CARD-MRI Development Institute, Inc.

Module for Blended Learning

Course Title ENTREP 413: Business Policy
Course This course will discuss the type of business policies; business policy as a
Description field of study; functions and responsibilities of general management; the
concept of corporate strategy; concept of strategy in relation to
business, corporations and management; linkages between organization
and their environments; introducing a formal strategic planning system
in a business firm; concepts of policies, decision making, business
objectives, performance, criteria, structure and managerial behaviors;
practice in calculating simple financial and economic indices from
business data and other accounting information; learning opportunities
and threats, strengths and weaknesses of business system
Course
COURSE AIMS
Learning
Outcomes The aim of this course is to explain business and identify it as the basis for
guiding the management and organization of an enterprise
COURSE OBJECTIVES
By the end of this course, the student should be able to:
Understand the basic considerations in business policies
Understand the functions and responsibilities of an enterprise general
management unit
Identify problems associated with the management of an enterprise
Understand the design and implementation of corporate strategies
Evidence of The teacher will facilitate the following assessment:
Learning/
Assessment 1. One-minute-paper thru (chatrooms)
Tools 2. Socratic questioning
3. Illustration work
4. Conference discussion
5. Short quiz
6. Summative test
7. Case study
8. One-minute reflection chat
9. Pro-Cons Grid
10. Real-time reactions
Topics Module 1 covers the following topics:
(Coverage)
UNIT 1: Business Policy – Definition and Discussion of Concepts

UNIT 2: Evolution of Business Policy as a Discipline

UNIT 3: Characteristics of Policy

UNIT 4: Kinds/Types of Policies
UNIT 5: Nature, Objectives and Purposes of Business Policy
UNIT 6: Organizational Policies
UNIT 7: Functions and Responsibilities of Business Policy in management

Target This course is offered to the upcoming fourth year students taking
Participants up Bachelor of Science in Entrepreneurship with Specialization in
Microfinance.

Learning Time: August 24, 2020 – January, 2021

Means for Students may contact teacher for assistance and guidance to the
Learner following links:
Support Email: lidan_christian@yahoo.com
Messenger: Christian Formento
Mobile No.: 0947-229-1888

Summative For overall assessment of this module, the student Rubrics/Stand

Assessment will be doing a Portfolio Analysis of different Case ards
Studies where students will come face to face with (See in NEO
practical problems situations for their analysis and LMS)
then judgment or decision-making.

2
 PERIOD/TERM: Prelim-term – Week 1

INTRODUCTION:

Photo: https://www.alamy.com/stock-photo/pyramid-model.html
Good day everyone!

Welcome to your BUSINESS POLICY course, where you will learn

different types of Business policy, thus preparing you to be a potential or active
entrepreneur, thus, explaining business procedures and strategy formulation and
identify it as the basis for guiding the management and organization of an
enterprise

Every organization has a purpose for which it was established – either for
profit making or non- profit making, and closely allied to the purpose of an organization are
the principles on which it is to be conducted. These principles in business parlance are
commonly called “Policy”. Policy, according to Kalejaye (1998), denotes a future course of
action of intent towards the activities of an organization.

He opined that there is more to the meaning of policy than an expression of intent.
To him, there is usually the connotation that policies should express the beliefs of the
organization, the things that are right to do and the courses of action which it ought to take
in the organization. This explains why policies on the same subject can be so different from
one organization to another.

Every business requires guidelines which are to be embedded in policy. Policy is a

decision rule, not a decision (Ackoff 1993). Principles in business parlance are commonly
known as policy. Policy denotes a future course of action of intent towards the activities of
an organization.

In this unit, you will be introduced to the meaning of business policy in order to
prepare you for all the associated ideas about the concept in business management. We
shall also highlight the reasons why business policy is necessary. Finally, we shall explain
business policy implementation in an organization.

I believe you have read the course guide and have a general understanding of this
course unit and how it fits into the course as a whole. You will see the objectives below
specify what you are expected to learn after reading this unit.

Have fun learning!

Unit # 1
TIME ALLOTMENT: August 24 - 31, 2020

TOPIC 1: BUSINESS POLICY – DEFINITION AND DISCUSSION OF CONCEPT.

Note: The 4A’s lesson plan is design for both virtual and online class (asynchronous and
synchronous pace).
Learning Part
Activate Prior Knowledge
(Time allotted: 10 min)

Synchronous

Greetings everyone!
Welcome to Module 1 of your course BUSINESS POLICY.
Our objectives for this topic are the following:

1. At the end of the lesson, you will be able to define business policy;
2. state the need for business policy; and
3. explain business policy implementation in organization.

