/
Strategic Management and Business Policy by
Azhar Kazmi