7/28/2019 Business Policy Defines the Scope or Spheres Within Which Decisions Can Be Taken by the Subordinates in an Org

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Business Policy

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.

Nature of business policy: The following are the main features of business policies:

(a) Policies are always in writing: The policies in general are written procedures which specify

limits or guidelines for perfection of work to be undertaken in future.

(b) Directions towards goal achievements: A policy is formulated in context of organisational

objectives. Therefore, the policy tries to contribute towards the achievements of organisational

achievements by specifying limits.

(c) Persuasive Function: Formulation of policy is a function of all managers whether manager

of marketing, personnel, finance department etc.

(d) Policy Differs from Strategy: A layman may think, there is no difference between policy

and strategy, so at times people use these words interchangeably. Policies are identified as

guides to thinking in decision making while strategies devote a general program of action and a

commitment of emphasis and resources towards the attainment of comprehensive objectives.

(e) Expressed in Qualitative and General Way: Policies are generally expressed in a qualitative,

conditional and general way. The verbs most often used in setting up policies are to maintain to

continue, to follow, to adhere, to provide, to assist, to assure, to employ etc.

(f) It Involves Choice of Purpose: Policies involves a choice of purpose and defining what

needs to be done in order to mould the character and identify of organisation.

(g) Policies Must be Long Range: In general a policy is a written decision by top managementfor achieving certain results.

(h) Clarity of Thought: A policy should be clear and self explanatory thus there will be no

change for wrongdoing.

(j) Policies are reflection of management philosophy: a policy is a written and effective

expression of management thought and action.

7/28/2019 Business Policy Defines the Scope or Spheres Within Which Decisions Can Be Taken by the Subordinates in an Org

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