To start with, let’s have quick survey activity to know your prior knowledge about business policy.
Kindly click the link to take the survey.
https://cmdi.neolms.com/teacher_survey_assignment/show/...
(The teacher shall be doing a true or false survey questions thru neolms)
Questions:

1. For you, how will you define a “policy”?

2. What is your idea about policy making?
3. What is the importance of having policy inside an organization?
Acquire New
Knowledge (Time
allotted: 40 min)
Asynchronous

Let’s start our discussion by a short video of BUSINESS POLICY from the
IMSUC FLIP followed by an activity and the content reading.

https://www.youtube.com/watch?v=j2_bE2jEZK0&t=7s

Are you done watching the video? If you are, that’s great! Let’s now have a quick POST-IT-
PARADE. I would like to know your learnings about business policy.
 Based on your understanding of the video, list down at three importance of policy in a
business enterprise.

Three importance of business policy: 1.

2.

3.

Are you done listing your understanding of the importance of having business policy? If
yes, that’s amazing! This topic focuses of the following lessons;

 What is the definition of “policy”?

 What is the definition of “business”?
 What is “Business Policy”?

I believe in you! now let’s go down to the details of topic 1.

Have fun learning!

Definition of Policy

What comes to your mind when the word policy is mentioned?

As stated in the introduction earlier, policy is defined as a decision rule not a decision. For
example, of a policy- Hire only professionally qualified accountants for senior accounting positions.
When such a person is hired it is a decision.

A policy is considered the general guideline for decision making. Kalejaye, A. (1998) defined
policy as the objectives, the mode of thought and the body of principle underlying the activities of an
organization

According to Fagbemi (2006) a policy refers to what an organization or a person intends to do

or does. Business policy therefore is what business organization intends to do. It aims at assisting the
organization to deliver services to meet the needs and expectations of the goals of the organization.

Policies are plans in that they are general statements or understandings that guide or channel
thinking in decision making. In actual business situation, not all policies are ―statements; they are
often merely implied from the action of managers. The president of a company (organization), for
example may strictly follow-perhaps for convenience rather than as policy-the practice of promoting
from within; the practice may be interpreted as policy and carefully followed by subordinates.
Weighrich & Koontz (2005)

To be candid, it is incumbent upon the managers to ensure that subordinates do not interpret
as minor managerial decisions that are not intended to serve as patterns.

Business policy is a guide and roadmap to create awareness and direction to the management
of any organization. It publicizes the rights and obligations of different rung of the ladder- horizontal
and vertical- of the different capital be human resource engagement, finance utilization etc. It ensures
that organizations deliver better end product within a framework. It encourages, promotes and
improves performance attainment in an organization.

Policy provides the bedrock for vision and mission statement of the business organization along
the corporate objectives and goal. Policy enables the business to be assessed and given an image by
the way the carry out their responsibility along with their relationship with their clients/customers. It is
the ‗barometer‘ of playing by the rule and gives purpose to the strategy thrust of the organization.

Self-Assessment Exercise 1.1

Define policy in your own words.

Definition of Business

Wikipedia (2012) states that a business (also known as enterprise or firm ) is an organization
engaged in the trade of goods, services, or both to consumers.[1] Businesses are predominant in
capitalist economies, where most of them are privately owned and administered to earn profit to
increase the wealth of their owners. Businesses may also be not-for-profit or state-owned. A business
owned by multiple individuals may be referred to as a company, although that term also has a more
precise meaning.

The etymology of "business" relates to the state of being busy either as an individual or society
as a whole, doing commercially viable and profitable work. The term "business" has at least three
usages, depending on the scope — the singular usage to mean a particular organization; the
generalized usage to refer to a particular market sector, "the music business" and compound forms
such as agribusiness; and the broadest meaning, which encompasses all activity by the community of
suppliers of goods and services. However, the exact definition of business, like much else in the
philosophy of business, is a matter of debate and complexity of meanings.

Although forms of business ownership vary by jurisdiction, there are several common forms:

Sole proprietorship: A sole proprietorship is a business owned by one person for-profit. The owner
may operate the business alone or may employ others. The owner of the business has unlimited
liability for the debts incurred by the business.

