Anda di halaman 1dari 75



Executive summary:

A business policy is the study of the nature and process of choice about the future of independent enterprises by those responsible for decisions and their implementation.It is fundamentally important for organizations to develop policy. An organization without policy is an organization without control. If there were no formal documented policies, then organization personnel at any level would have no guidance on how to make decisions. There are many types of policies marketing policies, financial policies, production policies, personnel policies to name a few in every organization. Business policies generally have a long life. They are established after a careful evaluation of various internal and external factors. Policies exist at all level in the organization. Some may be major policies affecting the entire organization while other affecting other functional departments.

1. Table Contents
1. Introduction:.........................................................................................................5 2. Introduction to Business Policies: .......................................................................7 a. Why Do We Need Business Policies: ............................................................10 b. Definitions of Business Policy :- ....................................................................11 c. Difference between Policy and Strategy: .......................................................12 d. How Business Policy helps:-. .........................................................................13 e. Types of Policies: ...........................................................................................14 f. An effective business policy must have the following features: ....................21 3. SWOT analysis ..................................................................................................23 4. Scope of the Business Policy: ............................................................................34 5. Need and importance of Business Policy: .........................................................38 6. Limitations of Business Policies: ......................................................................41 7. Process/Steps of Business Policy: .....................................................................45 8. Elements/ Components of Business Policy: ......................................................52 9. Factors/ Determinants of Corporate Policy: ......................................................57 10. 11. Mission, Vision and Objective: ......................................................................60 Case Study: .....................................................................................................67


Conclusion: .....................................................................................................73

2. Introduction:
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. Once established the policy decisions shape the future of a company channel the available resources along desired lines and direct the energies of people working at various levels towards predetermined goals. In a way, business policy implies the choice character the continuous definition of what is to be achieved and the deployment of resources for achieving corporate goals. Policies provide a basic framework within which managers operate. Policies exist at all level in the organization. Some may be major policies affecting the entire organization while others may be minor in nature affecting the departments or sections in the organization. It has to be remembered that a policy is also a decision. The Business policy is integrative in nature. It enables the learner to understand the importance of looking at the organization as a unified whole. The functional flavor and emphasis is needed to motivate people to peak performance. But in the race to get ahead of other departments, especially where resources have to be put to

effective use, one should not lose sight of the broad, overall interests of an organization. A course in business policy seeks to integrate the knowledge and experience gained in various functional areas of management. Individual departments may suffer from certain unique problems. Marketing may complain against poor quality, Production may look at poor sales support. Finance may find it difficult to come out with appropriate budgetary allocations and Personnel Department may criticize the poor compensation plans coming in the way of improved performances. Sectional interests no doubt have to be taken care of. According to the policy manual of General Electric Company, "Policy is definition of common purpose for organization components of the company for benefit of those responsible for implementation, exercise discretion and good judgment in appraising and deciding among alternative courses of action."

3. Introduction to Business Policies:

The greatest difficulty in the World is not for people to accept new ideas but to

make them forget about old ideas John Maynard Keynes(Economist). The organization sets the objective and works towards their achievement. Once these objectives are defined and strategies determined, certain policies have to be made to put them into action. Business policies act as a guide to action.They provide the frame work within which an organization has to meet its business objectives. The policy points out the direction in which the company ought to go. Without Business Policy, an organisation is like a ship without rudder, going

around in circles. Its like a tramp; who has no place to go Joel Ross and Michael Kami. 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. A business policy is : guidelines to facilitate achieve predetermined objective as plan(decision making) involving all levels of the management in any business organization.It set a statement on the mode and manner how the objectives will be achieved. Without a policy the organization will function arbitrarily in an anarchic way and may not reach its objectives. Business policy is dependent on consumer satisfaction and gathering information regarding merits/demerits so as to introduce timely modifications on products. If this strategy is followed and policies are

made, the organization will prosper. Business policies are guidelines statements (guide to plans & decision making) to facilitate predetermined objective on the mode and manner in the structural & functional aspects to achieve the objective formulated as plans at all levels of management in the business organization.

Business policy course is multi-disciplinary in nature. It draws rich inputs from other disciplines such as Psychology, Economics, and Sociology etc. The students are made to examine the important issues from various angles. Sectional interests, sectoral demands, tunnel visions and departmental loyalties and a host of other disintegrating factors are examined and cross examined bit by bit, piece by piece while arriving at mutually satisfying decisions the course helps participants to cross fertilize ideas, synchronize thoughts and deal with issues dispassionately. They can come out of the shell cross functional boundaries and take effective decisions keeping the best interests of the organizations in mind. They are willing to look at the other side of the coin more closely. They are willing to listen and toss around ideas freely, interact openly and take everything good or bad in their stride.


a. Why Do We Need Business Policies:

Many business people wonder Why Do We Need Business Policies because to them it is not necessary. Policies may sometimes not favor the business people since they limit them from running the businesses the way they want. However, some policies are for protecting businesses. Therefore, entrepreneurs should not wonder Why Do We Need Business Policies. Imagine if you had a faulty product and you wished to return it to the shop from which it was purchased. If the shop has no policy on refunds, the result on whether you were able to obtain a refund might depend upon which person you spoke to, or whether the person you spoke to was having a bad day. In short, an absence of policy leads to inconsistency of decision making.


b. Definitions of Business Policy :-

According to Koontz and O'Donnell, "Policies are plans in that they are general statements of principles which guide the thinking, decision making and action in an organization." Christensen et. al. and steiner," 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. Robert J. Slockler defines Business policy as, "Strategic guidelines for action and spells out what can and what cannot be done in all areas of a companys operation."


