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 to deal with the problems and issues without consulting top level management every time for decisions. 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 following are the main features of business policies: (a) Policies are always in writing: The policies in general are written procedures which specify limits or guidelines for perfection of work to be undertaken in future. (b) Directions towards goal achievements: A policy is formulated in context of organisational objectives. Therefore, the policy tries to contribute towards the achievements of organisational achievements by specifying limits. (c) Persuasive Function: Formulation of policy is a function of all managers whether manager of marketing, personnel, finance department etc. (d) Policy Differs from Strategy: A layman may think, there is no difference between policy and strategy, so at times people use these words interchangeably. Policies are identified as guides to thinking in decision making while strategies devote a general program of action and a commitment of emphasis and resources towards the attainment of comprehensive objectives. (e) Expressed in Qualitative and General Way: Policies are generally expressed in a qualitative, conditional and general way. The verbs most often used in setting up policies are to maintain to continue, to follow, to adhere, to provide, to assist, to assure, to employ etc. (f) It Involves Choice of Purpose: Policies involves a choice of purpose and defining what needs to be done in order to mould the character and identify of organisation. (g) Policies Must be Long Range: In general a policy is a written decision by top management for achieving certain results. (h) Clarity of Thought: A policy should be clear and self explanatory thus there will be no change for wrongdoing. (j) Policies are reflection of management philosophy: a policy is a written and effective expression of management thought and action.