Partnership: A partnership is a business owned by two or more people. In most forms of

partnerships, each partner has unlimited liability for the debts incurred by the business. The three
typical classifications of for-profit partnerships are general partnerships, limited partnerships, and
limited liability partnerships.

Corporation: A corporation is a limited liability business that has a separate legal personality from its
members. Corporations can be either government-owned or privately- owned, and corporations can
organize either for-profit or not-for-profit. A privately-owned, for-profit corporation is owned by
shareholders who elect a board of directors to direct the corporation and hire its managerial staff. A
privately-owned, for-profit corporation can be either privately held or publicly held.

Cooperative: Often referred to as a "co-op", a cooperative is a limited liability business that can
organize for-profit or not-for-profit. A cooperative differs from a for-profit corporation in that it has
members, as opposed to shareholders, who share decision-making authority.
Cooperatives are typically classified as either consumer cooperatives or worker cooperatives.
Cooperatives are fundamental to the ideology of economic democracy.

Self Assessment Exercise 1.2

What is a business?
How will you differentiate the four aforementioned forms of business
 ownerships
Definition of Business Policy

Business Policy defines the scope or spheres within which decisions can be taken by the
subordinates in an organization (Wikipedia, 2012). 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.

Specific- Policy should be specific/definite. If it is uncertain, then the implementation will become
difficult.

Clear- Policy must be unambiguous. It should avoid use of jargons 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 be appropriate to the present organizational goal.

Simple- A policy should be simple and easily understood by all in the organization.

Inclusive/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 indecisiveness and uncertainty in minds of those
who look into it for guidance.

Rama Rao (2010) gave some useful definitions of Business Policy as follows:

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.

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.

The purpose of a business policy is to enable the management to relate properly the organization‘s
work to its environment. Business policies are guides to action or channels to thinking.

What is the difference between Policy and Strategy?

The term “policy” should not be considered as synonymous to the term “strategy”.

The difference between policy and strategy can be summarized as follows:

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 deals with routine/daily activities essential for effective and efficient running of an organization.
While strategy deals with strategic decisions.

Policy is concerned with both thought and actions. While strategy is concerned mostly with action.

A policy is what is, or what is not done. While a strategy is the methodology used to achieve a target
as prescribed by a policy.

Self Assessment Exercise 1.3

Define, in your own words, the concept “Business Policy”.

State the major differences between a policy and a strategy.

Objectives of Business Policy

The main objective of business policy is performance driven which ensures delivery of service or
product depending on purpose of which the business was set up-service or product oriented.

Business policy specific objectives ensure:

Efficiency and effectives in performance of duties

 Equal provision of services and treatment of customers

Better management and provision of better-quality services

The utilization and application of resources
The formulation mission statement
The establishment of vision of the organization

Policies are always aligned with the objectives of the enterprise if it is to be effective. All policies
follow parallel courses and directly related to objectives. If they cross or oppose objectives, collective
effect is lost and disorder would prevail. Misunderstanding and confusion are often the cause of
problems and poor results rather than faults in the stated policy (Kalejaye, 1998).

Then, why do we need to have policies?

Why Create Business Policies?

No matter what the size of the business, business policies can be simple to write and implement, while
adding structure to the great things you are already doing. Specifically, business policies:
Drive strategic planning, and help set expectations and performance objectives.
Lead to more efficient internal operations.
Engage and align the values of stakeholders; and build mutual understanding of expectations
and challenges.
Ensure accountability and create transparency.
Promote ethical and responsible decision-making. Assess and mitigate risk.
Streamline new staff orientation; having established written policies that staff can refer to
creates consistency, clarity, and provides an understanding of the goals and culture of the
company.
Result in time savings: proactively thinking about how specific situations and issues will be
handled eliminates having to discuss and debate how to handle issues every time they come to
the forefront.
Meet legal requirements; some laws require employers to adopt certain policies to guide the
actions of their staff and management. Example: Discrimination/Harassment Policy.

Self-assessment exercise 1.4

What are the objectives of Business Policy?
Application:
(Time allotted: 10 min)

Asynchronous | Synchronous

Congratulations for finishing the content of topic 1. Look how far you’ve come!
Now, give yourself two big thumbs up for your effort!!!
I’d like to know how much learnings you gain. Let’s have a quick essay activity. Please refer to
the instruction below.

Details of Activities

ESSAY NO. 1

Define a Business Policy.

What are main objectives of Business Policy?
Why does a business create policy?

Assessment

Asynchronous | Synchronous

Remarkable!!! I know you are capable of so much more!!!