RE Thomas, 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 relation to its environment.

Difference between Policy and Strategy:

Difference between Policy and Strategy Policy is a blueprint of the organizational activities which are repetitive/routine in nature. While strategy is concerned with those organizational decisions which have not been dealt/faced before in same form.Policy formulation is responsibility of top level management. While strategy formulation is basically done by middle level management. Policy is mostly formulated by the top level management whereas strategy is set by middle level management. Policy involves with routine/daily activities essential for running of an organization, policy is relate to both thought and action whereas strategy is mostly concerned with action alone.


d. How Business Policy helps:-.

Business Policy helps . . . To determine the mission, objective, strategies of a firm . To know external and internal environment and how it affects the functioning of an organisation . To be receptive to new ideas, information and suggestion to have a practical approach to decision making and problem solving

1) Helps the participant to understand why functional boundaries are created and appreciate why the various sub units have to move Inc lose coordination while realizing the overall objective(s). 2) Helps to resolve difference between individual and organizational goals. Every attempt is made to pull all the functions and activities together. 3) Helps participants to work in an orderly manner appreciating the work put in by others.



of Policies:

Policies come into being in any orgnisation in different ways. Koontz and Odonnel have classified policies on the basis of their source under the following categories-


Original Policy

Externally Imposed Policies

Business Policies

Implied Policies

Appealed Policies

a. Original Policy:
The top management formulates policies for the important functional areas of business such as production, finance, marketing etc. The objective is to help the concerned functional managers in decision making in their respective areas. Thus


originated policies are the result of top management initiative. These policies are formulated in the light of the enterprises objectives. They may be broad or specific depending on the degree of centralization of authority. If they are broad, they allow the manager some operational freedom. On the other hand, if they are specific they are implemented as they are.

b. Appealed Policies:
Managers often confront with particular situations as to whether they have the authority to take a decision on a particular issue or problem. The policies regarding some issues may be unclear or may be totally absent. In such case, he appeals the matter to his superiors for thinking. Appeals are taken upwards till they reach the appropriate level in the hierarchy. After thorough examination of the issues involved, policy decision would be taken at the appropriate level.

c. Implied Policies:


In some cases there may not be specific policies. Managers draw meaning from the actions and behaviour of their superiors. Though there is no explicit

policy, managers may assume it in a particular way and go about in their day-today operations.


Externally Imposed Policies:

These are the policies which are not deliberately conceived by the managements. They are rather, imposed as the organisations by the agencies in the external environment like Government Trade Unions, Industry Association, Consumer Councils etc. These agencies to protect the interest of the respective groups may lay down certain policies to be followed by the business. As the interaction of the business with external environment is increasing, one can find many policies thus coming into being in any modern business. For instance, the recruitment policy of the organization is influenced by the Govts policy towards reservation to weake r sections. Anti-pollution measures, concern for the quality of the product, customer care and service etc. come under this category.


Nature and Characteristics of Business Policy:

The nature and objective of business policy are both formulated as plans and determined by a business organization.Objective is the end to a plan while policy is the mode and manner to reach the objective.A business policy is guidelines that facilitate to reach a predetermined objective both in mode and manner formulated from the top to the lower level management while Objectives are the endpoints to a plan.Business policy is the guide post to decision making. It helps in the managerial thinking process and thus leads to the efficient and effective attainment of the objectives of any organization.

Followingare the different points of leading authorities as to what is

business policy ? The first category holds the opinion that policy and strategy are synonymous. Business policy has been defined by William Glueck as "Management policy is long range planning. For all practical purposes, management policy, long range


planning and strategic managernent mean the same thing." However, this view is quite controversial as strategy and Business policy do not mean the same thing. Strategy includes awareness of the mission, purpose and objectives. It has been defined as, "the determination of basic long term goals and objectives of all enterprise, and the allocation of resources necessary to carry out these goals", while policies are statements or a commonly accepted understandings of decision making and are thought oriented guidelines. Therefore, strategy and Business policy cannot be used interchangeably as there is a clear line of differentiation between the two terms. This view stress upon the assumption that business strategy and policy are more or less the same. However, this view did not receive much support from various authorities in the area of business management. The second group of experts view Business policy as the process of implementing strategy in the words of Frank 1. Paine and William Naumes, "Policies guide and channel the implementation of strategy and prescribe the processes within the organisation will function and be administered. Thus the term policy refers to organisation procedures, practices and structures, concerned with


implementing and executing strategy." The third group considers business policy to be decisions regarding the future of an organisation. Robert J. Slockler defines Business policy as, "Strategic guidelines for action and spells out what can and what cannot be done in all areas of a companys operation."

The views of different management authorities differ because of following reasons: There is no clear differentiation of policy from other elements of planning. There are different policies made at different levels of management for directing executives. Business policy encompasses and relates to the entire process of planning. Thus, Business policy focusses on the guidelines used for decision making and putting them into actions. It consists of principles along with rules of action that provides for successful achievement of Business objectives.



An effective business policy must have the following features:

Specific- Set specific policies pertaining to organizations goals and objectives. Implement these policies smartly and achieve the goal. Clear- Policy must be unambiguous. It should avoid use of misleading phrases and connotations. There should be no misunderstandings in following the policy. Reliable/Uniform- Policy must be uniform enough so that it can be efficiently followed by the subordinates. Appropriate- Policy should meet the organizations goal, in short it has to be appropriate. Simple- A policy should be simple and easily understood by all in the organization. Inclusive/Comprehensive- Plan comprehensive policy for the better and secure future of the organization.


