Business

Business Policy
Policy
By: [Link]
Dept. of Management ,PIM,Gwalior

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 Why Businesses Fail
• Businesses fail, because of ……………..fail
 EVOLUTION OF
BUSINESS POLICY AS A DISCIPLINE
• The origin of business policy can be retracted to
1991, when Harward Business School introduced an
integrated course in management aimed at the
creation of the general management ability and
capability .

• The term “Business Policy” has been used

traditionally though new titles such as “Strategic
Management”, “Corporate Strategy and policy”
 Policy

•A policy is a principle or protocol to guide decisions and

achieve rational outcomes.
• A policy is a statement of intent, and it is implemented as a
procedure or protocol.
•Policies are generally adopted by the Board of Directors or
senior governance body within an organization whereas
procedures or protocols would be developed and adopted by
senior executive officers.
•The term may apply to government, private organizations,
groups and individuals.
• Policy differs from rules or law. While law can
compel or prohibit behaviors (e.g. a law requiring the
payment of taxes on income), policy merely guides
actions towards achieving desired outcome.
• Policy may also refer to the process of making
important organizational decisions, including the
identification of different alternatives such as
programs or setting priorities, and choosing them on
the basis of the impact they will have.
• Policies can be understood as political,
management, financial, and administrative
mechanisms arranged to reach goals.
 Definition of Business Policy
• 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.
• A business policy is an implied overall guide setting up boundaries that
supply the general limit and direction in which managerial action will
take place.
• A business policy is one, which focuses attention on the strategic
allocation of scarce resources. Conceptually speaking strategy is the
direction of such resource allocation while planning is the limit of
allocation
• A business policy represents the best thinking of the company
management as to how the objectives may be achieved in the
prevailing economic and social conditions
 An effective business policy must have following features
• Specific- Policy should be specific/definite. If it is uncertain,
then the implementation will become difficult.
• Clear- Policy must be unambiguous. 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 be appropriate to the present
organizational goal.
• Simple- Policy should be simple & easily understood by all in
the organization.
• Comprehensive- In order to have a wide scope, a policy must
be comprehensive.
• 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 repetitive/
routine scenarios.
• Stable- Policy should be stable else it will lead to uncertainty in minds.
• Deals with decisions regarding the future of an ongoing enterprise.
• Top level management is involved in policy formulation.
• Gives a shape to the future of a company
• Allocates the resources.
• Goal oriented.
• Creates identity and character of the company.
• • Integral. • Comprehensive • Stable
 BUSINESS POLICY:

“Business policy is the study of functions and responsibilities

of management, the problems and decisions that determine
the direction of the organization”.
Christensen.

Historical evolution of Business policy

1930’s 1940’s
1960’s 1980’s
Ad Hoc Planned
Strategic
Policy Policy
Strategy management
making formulation

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 Business Policy:

Strategic Management in India:

Pre-liberalization Post-liberalization
Transition Phase 2000-2010
Strategic management
1990’s Mergers &
in Govt. control
Acquisitions

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 Business Policy:

Nature of Business policy:

1. It is the study of functions and responsibilities of senior
management related to organizational problems.
2. It determines future course of action.
3. It defines the character and identity of an organization.
4. It is concerned with mobilization of resources to help an
organization achieve its goals..

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 Business Policy:

Purpose of Business policy:

1. It integrates knowledge & experience gained in various
functional areas of management.
2. It deals with constraints and complexities of real-life
business.
3. It helps to bring long-term view of the environment.
4. It helps to understand the linkage within sub-systems
of the organization..

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 Business Policy:

Importance of Business policy:

1. For learning purpose: It integrates the knowledge &
experience. It cuts the narrow financial boundaries. It
makes the study of management more meaningful.
2. For understanding business environment: To understand
how policies are formulated. It makes the task of policy
implementation simpler.
3. For Understanding the organization: It presents a basic
framework for understanding strategic decision-making.
4. For personal development: To understand the impact of
policies on position. To understand the senior manager’s
viewpoint. To identify growth areas for development..

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 STRATEGY:
Strategy (Strategos= direction of military force).