Now let’s evaluate the level of competency you acquire throughout the topic. Heads up and
take these activities with high motivation.
Details of Activities

DISCUSSION BOX NO. 1

Instructions:

You need to reply to these two (2) discussion questions and make at least three (3) reply posts to
your classmates.
1. After reading thoroughly the content of our first topic under Unit 1 of PRELIM, answer the
following questions by discussing your answer in three different categories, according to (1)
to yourself as a student (2) to the agriculture community (3) to the economic development.
To the
to yourself to economic
SN QUESTIONS organization
as a
that you development
student in
belong with
BSE
1 Why do we need to study
the business policy?

2 What is the relevance of creating

policy?
3 How does policy work?

2. Identify related statements or videos even your personal experiences to support your answer
to enrich the discussion.
Details of Activities

ASSIGNMENT NO. 1

Instructions:

1. Read the case study in the book “Business Policy and Strategy” by Cynthia A. Zarate chapter
activity #2 pages 9 – 10 entitled “John Gokongwei and the Universal Robina Corporation, then
answer the follow up questions.

To further appreciate business policy – concepts and definitions, you can consult
and read the following for further readings.
Ackoff, R. L (1993). The Role of Business in a Democratic Society A Portable
MBA Edited by Collins, EGC & Devanna, M. A. Ibadan Spectrum Books Limited.

Fagbemi, A. O (2006). Customer Service Delivery in Public Sector Management

Lagos, Concept Publications Limited.

http://www.managementstudyguide.com/index.html.

Kalejaye, A. (1998). Basic Management Practice Lagos: Mak-Jay Enterprise,

ISBN: 978-027- 770-6, pp. 196 – 197.

Rama Rao, V. S. (2010). Business Policy. downloaded on November

3, 2010 from http://www.citeman.com/11809-nature-of-business-
policy.html#ixzz1naSwscRY

Weighrich, H & Koontz, H (2005) Management – A Global Perspective

Eleventh Edition New Delhi Tata McGraw-Hill Publishing Company Limited.

CONCLUSION

“In conclusion, it is deduced that every organization including

business requires a policy as a decision rule to guides the activities
and performance of the business to eventually achieve goals and
objective of the organization.”
Congratulations for finishing this first Module.
Course Name: BUSINESS POLICY
TOPIC TITLE: UNIT 2: Evolution of Business Policy as a Discipline
UNIT 3: Characteristics of Policy
TIME ALLOTMENT: 1.5 hours / 2nd week
MODULE #: Module 1 – Unit 2 and Unit 3
Period/Term: Prelim Term

Lesson Learning Objectives:

At the end of this unit, you should be to:
 trace the evolution of business policy as a discipline;
 discuss the genesis of business policy;
 trace the evolution of business policy based on managerial practices;
 discuss the historical perspective of the evolution of business policy;
 predict the future business policy in regard to managerial practices.
 state the nature of business policy;
 highlight the importance of business policy;
 enumerate the purposes of business policy
 list the objectives of business policy.

Learning Part

Activate Prior
Teaching Methods
Knowledge
INTRODUCTION:

Greetings everyone!

Time Required: In the last unit, we gave an overview of the concept “business policy”. We defined the
10 minutes concepts policy, business and business policy. We also identified the reasons for business
policy. Finally, we listed and briefly explained. In Unit 2, we shall trace the evolution of
business policy as a discipline. While in Unit 3, we shall trace the evolution of business policy as
a discipline.

Acquire New
Teaching Methods
Knowledge
Time Required:
60 minutes UNIT 2: Evolution of Business Policy as a Discipline

Video Streaming:
Entitled: Development of business policy
Link: https://www.youtube.com/watch?v=T35penSJHnc