Flexible- Policy should be flexible in operation/application. There should always be a scope of alteration in time of emergency. Though over flexibility could harm the organization but little flexibility in policy is required for healthy growth. Stable- Policy should be stable else it will lead to indecisiveness and uncertainty in the minds of those who look into it for guidance.


4. SWOT analysis
To beat the increasing level of competition organizations are planning their policies following the concept of SWOT. SWOT analysis (alternately SLOT analysis) is a strategic planning method used to evaluate the Strengths, Weaknesses / Limitations, Opportunities, and Threats involved in a business venture. It involves specifying the objective of the business venture and identifying the internal and external factors that could cause hindrance in achieving business goals and marking the factor that could facilitate the growth of the business. The technique is designed to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies. A SWOT analysis starts with setting objective for the organization. A SWOT analysis is incorporated into the strategic planning model. For the proper management of any business it is essential to identify the SWOT and work according to it. Identification of SWOT is important from the planning purpose. First, the policy makers have to decide whether the objective is achievable if the objective is tough or unachievable then new objective has to be considered. The


SWOT analysis is often used in many business areas including academics to highlight and identify strengths, weaknesses, opportunities and threats.

Essentials of a Good Business Policy.

How do we go about determining whether policy is good policy. In other words has it achieved the desired objectives of the organisation and the required outcomes. Good Business Policy must have this 17 characteristics:-

1) Outcomes are clearly stated.

The policy outcomes are clearly stated. Policy must have a clear purpose and outcome if it is to be of any value to the organisation. It is important that staff recognise the problem that is being addressed through the policy implementation. It is extremely difficult to implement policy in a situation where people do not perceive there is a need for the specific policy unit to be developed or implement. If policy is being implemented to support an organisation in its growth and develop it is imperative that policy outcomes are clearly stated so that everyone and understands why the policy has been implemented in what the policy expectations



2) Assumptions are clear and explicit.

The assumptions are explicit Part of the policy statement must clearly express why the policy has been written and what is hoped to be achieved by its implementation. Part of the consultative process prior to the implementation of policy needs to be a testing of the process and ideas as to why the policy needs to be implemented. One of the common problems within organisations is that people among level of the organisation believed policy next year it meant to resolve the specific problem may not necessarily exist across the entire organisation.

3) There is linkage to organisational direction.

There is linkage to organizational direction. Policy makers must ensure that policies linked to the overall direction and goals the organization. The overall framework of the business will provide some strategic direction, and will be important in assessing the direction of the organizational policies. Policy writers


must ensure that the policy supports existing policies and procedures within the organization. One of the tests of good policy is that it supports the organization in achieving its goals and objectives. Often time policy through its implementation can in fact hinder staff in achieving the organizational goals.

4) Due process in the development stage has been observed.

Due process has been observed. The organisational rules and principles must be established and clearly understood as part of the policy development process. It is crucial that all components of the organisation have some input into the policy development.

Policy implemented in one department may seem fair and reasonable until that policy has a deleterious effect impact on other parts of the organisation as a whole.

As part of the organisational framework the structure needs to be both developed and implemented that will enable policy development to happen in a concise and


engaging manner so that all aspects of the organisation have their input into the policy development and implementation.

5) Stakeholders have been included in the development.

Stakeholders have been included. Stakeholders in other words those who are directly affected by the implementation of policy and the policy outcomes need to have some inclusive process developed whereby they can participate in the policy development. Part of the policy development process therefore is to clearly identify who all the stakeholders are. And appropriate consultative strategy needs to be implemented as part of the policy development process.

6) Public interest has been given a high priority.

Public interest has been given a high priority.Public all government policy needs to have as its core public interest. In other words has the policy been written with the general outcome and expectation being that the public will be better off as result of a policy implementation. One of the core challenges for government as they


implement policy is to ensure that the policy impacts do not have a deleterious effects on members of the community.

7) Organisational expectations have been met.

Organisational expectations have been met.Policy writers must realise that they have two audiences they are dealing with first audience is a group of people that policy has a direct impact on. In other words the staff that are going to be directly impacted by the policy implementation. Staff may be required to implement new procedures as result of the new policy being implemented. Their work practices may alter to some extent. The second audience and in oftentimes more crucial audience other leaders within the organisation. Have the leaders expectations being addressed and realised in the policy outcome. It serves little purpose of the policy is tabled at a board meeting to find the majority of the board in fact do not support the policy intent or specific outcomes.


8) The policy is likely to be both efficient and effective.

The policy is likely to be effective.The intended policy is to achieve a specific outcome is outcome needs to be effective in terms of the impact that it has on the organisation. Part of the consultative process is undertaken appropriately will help identify areas where the policy may not be effective i within the organisation.

9) Outcomes are stated in measurable terms.

The policy is measureable.This refers to measurable indicators that will provide proof a specific policy is having a desired effect. This is especially useful for the evaluation stage of the policy cycle.

10) There is a capacity to evaluate outcomes.


There is capacity for evaluation.As indicated in the desired characteristic above, the ability to measure the effectiveness of any policy gives it capacity to be evaluated. Evaluation of policies helps an organization determine effectiveness and possible areas where change is needed, enabling that particular organization to work at its' most efficient level

11) It has been appropriately funded and resource.