What is strategy?
1. “Determination of basic long-term goals & objectives of an
enterprise and adoption of course of action and allocation of
resources to carry out these goals.”
Alfred Chandler (1962)

2.“Pattern of objectives, purpose, goals and major policies & plans to

achieve these goals to define the current and desired policies of
the organization.” Andrews (1965)

3.“It is the common thread among the organization’s activities and

product-markets that defines the nature of business.”
Igor Ansoff (1965)..

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 Examples of Company Policies & Procedures
• Employee Conduct

• An employee conduct policy establishes the duties and

responsibilities each employee must adhere to as a condition
of employment. Conduct policies are in place as a guideline
for appropriate employee behavior, and they outline things
such as proper dress code, workplace safety procedures,
harassment policies and policies regarding computer and
Internet usage. Such policies also outline the procedures
employers may utilize to discipline inappropriate behavior,
including warnings or employee termination.
 What is Strategy?
4. “It is a unified, comprehensive and integrated plan designed
to assure that the basic objectives of enterprise are achieved.”
William Glueck (1972)

5. “It is a pattern in a stream(current) of decision and actions.”

Henry Mintzberg (1987)

6. “Developing and communicating the company’s unique

position, making trade-offs(exchange) and creating a fit
among activities.”
Michael E. Porter (1996)..

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 Levels of Strategy:
Corporate level
CORPORATE OFFICE strategy

SBU SBU Business

Strategic Business Unit
B C level
A
strategy

HRM Marketing Finance Production Systems

Functional
level
strategy

SBU is a business unit within the overall corporate identity which is

distinguishable from other business.
When companies become large, they are composed of a number of
businesses (or SBUs). Eg
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 STRATEGIC MANAGEMENT:
What is strategic management?
1. “It is a stream of decisions and actions which leads to
strategy development to achieve corporate objectives.”
William Glueck

2.“It is the formulation and implementation of plans and

carrying out of activities relating to important matters of the
organization.” Sharplin.

3. “It is a process through which organizations analyze and

learn from their internal & external environment, establish
strategic direction, create strategies to help achieve goals and
execute them.” Harrison & St. John..

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 Process of Strategic management:
Phases of Strategic Management:
Establish
strategic Formulate Implement Strategic
Intent strategies strategies evaluation

Strategic
control

Establish Strategic Strategic

strategic SWOT Strategic Strategic
Analysis implement- evaluation
Intent analysis alternatives
& choice ation

Strategic control

Working model of Strategic

SILKY JANGLANI Management: 19
 Model of Strategic Management Process:
Establish strategic intent:
Vision, Mission, objectives,
Business definition

Formulate strategies:
Environmental appraisal,
organizational appraisal, SWOT analysis,
Corporate & business level strategies,
strategic
control Strategic choice, strategic plan.

Implement strategies:
Project, procedure, resource allocation,
Structural, behavioral, functional
and operational implementation.

Strategic evaluation

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 VISION:
1st level of Strategic Intent
VISION: It is a position that a company would like to achieve
in the distant future (10-15 years). It is a powerful motivator
to action.
Vision of Walt Disney: To make others happy.
It is a category of intentions that are broad, all-inclusive and
forward-thinking.
Why vision is needed?
a. Good visions are inspiring.
b. Good visions help in creation of a common identity and a
shared sense of purpose.
c. Good visions are competitive, original and unique.
d. It promotes risk-taking and experimentation.
e. It promotes long-term thinking… IO
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 MISSION:
2nd level of Strategic Intent

Vision is a forward-thinking view of what an organization wants

to be. Mission is what an organization is and why it exists.

Mission is a statement that defines the role an organization

plays in a society.
Eg: A newspaper & TV news editor: mission- information.

It is the purpose or reason for the organization’s existence..

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 MISSION:
2nd level of Strategic Intent

Characteristics of Mission:
1. It should be feasible.
2. It should be precise; not too narrow & broad.
3. It should be clear.
4. It should be motivating.
5. It should be distinctive; unique from competitors.
6. It should indicate how objectives are to be achieved...