Genesis of Business Policy

Tracing the history of business policy, Kazmi (2006) stated that its can be traced back to
1911, when the Harvard Business School introduced an integrative course in management
aimed providing general management capability. This course was based on case studies which
had been in use at the School for instructional purposes since 1908 (Christensen, et. al., 1982
cited in Kazmi, 2006). However, the real impetus for introducing business policy in the
curriculum of business schools (as management institutes or departments are known in the
United States) came with the publication of two reports in 1959. The Gordon and Howell
report, sponsored by the Ford Foundation, had recommended a capstone course of business
policy which would ―…give students an opportunity to pull together what they have learned in
the separate business fields and utilize this knowledge in analysis of complex business
problems‖ (Kazmi, 2006). The Pierson report, sponsored by the Carnegie Foundation, and
published simultaneously, had made a similar recommendation.
In 1969, the American Assembly of Collegiate Schools of Business), a regulatory body for
business schools, made the course of business policy a mandatory requirement for the purpose
of recognition. In the last two decades, business policy has become an integral part of
management education curriculum. The practice of including business policy in the
management curriculum has spread from the United States to other parts of the world. The
contents of the course, teaching methodology and so on vary from institution to institution. But
basically, business policy is considered a capstone integrative course offered to students who
have already been through a set of core functional area courses. The term ―business
policy‖ has been used traditionally though new titles such as strategic management, corporate
strategy and policy and so on are now used extensively for the course. The discussion has so far
been related to the academic status of the business policy course. In practice, however, the
development has been along different lines.

Evolution based on Managerial Practices

Kazmi, (2006) have viewed the development in business policy as arising from the use of
planning techniques by managers. Starting from day -to-day planning in earlier times,
managers, till recently, tried to anticipate the future through the preparation of budgets and by
using control systems like capital budgeting and management by objectives. However, as these
techniques were unable to emphasise the role of the future adequately, long-range planning
came into use. But, soon, long-range planning was replaced by strategic planning, and later, by
strategic planning – a term that is currently being used to describe ―the process of
strategic decision- making‖. Strategic management forms the theoretical framework for
business policy courses today.

Historical Perspective of the Evolution of Business Policy

Hofer et al., (1984) have viewed the evolution of business policy in terms of four paradigm
shifts. For the sake of convenience, these shifts may be considered as four overlapping phases
in the development of the subject, business policy. It is interesting to note that the development
of business policy, as a field of study, has closely followed the demands of real-life business. He
further the first phase which can be traced to the mid-1930s, rested on the paradigm of ad-hoc
policy-making. The need for policy-making arose due to the nature of the American business
firms of that period. The first, which had originally commenced operations in a single product
line catering to a unique set of customers in a limited geographical area, expanded in one or all
of these three dimensions. Informal control and coordination became partially irrelevant as
expansion took place and the need to integrate functional areas arose. This integration was
brought about by framing policies to guide managerial action. Policy-making became the prime
responsibility of erstwhile entrepreneurs who later assumed the role of senior management.
Due to the increasing environmental changes in the 1930s and 40s in the United States,
planned policy formulation replaced ad-hoc policy-making. Based on this second paradigm, the
emphasis shifted to the integration of functional areas in a rapidly changing environment.

Increasing complexity and accelerating changes in the environment made the planned
policy paradigm irrelevant since the needs of a business could no longer be served by policy-
making and functional area integration only. By the 1960s, there was a demand for a critical
look at the basic concept of business and its relationship to the environment. The concept of
strategy satisfied this requirement and the third phase, based on a strategy paradigm, emerged
in the early sixties. The current thinking – which emerged in the eighties – is based on the
fourth paradigm of strategic management. The initial focus of strategic management was on the
intersection of two broad fields of enquiry: the strategic process of business firms and the
responsibilities of general management.

The story is far from over. As Thompson and Strickland (1984) say, the approaches and
methods of analysis of strategic management ―have not yet coalesced into a ‗theory‘ of how to
manage an enterprise, but ―they very definitely do represent a powerful way of thinking to
resolve strategic issues‖.
Pointers to the Future

The resolution of strategic issues that affect the future of a business firm has been a
continual endeavour in the subject of business policy. The endeavour is based on the
development of strategic thinking. As Whitefield says ―really useful training (in strategic
management should yield) …. a comprehension of a few general principles with a thorough
grounding in the way they apply to a variety of concrete details‖. Most likely, the students will
forget the details and principles but ―remember (usually unconsciously) new, non-
obvious ways of thinking strategically‖ (Kazmi, 2006). The general principles undergirding
strategic thinking have been the focus of the efforts of researchers and academicians in the field
of business policy. What, then, are these general principles? As a first step, the model of
strategic management that has developed so far, and is under constant review, incorporates
these general principles.