It is appropriately funded.Not only must an organization ensure its policies, and policy development initiatives, are properly and appropriately funded, it is imperative to identify and set aside the necessary funds for its implementation. Your organization should be budgeted for these initiatives; stay within budget.

12) There is clear accountability.

Clear accountability.It should be easily apparent in the policy which persons and departments are accountable for what actions, and within what time frame.


Everyone, from the policy officers to the direct worker are accountable for some part of the policy, whether it be proper use of funds, proper protocols for developments, or the recommended implementations, must be held directly accountable.

13) It follows all appropriate laws.

Policies, whether within government organizations or business, must adhere to certain laws. If the policy officers are uncertain if the policy they propose are crossing any legal lines, then the organizations lawyers must be consulted. Not doing so and allowing improper policy to be adopted in to implementation could be very costly on a legal level.

14) It is enforceable.


A policy that cannot be enforced is not worth the time and effort put in to it, much less the paper it is written on. If the policy is practical then it should be enforceable. If not it may need to be revisited and amended.

15) It is historically informed.

If an organization is not paying attention to past experiences they often find themselves "reinventing the wheel". It is a waste of time and effort, and money. Using a good policy framework can help prevent repetition as the organization should be constantly reviewing and revising, as necessary, all policies, learning from the evaluations.

16) Ideas have been tested prior to implementation.

The ideas have been tested.Ideas can be tested through "field testing" or "dry runs". More practically however testing can be accomplished by looking back with a


historical view, as mentioned previously. Consultations with staff and others who understand and have better "first hand" experience can also be useful when testing a proposed policy.

17) The policy outcomes are clearly stated.

The policy outcomes should be clearly stated and if need arises it should made changes effectively.


5. Scope of the Business Policy:

The Scope of policy in an organisation is to: 1. Provide general guidance about the organisation's mission A policy that limits the industries in which the organisation will operate. A policy about the geographical region in which the organisation will operate. A policy about the general nature of the business i.e. profit making, nonprofit making, community recreation or elite sport. A policy about affiliations with other organisations i.e. affiliation with a national body or a peak industry body

2. Provide specific guidance toward implementing strategies to achieve the organisation's mission A policy for athlete development. A policy for recruiting, training and utilising volunteers.


A policy for employing staff. A policy for opening hours of a facility. A policy for promoting and staging events. A policy for doping control.

3.Provide a mechanism to control the behavior of the organisation: A policy for the inclusion of people with disabilities. A policy that sets up judiciaries or disciplinary hearings. A policy that regulates the election of office-bearers. A policy for dealing with complaints

Business policies are statements of guidelines for Business thinking and action. They lay down the approach before the management to deal with the challenges in the environment. They cover the following broad areas that affect the decisions of the Organisation:


1. Business policy consists of a variety of subject that affect various interest groups in the Organisation and Outside it. 2. Business policy is concerned with the various functional areas like production, human resources, marketing and finance. 3. We call understand Business policy areas in two broad categories: Major and minor policies. The overall objectives, procedures and control are covered in major policies. These policies are concerned with each and every aspect of the Organisation, its structure, its financial status, its production stature, its human resources and all those issues which require attention like mergers, research, expansion, etc. Basically, the top management is involved in the framing of such major policies. Further, the operations and activities are also carried Out by executives so that the organizational objectives are met. The minor policies are concerned with each segment of the Organisation with emphasis oil details and procedures. These policies are part of the major policies. The operational control call be made possible only if the minor policies are implemented efficiently. The minor policies are concerned with the day to day operations and are decided at the departmental levels. The minor policies may cover relations with dealers, discount rates, terms of credit etc.


Thus, Business policies cover wide range Of Subjects ranging from operational level policies to the top level policies. 1) Dealing with suppliers and employees in a responsible way - for example by being open and honest about your products and services and avoiding pressure selling. It also means going beyond the legal minimum when dealing with employees and promoting best practice.

2)Building up a good relationship with the local community - for example by supporting a local charity or sponsoring a local event.

3)Minimising your impact on the environment and cutting pollution and waste - by using energy efficiency measures, eg switching off lights, reducing the use of water.


6. Need and importance of Business Policy:

A written business policy communicates your company's expectations about appropriate employee work performance. Policy illustrates the acceptable performance boundaries while simultaneously addressing the employees' needs. Some employers prefer a written policy that covers every conceivable situation; others prefer no written policy, whereby management decides each case as the situation merits. Find the ideal balance when creating a business policy for your business. The Business policy is integrative in nature. It enables the learner to understand the importance of looking at the organization as a unified whole. The functional flavor and emphasis is needed to motivate people to peak performance. But in the race to get ahead of other departments, especially where resources have to be put to effective use, one should not lose sight of the broad, overall interests of an organization. Business policy seeks to integrate the knowledge and experience gained in various functional areas of management. Individual departments may suffer from certain unique problems. Marketing may complain against poor quality, Production may look at poor sales support. Finance may find it difficult to come out with appropriate budgetary allocations and Personnel Department may


criticize the poor compensation plans coming in the way of improved performances. Sectional interests no doubt have to be taken care of. Every attempt must be made to put out the internal fires by emphasizing the overall goals for which the organization is known. Business policy course is multi-disciplinary in nature. It draws rich inputs from other disciplines such as Psychology, Economics, and Sociology etc. The students are made to examine the important issues from various angles. Sectional interests, sectoral demands, tunnel visions and departmental loyalties and a host of other disintegrating factors are examined and cross examined bit by bit, piece by piece while arriving at mutually satisfying decisions the course helps participants to cross fertilize ideas, synchronize thoughts and deal with issues dispassionately. They can come out of the shell cross functional boundaries and take effective decisions keeping the best interests of the organizations in mind. They are willing to look at the other side of the coin more closely. They are willing to listen and toss around ideas freely, interact openly and take everything good or bad in their stride.

