BBA 2010

BUSINESS POLICY AND

STRATEGIC PLANNING

KHOO YU TING
921227015896
200080

MR. CHONG KAR YUN

MARCH 2012

TABLE OF CONTENT

TOPIC

PAGES

Contents

Business Policy

3-4

Factors Affecting Business Policy

-Economics factors

5-16

-Political and Legal factors

-Social-cultural factors

-International factors
Conclusion

17-18

References

19

Coursework

20-23

2.0 Business Policy

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Business policies are sets of rules followed by a store or group of stores that define
business processes, industry practices, and the scope and characteristics of a store's or
group of stores' offerings. They are the central source and reference template for all
allowed and supported practices within a store or group of stores.
In Web Sphere Commerce, business policies are enforced with a combination of one or
more business policy commands that implement the rules of the business policy. Each
business policy command is a Java class. A business policy command can be shared by
multiple business policies. The behavior of the business policy command is determined
by the parameters passed to the command.
Parameters affecting the function of a business policy command can be introduced in
three places:

the contract term and condition referencing the business policy

the business policy definition

the business policy command itself

The business policy definition may specify a set of parameters that are automatically fed
into each invocation of any of commands associated with the policy. A business policy
command may specify additional parameters when it is invoked. Finally, a contract term
and condition may proved extra parameters for a business command unique to the term
and condition.

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Business policy commands for the same type of business policy must have the same
interface.
The following categories of business policies are provided in Web Sphere Commerce:
Catalog business policies
Catalog business policies define the scope and characteristics of the catalog of
products for sale in a store including prices and the categorization of products in a
store's catalog.
Payment business policies
Invoicing, payment, and refund business policies define how a store accepts
payments, pays refunds, and the format of a store's invoices.
Returns business policies
Returns business policies define if refunds are accepted, the time period they are
accepted for, and any re-stocking fees applied to returns.
Shipping business policies
Shipping business policies define the shipping providers a store can use and the
charges associated with each type.
Referral interface business policies
Referral interface business policies define the relationship between a proxy store
and a remote store.

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3.0 Factors Affecting Business Policy

Economic factors
Demand and Supply
The demand and supply are two principal factors that affect the working of any business
model. The demand is the will and ability of consumers to purchase a particular
commodity and the supply is the ability of the business to provide for the demand of
consumers. It must be noted that all the factors that are included in this list are interconnected. You may also read demand and supply analysis.

Marginal and Total Utility

Utility is the amount of satisfaction, that is derived by consumers from consumption of
goods. It so happens that after continuous and successive consumption of units of the
same goods, the satisfaction that is experienced by consumer starts decreasing. This often
results into short term or long term fall of sales. Some organizations prepare for the
launch of another brand before the fall in utility and sales is experienced. The launch of
new brand, ensures that the revenue trend of the business does not fall. Diminishing
utility is among the external factors affecting business. You may also read more on
diminishing marginal utility.

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Money and Banking

Banking facilitates monetary and fiscal policies that affect business and also the
customers of the business. Money in circulation dictates the paying power or rather the
demand of the consumers and the banking facility dictates the borrowing capacity of
individuals as well as the business.

Economic Growth and Development

Economic growth dictates the amount of finances that the society at large is earning and
development indicates the volume of money that is being invested into channels of long
term up-gradation. Among all the economic factors affecting business environment,
development is the most important one, as the business has to cater to the demand of an
economically dynamic society.

Income and Employment

Another very important aspect of the economy that affects the working of the business, is
the level of employment and rate of income. The per capita income and density of
employment dictates the rate of demand, density of demand and also the purchasing
power of the people.

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General Price Level

Another very important aspect of the economy, that affects the business is the general
price levels of the commodities that also affect the sales of the business. Costs of raw
materials, paying power of people, cost of production and finally, cost of transport are
some of the important components that determine the general price level and also, the
sales of the firm.

Trade Cycles
Trade cycles are the fluctuating costs of goods and commodities in an economy. Rise,
stability, continuity and fall are some of the important cycles that affect the prices off all
goods such as raw material, credit, final goods, etc. Trade cycles also many a times affect
the general price level.

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Political and Legal factors

Lets focus briefly on how the political and economic ideologies that define countries
impact their legal systems. In essence, there are three main kinds of legal systems
common law, civil law, and religious or theocratic law. Most countries actually have a
combination of these systems, creating hybrid legal systems.

