Business Policy

Unit:- Ist
Dr. Sushma Sharma
 
 A business is defined as an organization or enterprising
entity engaged in commercial, industrial, or professional
activities. Businesses can be for-profit entities or they can
be non-profit organizations that operate to fulfil a
charitable mission or further a social cause. 

 The term "business" also refers to the organized efforts

and activities of individuals to produce and sell goods and
services for profit. Businesses range in scale from a sole
proprietorship to an international corporation. Several
lines of theory are engaged with understanding business
administration including organizational behaviour,
organization theory, and strategic management.
 Business policy basically deals with decisions regarding the
future of an ongoing enterprise. Such policy decisions are
taken at the top level after carefully evaluating the
organizational strengths and weaknesses in terms of
product price, quality, leadership position, resources etc.,
in relation to its environment.
 Business policy implies the choice of purposes, the
shaping of organizational identity and character the
continuous definition of what is to be achieved and the
deployment of resources for achieving corporate goals
According to Flippo,
Policy “is a man made rule of pre-determined
course of action that is established to guide the
performance of work toward the organization
objective. It is a type of standing plan that serves
to guide subordinates in the execution of their
task.”
 According to George R. Terry, meaning of
Policy is “A verbal, written or implied overall
guide setting up boundaries that supply the general
limits and directions in which managerial actions
will take place.”
Business Policy
The word ‘Policy’ is derived from the Greek word ‘Politeia’
meaning policy or government. In the autocratic system the
policies are framed by the leader whereas in the democratic
system the policies are framed by the people.

Definition

George R. Terry, meaning of Policy is “ A verbal, written or

implied overall guide setting up boundaries that supply the
general limits and directions in which managerial actions will take
place.”
Nature of Business Policy
1.Specific- Policy should be specific/definite. If it is uncertain, then the
implementation will become difficult.
2.Clear- Policy must be unambiguous. It should avoid use of jargons and
connotations. There should be no misunderstandings in following the
policy.
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 be simple and easily understood by all in the
organization.
6.Inclusive/Comprehensive- In order to have a wide scope, a policy
must be comprehensive.
7.Flexible- 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 petitive/routine
scenario
Importance Of Business Policy
Balance
The ideal business policy encourages individual productivity without making the
employee feel as though you micromanage him. According to Entrepreneur magazine,
neither an extremely detailed nor a nonexistent business policy creates a highly
productive work environment.

Job Descriptions
Include in your business policy a description of each position in the organization.
Employees must understand their role and how they will interact with others within the
organization. Each employee should understand how their work impacts others in the
company. Make the reporting structures clear both inside the department, between
departments and companywide. Once employees understand their responsibilities, hold
them responsible for their work performance.

Liability
Entrepreneur magazine states that when employees misbehave on the job, the employer may be
held liable for how that situation affects clients, individuals or other employees. A written
business policy with clear behavioral expectations helps establish that you do not approval of and
are not contributing to the employee's bad behavior.
Consequences for Violations
Establish rules that address any violations of your business policy. Stating the
consequences for violating business policy puts the employee on notice and also
increases the employer's options for effectively dealing with behaviors contrary to
policy. Decide what behaviours mandate an immediate dismissal and what behaviors
will trigger a disciplinary approach, and clearly outline the steps involved in your
disciplinary procedure. From policy, the employee understands the disciplinary
process.
Forecasting
Forecasting is the process of making statements about events whose actual outcomes
(typically) have not yet been observed. A commonplace example might be estimation
for some variable of interest at some specified future date. Prediction is a similar, but
more general term. Both might refer to formal statistical methods employing time
series, cross-sectional or longitudinal data, or alternatively to less formal judgmental
methods.
 BASIS FOR COMPARISON STRATEGY POLICY

Meaning Strategy is a comprehensive Policy is the guiding

plan, made to accomplish principle, that helps the
the organizational goals. organization to take logical
decisions.

What is it? Action plan Action principle

Nature Flexible Fixed, but they allow

exceptional situations

Related to Organizational moves and Organizational rules for the

decisions for the situations activities which are
which have not been repetitive in nature.
encountered previously.
Orientation Action Thought and Decision

Formulation Top Level Management Top Level Management

and Middle Level
Management

Approach Extroverted Introverted

Describes Methodology used to What should be done and

achieve the target. what should not be done.
Parameters of Policy:

1. Policy should be identifiable and clear, either in

words or in practice.
2. Objectives of the policy should be fully identified
and well defined.
3. Policy should not be conflicting with other
functional and divisional policies of the company.
4. The policy should be capable enough to fully
exploit the opportunities.
5. Policy should be characterized by fairness and
honesty with organizational philosophy, objectives,
goals and strategy.
6. Policy should be appropriate to the desired level of
contribution to society.
7. Policy should be acceptable to all concerned; i.e., it
should be appropriate to the personal values and aspirations
of the key managers.
8. Policy should constitute a clear stimulus to
organizational effort and commitment.
9. Policy should always be realistic.