1) Helps to understand why functional boundaries are created and appreciate why the various sub units have to move Inc lose coordination while realizing the overall


objective(s). 2) Helps to resolve difference between individual and organizational goals. Every attempt is made to pull all the functions and activities together. 3) Helps to work in an orderly manner appreciating the work put in by others. They understand and adjust with each other by developing mutual trust, cooperation and understanding. Production knows its target maintenance keeps equipment and tools in good order. 4) Creates an understanding of how overall objectives and policies are formulated why everyone has to focus attention on pre-set targets and goals, why one should appreciate the viewpoint of the other while translating rhetoric into action; why one needs to anticipate changes and adjust accordingly.


7. Limitations of Business Policies:

Business policy and its implementation is a long term process. It leads to changes in organization hierarchy or otherwise, which leads to resentment and dissatisfaction among employees. Some groups in the organization consider

themselves responsible for profits and hence make unreasonable demands on the management. A few of the reasons are:-

1. TimeConsuming:
An analysis of internal and external environment, forecasting, interaction with


officers and employees take considerable amount of time. This leads to limiting the strategic management`s success .Though the top management formulates the business plans, sometimes they fall in producing results due to the uncertainties in the implementation stage.

Very Expensive Process:

Planning is the big process so it is very time consuming and you can say money may delay certain cases.the expenses on planning is directly proportional to the time spent on planning. if you plan to maintain your budget according the planning process, then result may vary in many cases.

Non availability of data:

it is major problems on the everywhere you can not find the real data which you want. planning loses its value in absence.and the second problem is when you can not effort too much money for sufficiant information.

4. Rigidity:
Planning involves the determination of a course of action in advance. It may lead to internal inflexibility and procedural rigidity. For example With the planning a business or organization may achieve certain goals. But this way planning may


create rigidity or It locks business into certain goals.

5. Forcasting:
Planning has its limitation just as it can notforcastanything . Planning is the roadmap to achieving the certaqins goals. if the forcasts do not turn out to be true, the effectivness of planning is likely to be highly impaired. If authentic figures and information are not available, planning becomes unrealistic.

6. External Factors:
External factors are very difficult to predict. some external factors are War, goverment control and polocies, Market slump etc.these may make the implementation of plans very difficult.

7. Less Accurate:
Planning and prediction for future work may be a awful work for anyone. Business planning is done by fast, simple and accurate techniques. Inefficient techniques of data collection used by planners cause accuracy problems.

8. Over Ambitious Projections:

Sometimes Business owners and professionals set over ambitious projections then


reality. Outline a clear vision. Business planning should be based on real facts and it must show a realistic path to targeted goal. Make it real and alive. 9.

Top Level Commitment:

Everyone know that commitment is essential to success. And true commitment at the top level is the major challenges in business planning process. It gives power to people to make solid decisions within the limitations of planning.


8. Process/Steps of Business Policy:

The organisation is to develop policies that reduce or eliminate the threat that the problem or issue causes. But how is a policy made? Where do you start? The first step isconduct some research.

1. Read:
Read if possible, policy documents created by other organisations on the same


topic. Whilst it may not be appropriate or fair to copy completely policies developed by other organizations , it may be quite reasonable to utilise them to develop an understanding of the topic, keywords and phrases and to obtain a picture of what is involved. For the inexperienced writer, it may be more than useful to gain an insight into how the policy document may be structured.

2. Research legislation on the Internet:

Changes in legislation can create a need to create or amend policy. For example, the introduction of the Good and Services Tax (GST) has impacted on all sport and recreation organisations. Recent changes to the laws regarding Fringe Benefits Tax have also had an effect. There is a wealth of information on the Internet about legislation, not just tax but any legislation can be downloaded in full or viewed on a desk top personal computer.

3. Conduct a meeting:
It is important to seek the assistance of others to analyse and define the problem. Unless the problem is defined well, it is difficult to find a solution. The meeting


may be used to gather ideas from meeting participants about the nature of the issue or problem and how it might be solved. For instance, if the issue was about how to deal with misdemeanors of athletes while on way trips, then a meeting of coaches, managers and officials is likely to provide many suggestions .

4. Survey participants or a particular group of participants such as coaches:

Conducting a survey of participant satisfaction may be one possible way to gain information for the development of a policy on event organisation or customer services. The survey may ask participants to provide views on what they feel is really important.

5. Read minutes of management committee meetings: (if allowed)

Some organisations publish the minutes of their committee meetings or may allow them to be viewed by non-committee people. Minutes of management committee meetings often document the most important issues that the organisation faces. They may contain some detail of discussion about how issues may be solved.


Minutes of meetings may be less fallible than individuals. They do not change from year-to-year or have memory lapses. For this reason, minutes are a historical record of the organisation and may provide excellent information for policy development.

6. Read other documents such as annual reports or event reports:

Annual reports are another historical record of the organisation that may provide information about problems and issues that require policy development. Reports about events and programs that the organisation has conducted may provide opinions and views as to how they may be improved.

7. Seek legal advice:

The lack of policies, or policies that are inadequate can lead to legal action being taken against an organisation. Obtaining legal advice in the research phase and in the final approval of the policy may not be advisable but also necessary.