Legislation
Civil law is based on a detailed set of laws that constitute a code and focus on how the
law is applied to the facts. Its the most widespread legal system in the world.
Common law is based on traditions and precedence. In common law systems, judges
interpret the law and judicial rulings can set precedent.
Religious law is also known as theocratic law and is based on religious guidelines. The
most commonly known example of religious law is Islamic law, also known as Sharia.
Islamic law governs a number of Islamic nations and communities around the world and
is the most widely accepted religious law system. Two additional religious law systems
are the Jewish Halacha and the Christian Canon system, neither of which is practiced at
the national level in a country. The Christian Canon system is observed in the Vatican
City.
Employment Law Employment laws are very versatile and always changing so JLR
must keep up with these changes to make sure that they are following the legislations. For
example the minimum wage regulations mean that JLR must pay all of their employees a
certain amount of they will be breaking the law and will face penalties for it. These
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regulations would apply for Bedford borough council as well because their employees
would have to be paid at least the minimum wage because regardless whether youre a
private business or a public body everybody must follow these regulations.
Competition Law There are rules in place as to how businesses compete with each
other, and JLR are subject to these legislations. For example JLR cant agree to set
certain prices with another competitor to regulate the market and also they are only
allowed to expand to a certain extent and will be penalised if they was to become a
monopoly company. These competition laws dont apply to Bedford Borough council
because they to an extent arent competing for anything and they are simply trying to
run a population so they cannot become a monopoly.
Attitude Toward Business
In this article, we set out to examine how small business managers overall attitude
toward growth was influenced by the consequences they expected from growth. In doing
that, we used data from three separate survey studies employing the same measuring
instruments. This allowed us to come up with many useful comparisons. Some results
recur very consistently across sub-analyses and can therefore be accepted even if the
associated probability of the coefficient is not very low in every analysis. Other results,
while statistically significant in one analysis, may be disregarded because the result
appears in isolation. The general approach--to repeat the same measurement in several
separate surveys--is something we would highly recommend to other researchers. Results
from multiple samples are a much better basis for determining ones degree of
confidence, than is significance testing alone.

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Social-cultural factors
Social and cultural factors are important to consider while creating and implementing a
marketing strategy of a company. These often-linked but somewhat different factors have
diverse effects on the decisions of consumers and buyers. Basically, sociocultural factors
are customs, lifestyles and values that characterize a society. More specifically, cultural
aspects include aesthetics, education, language, law and politics, religion, social
organizations, technology and material culture, values and attitudes. Social factors
include reference groups, family, role and status in the society. Small-business owners
should be aware of and understand these factors' connection with buying habits.

Education and Language

The average level of education in a society affects the interests and sophistication of
consumers. For example, in a community in which a high percentage of potential
customers have some form of post-secondary education, small-business owners might use
more details and explanations while advertising and promoting products. The spoken
language of the community is a decisive factor on the labeling and advertising of the
products. Consider the foreign language skills in the society while advertising. For
example, in Washington, D.C., different transportation companies use English and
Spanish on their brochures.

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Social Organization

As part of the culture, social organization is the way a society organizes itself, how it
considers kinship, status system, social institutions and interest groups. For example, the
role of women in a society, whether they are the decision-makers in shopping, for
example, is a decisive factor in marketing. A major interest group in the area -- such as oil
companies in Texas -- can also influence society. The marketing of a small business can
be successful by building its advertising strategy on women or moms, a specific interest
group or a leader that has the biggest influence in the community.

Reference Group and Family

Because people are social beings, each person has people around him who influence his
decisions in some way. Reference groups comprise people with whom individuals
compare themselves. Family members, relatives, neighbours, friends, co-workers and
seniors at workplace can form reference groups. Well-known and respected idols in
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society serve as examples in lifestyle, values and buying habits. Family is a specific
reference group and can play the most important role in influencing the buying decisions
of the individuals. Spouses, children or grandparents have different needs and necessities.
Being aware of and finding the major reference groups, persons or family structures in a
community and building marketing on them can help small businesses achieve success.

Role and Status in Society

A person's role in society and social status affects her buying decisions. Each person
plays a dual role in society depending on the group to which she belongs. An individual
working as president at a reputed firm is also someones wife and mother at home. The
social status is also a relevant factor; an individual from an upper-middle class would
spend on luxurious goods, while an individual from a lower income group would buy
items required for basic needs. Knowing the income information of the potential
customers gives the small-business owner an edge, allowing her to have more
information about customer habits and implement a successful marketing strategy.

