B U S I N E S S

P O L I C Y

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 What is Business Policy
• Guidelines Business policies are the guidelines developed by an organization to
govern its actions.

• Scope Spheres within which decisions can be taken by the subordinates in an

organization.

• Permission It permits the lower level management to deal with the problems and
issues without consulting top level management every time for decisions.

• Limits They define the limits within which decisions must be made

• Consist Study of the roles and responsibilities of top level management, the
significant issues affecting organizational success and the decisions affecti
organization in long-run

Ghar Se Permission Leke Chal

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Evolution Of Business Policy

Beginning / Genesis

First traced in 1911.Harvard business school introduce it as a course of b’studies

To develop general management capabilities.

In 1959 after the report of Pierson( Carnegie foundation) and Gordan and howell(ford
foundation) it was well established as a core subject.

1969 American assembly of collegiate school of business made this course

mandatory.

Nowadays BP is now knows as strategic management, corporate strategy ,corporate

policy.

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Evolution based on practices.

Paradigm of ad hoc policy (Mid 1930S)

Planning was confined to day to day activity. Around 1930 attempts were made to
orecast the future for bit longer period.

n US firm them emphasis on ad hoc policy b’cos of expansion in market n product.

They introduced budgeting and control system.

2.Paradigm of planned Policy.(1930 to 1940)

Increase in technical innovation and competitive pressure adholic policies were replaced
by integrated policies in different functional areas.

Long term planning which was based on forecasting future by using economical
and technical tools.

3.Strategic Paradigm –

With development of system and game theory of decision making people adopted
Concept of strategy in management.
ncrease in competition forced companied to use corporate strategy.
Focused on competitive environment and it’s factor
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4. Paradigm of strategic Management(1980 onward) –

As a result of globalization, Competition become fierce and international. The world

economy was open because of GATT and its successor WTO.

SM focus on direct involvement of top mngmt in formulation and environmental

analysis to develop likely future business plans.

SM is now the core of BUSINESS POLICY

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Features Of Business Policy

SPECIFIC- Policy should be specific/definite. If it is uncertain, then the

implementation will become difficult.

Ex- Airtel decide to operate predefined in 14 circles in India

C L E A R- Policy must be definite. It should avoid use of jargons and connotation

There should be no misunderstandings in following the policy.
Ex – Reliance

Policy on Financial and Accounting Integrity

“ We are committed to the maintenance of accurate and complete corporate records”.

REL I ABLE- Policy must be uniform enough so that it can be efficiently followed
by the subordinates.
Ex- TCS committed to reducing environmental impact

A P P R O P R I A T E - Policy should be appropriate to the present organizational goal.

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S IMPLE- A policy should be simple and easily understood by all in the
organization.

I N C L U S I V E / C O M P R E H E N S I V E - In order to have a wide scope, a policy

must be comprehensive.

F L E X I B L E - 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.

S T A B L E - Policy should be stable else it will lead to indecisiveness and uncertainty

in minds of those who look into it for guidance.

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 C urrent Trend InBusIness PolIcy
1.Focus on Strategic Management

BP focus on SM unlike Operation Mngmt. Its deals with scritanising and changing with
environment.
Ex :- Videocon, LG entered into mobile manufacturing bcos of growing demand of mrkt.

2. Social and Ethical Consideration

Now a days everything is not fair in corporate war. Companies are social and ethical

Ex Classmate donate 1 Rs for every purchase of 2 notebooks for rural development.

Nokia recycling phones. Pharma Co. organise free checkup camps.(Cipla, Ranbaxy)

3.Extended scope

Profit is not only business of business. They started with some non profit
Business too.

4.Emphasis on Research

Before formulation and implementation lot of research activities is been done now.

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S T R A T E G Y

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Strategy

“ Strategy is an action that managers take to attain one

or more of the organization’s goals.”

“ Its A general direction set for the company and its various
components to achieve a desired state in the future ”.

“ A strategy is all about integrating organizational activities and utilizing and

allocating the scarce resources within the organizational environment so as to
meet the present objectives.

“ Strategy can also be defined as knowledge of the goals, the uncertainty of events

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“Strategy is the blueprint of decisions in an
organization that shows its objectives and goals,

Plans for achieving these goals,

The type of economic and human organization
it wants to be,

Contribution it plans to make to its

Shareholders, customers and society”

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“Strategy is a well defined roadmap of an organization. It defines the overall mission, vision and
direction of an organization ”.

“ The objective of a strategy is to maximize an organization’s strengths and to minimize the

strengths of the competitors”.

“Strategy, in short, bridges the gap between “where we are” and “where we want to be”.

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F eatures of S trategy

Strategy is Significant
Because it is not possible to see the future. Without a perfect foresight, the
firm must be ready to deal with the uncertain events which consist of Business
environment

Visionary
Strategy deals with long term developments rather than routine operations,
i.e. it deals with probability of innovations or new products, new methods of
productions, or new markets to be developed in future.

Predictive
Strategy is created to take into account the probable behavior ofPage 14
customers
Thank You
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 Strategic Management

It is the process of specifying the organization's mission, vision and objectives, developin
policies and plans, often in terms of projects and programs, which are designed to
achieve these objectives, and then allocating resources to implement the policies and
plans, projects and programs.

Managerial decisions & actions that determines the long-run performance of a business

a bundle of decisions and acts which a manager undertakes and which decides the
result of the firm’s performance.

planning for both predictable as well as unfeasible contingencies.

It deals with making and implementing decisions about future direction of an organization

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S M is a continuous process that evaluates and controls the business,
evaluates its
competitors and sets goals and strategies to meet all existing and
potential competitors.

Re-evaluates strategies on a regular basis to determine how it has

been implemented
and whether it was successful or does it needs replacement.

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Why SM

better performance and a sustainable competitive advantage for their organization.

make use of arising opportunities from the business environment and shouldn’t ignore t
By SWOT analysis

It helps us to identify the direction in which an organization is moving.

evaluates its competitors and sets goals and strategies to meet all existing and potentia

gives a broader perspective to the employees of an organization and they can better
understand how their job fits into the entire organizational plan and how it is co-related
to other organizational members.

strategic management is to integrate various functional areas of the organization compl

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 Process of StrategIcmanagement
Strategic management process has following four steps:

1.Environmental Scanning

Environmental scanning refers to a process of collecting, scrutinizing and providing

information for strategic purposes. It helps in analyzing the internal and external
factors influencing an organization. After executing the environmental analysis
process, management should
evaluate it on a continuous basis and strive to improve it.
 
2.Strategy Formulation- Strategy formulation is the process of deciding best
course of action for
accomplishing organizational objectives and hence achieving organizational
purpose. After conducting
environment scanning, managers formulate corporate, business and functional
strategies.
3.
Strategy Implementation- Strategy implementation implies making the strategy
work as intended or
putting the organization’s chosen strategy into action. Strategy implementation
includes designing
the organization’s structure, distributing resources, developing decision making
process, and
managing human resources.
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rategy Evaluation- Strategy evaluation is the final step of strategy manageme
ocess. The key strategy evaluation activities are: appraising internal and externa
ctors that are the root of present strategies, measuring performance, and taking
medial / corrective actions. Evaluation makes sure that the organizational strateg
well as it’s implementation meets the organizational objectives.

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Second level
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