8. Purpose of policies:
The organisation also needs to know and understand the purpose of policies and to


recognise that the issue or problem can be effectively dealt with by the creation or modification of a policy.


Appoint a person or person(s) to co-ordinate the policy development process:

The policy development process may take place over several months. There needs to be someone or perhaps a committee who is "driving" the process .


Prepare a discussion paper:

The purpose of the discussion paper is to explain the nature of the problem or issue, to summarise information yielded by research and to suggest a number of policy options. The discussion paper will be an important tool in the process of consultation.


Consultation - Stage 1:

Circulating the discussion paper to all stakeholders (interested parties) is a first step in the consultation process. It may also be necessary to telephone stakeholders and send notices to remind stakeholders to read the discussion paper. It is then


important to gain as much feedback from stakeholders as possible. This may be effected through workshops, open meetings, your web site and by meetings with individuals. Several months may be required to ensure that this stage of consultation is thorough.


Prepare a draft policy:

When there has been sufficient time for consultation processes to be completed the next step is to prepare a draft policy.


Consultation - Stage 2:

When the draft policy is completed it should be circulated to key stakeholders, published in the organisation's newsletter and web site, discussed in further meetings and forums. At this stage it is necessary to seek help from stakeholders to fine tune the wording, clarify meaning and make adjustments to the policy before it is finalised.



When the co-ordinator of the policy development process is reasonably satisfied that all issues and concerns about the policy have been aired


and dealt with, it is time to finalise the policy. The final policy document needs to be formally adopted by the management of the organisation (management committee) with an appropriate record entered in to the minutes.



Following formal adoption of the policy it should be communicated far and wide throughout the organisation and stakeholders. Training sessions may need to be conducted to ensure that organisation personnel are fully informed and able to implement the policy. If the policy is not well communicated it may fail.


Review and evaluate:

The implementation of the policy should be monitored. The policy may still require further adjustments and furthermore the reasons for the policies existence may change. A general practise is to set a date for the policy to be reviewed, this might be one a year or once in every three years. It just depends on the nature of the policy.


9. Elements/ Components of Business Policy:

Business policies are the rules and standards of how a business is supposed to operate. Usually composed of legal requirements, industry regulations and core values of the business, these written policies are the documents referred to when settling disputes or determining future growth. Because the business environment and laws can change over time, it is important for businesses to regularly analyze business policies in order tomitigate against potential conflicts, lawsuits and financial loss.



First of all comes the definition of policy area- the area for which a policy is to be framed. The objectives and needs of the organization should be kept in mind while specifying policy area. The policy area should never ignore market expectations and various key areas that are vital to the company.


Policy formulation may begin at any level of management and may flow upwards or downwards along the levels of organization. Policy usually is formed by, the board of directors and senior management, who determine the main policies, being passed up the chain of command until someone takes responsibility for making a decision.



Make sure Business Policy is written in such a way that everybody in the organisation can understand it and that is not confusing . That right; it need to be communicated to the whole organizatio , not just executives. Changes in the workplace have the potential to scare people. Company's policy that's going to have a significant effect on your employees, it's important that you mange the communication of your new ideas carefully. Allowing rumor and conjecture to develop can be bad for staff morale and your management's authority. You'll want to make sure you provide as much information as possible about your planned changes and be confident that your staff fully understands what you're trying to do. 1)Draw up a document detailing the finer points of your company's new policy. Print off enough of these to distribute among all of your employees.

2) Make a number of slides containing bullet points explaining the details of your new policy and its ramifications for your employees using presentation software.

3) Arrange for all of your staff to attend a meeting where you can present your new policy. If this is impractical and you need to have a certain number of employees working at any one time, you may have to set up a series of meetings. Make sure


all of your staff are invited to a meeting, and make a note if any are on holiday or off sick.

4)Distribute the document detailing your new policy at the beginning of the meeting, and then use the presentation you've prepared to help you talk through the consequences of its implementation. Encourage your colleagues to take notes and save any questions until you've finished your talk.

5) Hold a question-and-answer session at the end of the meeting to field any concerns about the new policy. Encourage debate, and be prepared to defend your ideas and the reasons behind the implementation of the new policy. Make it clear that your employees can approach you with any concerns at any time.

6) Email an electronic copy of your policy document to all of your staff, and put a copy on your company's computer network.

7) Hold "mop-up" sessions to explain the new policy to staff who were absent at the time of the meetings you held.




Every organization that develops policies needs a review process. Some organizations form committees that review proposed policies and policy revisions and after committee approval the policy either takes effect or is submitted to a higher committee like a board of directors, trustees, officers, or the CEO for final approval. Other organizations utilize a policy review process whereby staff (users of the policy) perform a review followed by a management review before submission to a committee and or senior officials. The staff review is basically a solicitation of comment and feedback. It is a step in the process where ideas are needed to help improve the policy. Someone or perhaps a policy committee must coordinate the review and the submission of drafts to appropriate staff.