Population Changes

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A population change occurs when the number of people in a geographical area increases
or decreases. This can occur due to two causes. The first is through natural population
change, which is caused by more births and fewer deaths. This is normally achieved by
better medical care prolonging life and decreasing infant mortality. The second method of
population change is through migration. Generally, every year people move out of an area
and others move in. If more people immigrate than emigrate, the population of the area
will grow.

Lifestyle Changes
A persons lifestyle is essentially who he is. A persons habits, beliefs, morals and
financial status combine to manifest how he chooses to live his life. It determines the
choices he makes, the things he wants and the things he purchases. Understanding the
general lifestyle trends of a population can allow a business to better market itself. If
those trends change, the business needs to change.

Page 13 of 24

International factors
In international economics, international factor movements are movements
of labor, capital, and other factors of production between countries. International factor
movements occur in three ways: immigration/emigration, capital transfers through
international borrowing and lending, and foreign direct investment International factor
movements also raise political and social issues not present in trade in goods and
services. Nations frequently restrict immigration, capital flows, and foreign direct
investment.
Function

Factors serve exporters in several ways. First, they hire out local employees to
deal with the importer. This means that foreign customs and languages are no longer an
issue for the exporter. Second, the factor takes over the financial arrangements between

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exporter and importer. Third, in so doing, the factor investigates the local firm doing the
importing, especially the financial soundness of the potential importer. Finally, the factor
expedites collections from the importer, and is 100 percent responsible for all promised
money. The factor pays if the importer cannot. Factors, in other words, guarantee all
contracted sales.
Benefits

Hiring a factor reduces risk and worry over international clients. Since many
import contracts are billed after delivery, cash flow issues do arise, as do worries about
the solvency or transparency of an import firm in an unfamiliar country and culture. All
factoring is done by locals who know the local scene and how to communicate in the
local language. Cash flow and collections move more speedily.
Features

Factors are normally paid on commission. A factor's fee fluctuates with the
amount of sales his patron does with a specific country. This is done through the factor
forwarding up to 80 percent of the purchase price at the time the contract is signed. Once
delivery is made, the factor forwards the remainder of the money, subtracting his fee. The
factor is totally responsible for all financial dealings with the importer so that the exporter
does not need to worry about cash flow. Thus, company budgets become more accurate.

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Effects

The main effect of factoring is to smooth international sales. Mutual suspicion is

eliminated by the factor, who has already paid much of the purchase price in advance.
Ultimately, the factor lowers transaction costs. Factoring is, in essence, an insurance
policy that varies from transaction to transaction.
Significance

Organizations such as the Export-Import Bank exist largely to insure exports and
foreign investments. However, factoring has largely taken this function away from
agencies such as this and placed it in private hands. Factoring goes beyond the traditional
role of the Export-Import Bank in that, unlike the latter, it monitors the behavior and
financial operations of the importer and retailers.

Intergovernmental Relations

The Division of Intergovernmental Relations provides a broad array of services to

the public and state, local and tribal governments. It supports counties, municipalities,
citizens and businesses by providing support services in land use planning, land

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information and records modernization, municipal boundary review, plat review,

demography and coastal management programs.

4.0 Conclusion

Page 17 of 24

Strategic planning pays dividends to companies when approached in a disciplined process

with top-down support and bottom up participation. The following is the tenth in a series
of ten articles describing one proven, tested process for effective strategic planning.
Over the first nine articles in this series of articles, we have attempted to provide an
overview of the process and development of and effective strategic plan for any business.
The goal was to begin to apply a workable framework and process; one that when applied
would result in a product helpful to guiding and directing the management to do what is
consistent, right and effective for the long term success of the company and satisfaction
of the customer and employees.
A well-crafted Strategic Plan can and should help to avoid the Christopher Columbus
Syndrome. That is, when he started he did not know where he was going; he did not
know where he was when he got there, and when he returned, he did no know where he
had been.
The Strategic Plan is simply a tool to be thought of as a guide or map. It has a starting
point, (todays conditions and environment). It has an ending point, where the company
wants to be, (terms of success), in the future. And it has a middle or process. That is the
hard work part. The middle part is coming to terms with all of the elements that may be
either supportive of or in the way of getting from the start to the end. It is a process that
answers the question of how is the best, most likely way to be successful as defined by
the stakeholders and allowed by the customers and embraced by the employees.
While we presented one way to conduct the process of Strategic Planning it is by no
means the only way. The process has to fit the culture, resources and style of the
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company. It must reinforce the confidence of management to make consistent, workable

decisions.