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 Disney’s mission statement 
• Disney’s mission statement is “to entertain, inform and
inspire people around the globe through the power of
unparalleled storytelling, reflecting the iconic brands, creative
minds and innovative technologies that make ours the world’s
premier entertainment company”.
The mission statement by Disney has the following
characteristics:
• Improvement of communities
• Improving lives
• Entertain
• Exceeding expectations
 Goals & Objectives:

Goals & Objectives represent a future state or an outcome of

efforts put at present. Objectives are the ends that state how goals
will be achieved.
Goals are generalized & qualitative. Objectives are concrete,
measurable and specific.
Objectives make the goals operational.

Roles of Objectives:
1. Objectives define the organization’s relation with
environment.
2. It helps an organization to achieve its vision & mission.
3. It provides the basis for strategic decision-making.
4. It provides the standards of performance appraisal…

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 Goals & Objectives:

Characteristics of objectives:

1. It should be understandable.
2. It should be concrete and specific.
3. It should be related to a time-frame.
4. It should be measurable.
5. It should be challenging.
6. It should be set within limits..

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 Role of Top Management in Strategic Management

Role of CEO/ GM/ MD/ President:

Prime responsibility for strategic management.
1. He is the chief architect, strategist, organization builder
and coordinator.
2. He sets the mission of organization.
3. He decides organization objectives and goals.
4. He formulates and implements strategy.
5. He manages external environmental and relationships.
6. He is communicator of organizational purpose,
motivator and mentor.
7. He checks progress to avoid deviation from path..

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 Role of Top Management in Strategic Management

Role of Board of Directors:

Board of Directors include owners, shareholders,
controllers, MD, Govt., financial institutions, employee
representatives etc.
Role:
1. They set the vision and strategic direction.
2. They establish objectives and strategy.
3. They guide the senior managers in setting and achieving
objectives, reviewing organizational performance and
evaluation.
4. They monitor the progress.
5. They take corrective action when required..

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 Facebook
Vision , Mission ,Objective

.
 Vision-
• Facebook Inc. is the largest social networking website in the world. This
market position aligns with the company’s mission statement and vision
statement. The corporate vision statement describes the business
condition that the company wants to achieve. Facebook’s vision
statement guides employees in focusing their efforts. The corporate
mission statement identifies the primary aims and actions needed to
reach the vision. Facebook’s mission statement determines the
strategies and tactics to grow and develop the firm. Through consistent
focus on the mission and vision statements, Facebook Inc. ensures its
leadership in the global market for online social networking service
Facebook’s
Facebook’sVision
VisionStatement
Statement
Facebook’s
Facebook’svision
visionstatement,
statement,based basedon onthe
thecompany’s
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media
mediaservice
serviceoffering,
offering,isis
“People
“Peopleuse
useFacebook
Facebooktotostaystayconnected
connectedwithwithfriends
friendsandandfamily,
family,
toto discover
discover what’s
what’s going
going on on inin the
the world,
world, and
and toto share
share and
and
express
expresswhat
whatmatters
matterstotothem.”
them.”
This
Thisvision
visionstatement
statementshows showsthatthatthe
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businessisisnot
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an
online
online social
social networking
networking [Link]. Instead,
Instead, the
the company
company isis
established
established to to facilitate
facilitate valuable
valuable communication
communication among among
individual
individualusers.
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Facebook’s
Facebook’svision
visionstatement
statementhas hasthethefollowing
followingmain
main
components:
components:
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market
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communicationamong amongfriends
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Facebook’s Mission Statement
•Facebook’s mission statement is “to give people the power to
share and make the world more open and connected.” The
company focuses on making its social networking web site an
important part of individual users’ lives. The following are the
significant components of Facebook’s mission statement:
•Empowering people
•Enabling sharing
•Connecting the world
The “empowering people” component of Facebook’s mission statement
signifies the company’s goal of making its online social networking service
practical for users to become more capable online. The mission statement
further indicates that Facebook Inc. has the goal of connecting the world.
A connection is created each time users become “friends” on the social
media website.
• Thanks