10. Factors/

Determinants of Corporate Policy:

Many external and internal factors can affect the formulation of business policy.The degree to which you can control them varies. At the same time, you can improve the state of internal and external factors effecting your small business; you


can't make the economy grow, but you can encourage spending. Understanding the factors at work better equips you to prepare for them.

a. Internal Factors:
The internal environment is the environment that has a direct impact on the business. Here there are some internal factors which are generally controllable because the company has power over these factors. It can alter or modify factors such as its personnel, physical facilities, and organization and functional means, like marketing, to suit the current environment. The value system of the founders and those at the helm of affairs has an important bearing on the choice of the business, its mission and the objectives of the organization, including its business policies and practices.

b. Employees:
The caliber, attitude and work ethic of a company's employees are internal issues. Finding people qualified for the job and training them appropriately are other employment-related issues. The quality of employees affects the company's ability to innovate, customer satisfaction, productivity and efficiency. Employees also are significant cost considerations. Companies spend considerable resources to


hire, train and replace staff members.

c. Capital:
Capital capacity affect the policies of company.A significant internal factor businesses must consider is the quality of their capital with respect to their available money. A company's capital, such as equipment, land and factories, can either limit or enhance its ability to compete with other businesses. For instance, Wal-Mart's large amounts of capital enable it to offer lower prices on its merchandise than the prices offered by small, local shops.

d. Internal Communication:
The culture of your organization is built on internal communication; this includes interpersonal relationships, training materials, newsletters, philosophical

statements and policies. Your employees are happier when they are courteous and respectful of one another. They want their achievements to be recognized. When you provide sufficient instructions to your subordinates, you enable them to do their jobs effectively. When you help employees identify with your company's mission and goals, you are likelier to keep them long-term.



The value system of the founders and those at the helm of affairs has important bearing on the choice of business, the mission and the objectives of the organization, business policies and practices.


Mission, Vision and Objective:

Vision means the ability to think about the future with imagination and wisdom. Vision is an important factor in achieving the objectives of the organization. The mission is the medium through which the objectives are achieved.

a. Technical Environment:
The business in a country is greatly influenced by the technological development. The technology adopted by the industries determines the type and quality of goods and services to be produced and the type and quality of plant and equipment to be used.

b. Corporate Objectives:
Another internal determinant of corporate policy are the corporate objectives. All organizations frame organizational objectives and work towards their achievement.


Policy makers must take into account the economic, financial and other objectives of the company.

c. The Resources:
The organization has to carry out its activities keeping in mind the resources it has. The corporate policy has to identify the various resources available and then only can it be made sound. The size of plants, capital structure, liquidity position, personnel skills and expertise, competitive position, nature of product etc. all in the formulation of corporate policy.

d. Management structure and nature :

The structure of the organization also influences the business decisions. The organizational structure like the composition of board of directors , influences the decisions of business as they are internal factors . The structure and style of the organization may delay a decision making or some other helps in making quick decisions.

e. Structure:
Structure is an internal factor that impacts your company's day-to-day operations. You might sort your company by departments and teams, or you might structure it


so that employees work with outside contractors. The structure impacts the number of employees you hire, the levels of hierarchy, the extent of employee and department collaboration and the roles of your employees. If you choose a structure based on contractual work, for example, you will save money on employees but have less control over the end product.

The external environment covers parts of the organization which are usually unable to be controlled within the organization and include factors such as social, legal, technological and political factors. The external environment can also include the people outside your organization who are also a part of it in some or the other way This can include society, government and stakeholders.

a. Economics:
The economy is an external factor that effects the success of your business. The ability of your clients to pay directly impacts your bottom line, regardless of whether you sell a product or service. You can offer sales and promotions, and you can tout the value of your company's offerings, but during rough financial times


your clients might prefer to allocate their resources elsewhere. Economics might be specific to your clients' industries, and it might be a global issue impacting supply and demand. If you make a toy and business at toy stores across the country declines, your sales will suffer. Diversifying your product line minimizes this challenge.

b. Micro Environment :
The micro environment is also known as the task environment and operating environment because the micro environmental forces have a direct bearing on the operations of the firm. a) Suppliers An important force in the micro environment of a company is the suppliers, i.e., those who supply the inputs like raw materials and components to the company.

c. Customer:
The major task of a business is to create and sustain customers. A business existsonly because of its customers. Marketing Intermediaries The marketing intermediaries include middlemen such as agents and merchants that help the company find customers or close sales with them. Financers. The financers are also important factors of internal environment.


d. Public:

Public can be said as any group that has an actual or potential interest in or on an organizations ability to achieve its interest. Public include media and citizens.

e. Macro Environment:
Macro environment is also known as General environment and remote environment. Macro factors are generally more uncontrollable than micro environment factors. When the macro factors become uncontrollable , the success of company depends upon its adaptability to the environment.

f. Political Environment:
The political environment of a country is influenced by the political organizations such as philosophy of political parties, ideology of government or party in power, nature and extent of bureaucracy environment influence includes of primary and



adaptability of law and other legal rules governing the business. It may include the exact rulings and decision of the courts.

External Communications:


The way your company interacts with customers and its public audience impacts your company's image. If you alienate your external audience, you risk losing your source of income. Ensure tactful communication strategies to promote a positive impression. Effective advertisements speak to the intended audience. Customers expect to be treated with courtesy by you and your employees. Maintain a professional voice in your emails, letters and other correspondence. Ensure your website is welcoming and simple to navigate. Press releases need contact information and newsworthy content.

Customer needs and expectations:

Customer needs and expectations are essential for process innovations that improve process effectiveness. Orientation to customers and their satisfaction are well-known concept in the field of a Total Quality Management. The companies oriented to customers are responsive to final customer needs, measure their satisfaction level and improve the processes in order to satisfy customers.

i. Competition:

Policies are affected by the act of competition. The marketer must keep an eye on


the activities of the competitor. Some companies go for price leadership, while other goes for low pricing decision to wipe of the competitors from the market. Other environmental factors: while deciding the price of the product the company has to keep in mind the the other environmental factors also like: Economic conditions of the country like boom, recession, inflation etc. Consumer perception regarding the product. Government policy also affects the pricing policy. Distribution channel also have an effect on the price of the product.