5.0 References
Page 19 of 24

1.
2.
3.
4.
5.

text book
http://www.google.com/
http://en.wikiversity.org/wiki/
http://www.ehow.com

John F. Dix and H. Lee Buck Mathews

6.0 Coursework
1.Phases of Strategic management

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Phase 1-Basic financial planning: Managers initiate serious planning when they are
requested to propose the following years budget. Projects are proposed on the basis of
very little analysis, with most information coming from within the firm. The sales force
usually provides the small amount of environmental information. Such simplistic
operational planning only pretends to be strategic management, yet it is quite time
consuming. Normal company activities are often suspended for weeks while managers try
to cram ideas into the proposed budget. The time horizon is usually one year.

Phase 2-Forecast-based planning: As annual budgets become less useful at stimulating

long-term planning, managers attempt to propose five-year plans. At this point they
consider projects that may take more than one year. In addition to internal information,
managers gather any available environmental data-usually on an ad hoc basis-and
extrapolate current trends five years into the future. This phase is also time consuming,
often involving a full month of managerial activity to make sure all the proposed budgets
fit together. The process gets very political as managers compete for larger shares of
funds. Endless meetings take place to evaluate proposals and justify assumptions. The
time horizon is usually three to five years.

Phase 3-Externally oriented (strategic) planning: Frustrated with highly political yet
ineffectual five-year plans, top management takes control of the planning process by
initiating strategic planning. The company seeks to increase its responsiveness to
changing markets and competition by thinking strategically. Planning is taken out of the
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hands of lower-level managers and concentrated in a planning staff whose task is to

develop strategic plans for the corporation. Consultants often provide the sophisticated
and innovative techniques that the planning staff uses to gather information and forecast
future trends. Ex-military experts develop competitive intelligence units.
Upper-level managers meet once a year at a resort retreat led by key members of the
planning staff to evaluate and update the current strategic plan. Such top-down planning
emphasizes formal strategy formulation and leaves the implementation issues to lower
management levels. Top management typically develops five-year plans with help from
consultants but minimal input from lower levels.

Phase 4-Strategic management: Realizing that even the best strategic plans are worthless
without the input and commitment of lower-level managers, top management forms
planning groups of managers and key employees at many levels, from various
departments and workgroups. They develop and integrate a series of strategic plans aimed
at achieving the companys primary objectives. Strategic plans at this point detail the
implementation, evaluation, and control issues. Rather than attempting to perfectly
forecast the future, the plans emphasize probable scenarios and contingency strategies.
The sophisticated annual five-year strategic plan is replaced with strategic thinking at all
levels of the organization throughout the year. Strategic information, previously available
only centrally to top management, is available via local area networks and intranets to
people throughout the organization. Instead of a large centralized planning staff, internal
and external planning consultants are available to help guide group strategy discussions.
Although top management may still initiate the strategic planning process, the resulting

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strategies may come from anywhere in the organization. Planning is typically interactive
across levels and is no longer top down. People at all levels are now involved.

2. Archie Carroll proposes that the managers of business organizations have four
responsibilities: economic, legal, ethical, and discretionary.

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1. Economic responsibilities of a business organizations management are to

produce goods and services of value to society so that the firm may repay its
creditors and shareholders.
2. Legal responsibilities are defined by governments in laws that management is
expected to obey. For example, U.S. business firms are required to hire and
promote people based on their credentials rather than to discriminate on non-jobrelated characteristics such as race, gender, or religion.
3. Ethical responsibilities of an organizations management are to follow the
generally held beliefs about behavior in a society. For example, society generally
expects firms to work with the employees and the community in planning for
layoffs, even though no law may require this. The affected people can get very
upset if an organizations management fails to act according to generally
prevailing ethical values.
4. Discretionary responsibilities are the purely voluntary obligations a corporation
assumes. Examples are philanthropic contributions, training the hardcore
unemployed, and providing day-care centers. The difference between ethical and
discretionary responsibilities is that few people expect an organization to fulfill
discretionary responsibilities, whereas many expect an organization to fulfill
ethical ones.

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