Business policy

Concept: business policy is the study of the function and responsibilities of senior management , the
crucial problems that affect success in the total enterprise , and the decisions that determine the
direction of the organization and shape its future of it uncertain, then the implementation will
become difficult

Features of business policy

1. Clear – policy must be unambiguous. It should avoid use of jargons and connotations there
should be no misunderstandings in following the policy
2. Specific – policy should be specific/definite if it is uncertain, the implementation will become
difficult
3. Reliable/uniform – policy must be uniform enough so that it can be efficiently followed by
the subordinates
4. Appropriate – policy should be appropriate to the present organizational goal.
5. Simple – a policy should simple and easy understood by all the organization.
6. Flexible – policy should be flexible in operations/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
7. Stable – policy should be stable or else it will lead to indecisiveness and uncertainty in minds
of those who look into it for guidance
8. Inclusive/comprehensive – in order to have a wide scope, a policy must be comprehensive

Classification of business policy :-

On the basis of sources-
1. Originated policy
2. Appealed policy
3. Implied policy
4. Externally imposed policy
b. On the basis of different level:-
1. Basic policy
2. General policy
3. Departmental policy

On the basis of managerial functions:-

1. Planning policy - future cores of action
2. Organizational policy - specific for organizational goals
3. Motivational policy – motivate people

Procedure of policy making:

Policy can be define as follow;

“Business policy is an implied overall guide, setting up boundaries, that supply the general limits and
direction in which management action will take place”’ – prof. George terry Besides a business policy
– “is nothing more than well – developed statement of individuals and goals” – prof Peter and
Wotrube

DEVELOPMENT OF POLICY

IDENTITY THE SITUATION

DESSIMINATION

EXPLANATION OF THE POLICY

ACCEPTANCE OF THE POLICY

FEEDBACK

Objectives of business
 The business objective is a goal, i.e. where the business wants to reach in the future. For example, a
business wants to set up its franchise in another state in the 3 years or it wants to increase its
workforce in the coming months

Classification of business :-
Business classification is broadly of two
types-
1. Industry business classification
2. Commerce business classification

The basis for business classification is the activities out by businesses. For example, industry
classification looks to classify businesses based on their activities conversion and processing of
resources, whereas commerce looks to classify businesses based on goods distribution activities

business

industry commerce

primary secondary tertiary Trade Auxiliaries to

trade

1. Industry business classification

Businesses are broadly divided into three
sectors:
 Primary sector
 Secondary sector
 Tertiary sector

Commerce is broadly divided into two

categories:
Trade and aids to trade.

Characteristics of business
Economic Activity

Production/purchase of goods

And service

Selling of goods and services

Continuity in dealings
business

Profit Earning

Element of risk

Uncertain return

Legal and lawful

Types of objective
The different types of objectives are :-

 Economic objectives: financial aspects, fiscal and other objectives

 Social objectives: objectives, which are societal suitable and acceptable
 Survival objectives: objectives established by firm or organizations to grow and develop.
 Growth objectives: established by firms or organizations to grow and develop.
 Long term objectives: objective established for a period of more than an

Year

 Short term objectives: objectives that are established for a period of less than a year.
 Higher level objectives: the objectives that are established for the strategic level or top level
of the organizations

 Lower level objections: the objectives that are established for lower level of the organisation
or the middle level
 General objectives: objectives which covers the overall aspect of the business
 Specific objectives: objectives that are specific with clear instructions for any business are
termed thus
 Comprehensive objectives: a concise, brief list of objective covering all areas of the
organisation
 Functional objectives: a set of objectives specifically developed for each functional area in
the organization like HR, R&D, finance, Quality Control, Marketing, and Production and so on

Corporate planning:-
Corporate planning is setting long term objectives and goal within organization’s life. Through
planning on a corporate level, hurdles that might hinder the growth towards pre-determined goals
come to light, and the management can provide solutions to solve them. Moreover, it allows the
company to manage its resources more efficiently.
Objectives of corporate planning
1. Setting a strategy
The fundamental objective of framing a corporate plan is setting a business strategy. At the
stage, company should look at the opportunities and analyses the threat in the market. For this, they
can make a SWOT analyses and select viable propositions for investing their funds

2. Planning the operations

Once a firm knows his mission statement, it can use these objectives and find ways of attaining
them. The sole propose of corporate planning is to help a firm plan and prepare a list of resources it
requires to deliver to achieve its goal

3. Monitoring and control

There should be measurable indicators present in strategic plan to evaluate the progress of the
work rate vis-à-vis the initial plans

4. Review
Establishing and forming well-devised instrument to devise annual reports is a crux to a
successful corporate plan. Since the market environment constantly changes with events changes in
economic a company regularly needs a review

Key elements of a successful corporate

strategic plan
1. Mission statement
2. Vision statement
3. Objectives
4. Division of labour
5. Business operating plan
6. Financial plan
Strategic planning :-
Strategic planning is a process in which an organization’s leader define their vision for the future and
identify that organization’s goal and objectives. The prosses includes establishing the sequence in
which those goals should be realized so that the organization can reach its stated vision.

Strategic planning important:-

Businesses need direction and organization’s leaders to work toward. Strategic planning offers that
type of guidance. Essentially, a strategic is a roadmap to get to the business goals. Without such
guidance, there is no way to tell whether a business is on track to reach its goals.

The following four aspects of strategy development are worth attention:

 The mission. Strategic planning starts with a mission that offers a company a sense of
purpose and direction. The organization’s mission statement describes who it is, what it does
and where it wants to go. Mission are typically broad but actionable.

For example, a business in education industry might seek to be a leader in online virtual educational
tools and services.

 The goals. Strategic planning involves selecting goals. Most planning uses SMART goal—
specific, measurable, achievable, realistic and time-bound – or other objectively measurable
goals. Measurable goals are important because they enable business leaders to determine
how well business is performing against the goals and overall mission. Goal setting for the
fictitious educational and collaborations and technologies, ‘such as virtual classroom
platform within two years or increasing sales of an existing tool by 30% in the next year.
 Alignment with short term goals. Strategic planning relates directly to the short terms,
tactical business planning and can help business leaders with everyday decision making that
better align with business strategy. For the fictitious educational and colloborations and
technologies.
 Evalutions and revisions -