Case Study:

Steel and the State: Industry Politics and Business Policy Formation
American Sociological Review , Vol. 55, No. 5 (Oct., 1990), pp. 648-668

Whether states are autonomous and whether unity exists within the capitalist class are questions that have long been debated by political and historical sociologists. I suggest that these questions are historically contingent, and conceptualize the state as an organization that is affected by its own structure and agendas, and by the political coalitions in its environment. I evaluate competing explanations of state business policy formation by

examining policies that affected the U.S. steel industry between 1940 and 1989. There are four major findings: (1) organizations that represent political coalitions of capitalist groups in the state's environment form the basis of collective action and constitute the means to exercise political and economic power; (2) differential rates of accumulation affect business unity; (3) business policy is affected by the state's structure and agendas and the way in which its agendas conflict or coincide with the interests of the steel industry; (4) as the state's authority extends over more areas of economic activity and as it


establishes more complex enforcement structures, state autonomy declines because these new structures provide class segments with legitimate mechanisms within which class members can exercise their political power. There are several important findings from this case study. First, organizations that represent political coalitions of capitalist groups in the state's environment were a basis of collective action and constituted a means to exercise political and economic power AISI was the organizational vehicle that forged alliances with other capitalist groups and articulated a strategy to realize the steel industry's political economic interests within a wide range of historical conditions. This organization established an economic strategy to limit expansion of production capability in the oligopolistic era and a political strategy to obtain protectionism in the era of global competition when the economic strength of the steel industry declined. The political and economic power of this class seg- ment resulted in business policies that have financed a significant proportion of each major expansion and modernization project within the steel industry since the 1940s.


Second, differential rates of accumulationaffected business unity. Business unity among domestic capitalist groups was highest when OPEC oil prices (i.e., 1973) and foreign com- petition (i.e., 1979-82) undermined accumulation in the economy as a whole. These threats to accumulation from the global economy resulted in political alliances among several capitalist groups which lobbied Congress and the Executive Branch to implement policies to overcome constraints to accumulation. In contrast, business was less unified during periods of rapid economic growth. This finding suggests that when the

conditions of accumulation declined, the capitalist class mobilized and moved toward the unified end of the class unity/ division continuum to exercise control over business policy. Third, when the accumulation strategy of the steel industry undermined accumulation significantly in other capitalist groups (i.e., post WVWII, late1980s), these accumulation constraints emerged as political conflicts that were mediated within the state by revising business policy. Moreover, the state's structure and agendas and the way in which the agendas conflicted or coincided with the interests of thesteel industry affected the content of the subse- quent business policy. State intervention in the oligopolistic era occurred in the form


of corpo- rate revenue generating business policy because the steel industry's strategy to limit production capability undermined the state's agendas to ensure steady economic growth, a strong national defense, and to meet its militarypolitico obligation to foreign nation-states. Similarly, corporate revenue generating business policies were implemented in the era of global competition to ensure the state's agenda to maintain steady economic growth (e.g., 1962, 1981). After 1974, when protectionist policies were incorporated into the state structure, the steel industry used the state's organizational structure of trade dispute settlement to force the state to enforce litigation against foreign steel producers. A key component of the steel industry's political strategy was the coordinated filing of AD complaints (i.e., 1977, 1980, 1982, 1984), which if enforced would have conflicted with the state's foreign policy agenda. The Executive Branch, therefore, resisted enforcement of the AD laws. Fourth, the state was least autonomous in relation to the steel industry during periods of rapid economic growth when the state's national defense and economic stability agendas were dependent on a steady supply of steel. Under each of these conditions the state implemented business policies favorable to accumulation before the steel industry expanded production capability. When


economic stability became less dependent on domestic steel and the rate of accumulation in the steel industry declined, the steel industry was able to exercise less control over the state. This suggests that the state moves toward the less autonomousend of the continuum during periods of rapid economic growth, and toward the autonomous end of the continuum when the rate of accumulation declines (also see Block 1977). However, despite the steel industry's weakened economic position in the 1970s and 1980s, the cumulative effects of its political strategy steadily reduced the autonomy of the state. This case study has addressed one of the central theoretical problems of historical sociology: the conditions under which groups that share an interest act, or fail to act, on that interest (Tilly 1981). Such studies require historical grounding to identify the means of action that are available to groups. By developing a theoretically explicit conception of the relationship between the organizational state and political coalitions in its environment, I have sought to illustrate the historical conditions that shaped and transformed business policy that affected the steel industry. I identified two themes that affected the content of business policy: conflict between the accumulation goals of a powerful class segment and the agendas of the state, and conflict among capitalist groups. Both


conflicts 14 occurred at the economic level and were mediated at the political level (also see Quadagno1984). The historically specific conditions of accumulation that defined class alliances, the state's agendas, and the particular laws andstructure of the state that governed trade dis- pute settlement affected business policy. Once the protectionist mechanisms were incorporated into the state structure, each change in business policy redefined the state structure and the para- meters of its formal authority.




Business policy are integrative in nature .it helps learner to understand the policies and looking at the organisation as a unified whole. business policies help employees in their decision making capabilities in a significant way.


Thus while making decision in an organization policies provide a basic framework within which managers operate. Business policy represents the best thinking of the companys as how the objective would be achieved in the prevailing economic and social conditions.