The direction in which strategic management is moving can be anticipated from what
(Ansoff, 1984) calls an emerging comprehensive approach of ―management of
discontinuous change, which takes account of psychological, sociological, political, and
systemic characteristics of complex organizations‖. With the emergence of futuristic
organizations, which, in the words of Toffler, are no longer responsible simply for making a
profit or producing goods but for simultaneously contributing to the solution of extremely
complex ecological, moral, political, racial, sexual, and social problems,‖ (Toffler, 1980) the
demands on business policy are expected to rise tremendously. The general managers of
tomorrow may be called upon to shoulder a set of entirely new responsibilities necessitating a
drastic review of the emerging concepts and techniques in business policy. Responding to the
need for evolving new approaches to the teaching of business policy, the AACSB no longer
insists on the provision of just one course in this area. Now there is an emerging trend to have
several courses, such as, the theory of strategic competitive strategy, industry dynamics, hyper-
competition, and global strategy in the curriculum (Kazmi, 2006).

While reviewing the development of strategy and theory, Rumelt, Schendel and Teece
(1994) posed four fundamental questions which, in their view, characterize the major concerns
of strategic management. These four fundamental questions are:
 How do firms behave? Or, do firms really behave like rational actors, and, if not, what
models of their behavior should be used by researchers and policy-makers?
 Why are firms different? Or, what sustains the heterogeneity in resources and
performance among close competitors despite competition and imitative attempts?
 What is the function of or the value added by the headquarters unit in a diversified
firm? Or, what limits the scope of a firm?
 What determines success or failure in international competition? Or, what are the
origins of success and what are their particular manifestations in international
settings or global competition?
 In dealing with most of the issues raised by these fundamental questions, we would
need to look at what has been happening in Nigerian business scene.

UNIT 3: Characteristics of Policy

Video Streaming:
Entitled: Business Environment and Policy : Lecture 2 (Characteristics of business)
Link: https://www.youtube.com/watch?v=gxV1VSPDpYA

The Nature of Business Policy

Before we proceed to understand the nature of business policy, let us witness these
situations, as reported in an issue of a reputed business magazine in India: ( Kazmi, 2006).
Exide reaps the benefits of its strategies, which include modernization, expansion, and
acquisitions, to become the integrated leader in the battery sector. Costly expansions and poor
demand have forced JK Corp to rework its strategies. It is now banking its future on its core
paper business. This will come through the divestment of its cement division, Laxmi Cements,
and the acquisition of the Central Pulp Mills. Tisco is using divestments and mergers to
restructure its core businesses of steel, allied industries, refractory, and engineering. Exim
Bank (the Export and Import Bank of India), established in the early eighties with the objective
of extending support to Indian exporters and importers, still remains small given the Indian
economy‘s requirements. As it faces tough competition from the scheduled commercial banks it
needs a strategic vision to cope with the increasing competition in the new millennium.

From the above reports, we can see that when a company either promotes a joint venture,
divests a part of its business, embarks upon an expansion programme, undertakes mergers and
acquisitions or takes other similar actions which have a long-term impact on its future
operations and status, those are a result of senior management decision-making. The senior
management in any organization is primarily responsible for guiding the future course of action
and for providing a sense of direction. Business policy attempts to inculcate the capability for
senior management in one toward these ends.

Kazmi, 2006), defined 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. The problems of
policy in business, like those of policy in public affairs, have to do with the choice of purposes,
the moulding of organizational identify and character, the continuous definition of what needs
to be done, and the mobilization of resources for the attainment of goals in the face of
competition or adverse circumstances‖.

This comprehensive definition covers many aspects of business policy. Firstly, it is

considered as the study of the functions and responsibilities of the senior management related
to those organizational problems which affect the success of the total enterprise. Secondly, it
deals with the determination of the future course of action that an organization has to adopt.
Thirdly, it involves a choosing the purpose and defining what needs to be done in order to
mould the character and identity of an organization. Lastly, it is also concerned with the
mobilization of resources, which will help the organization to achieve its goals.

The senior management consists of those managers who are primarily responsible for
long-term decisions, and who carry designations, such as, Chief Executive Officer, President,
General Manager, or Executive Director. These are persons who are not concerned with the
day-to- day problems but are expected to devote their time and energy to thinking and deciding
about the future course of action. With its concern for the determination of the future course of
action, business policy lays down a long- term plan, which the organization then follows. While
deciding about a future course of action, the senior management are confronted with a wide
array of decisions and actions that could possibly be taken. The senior management exercises a
choice, on the basis of given circumstances, and which, in their opinion, would lead the
organization in a specific direction. By moving in a predetermined direction, an organization
can attain its planned identity and character.

The Importance of Business Policy

Kazmi (2006) opined that business policy is important as a course in the management
curriculum and as a component of executive development programmes for middle-level
managers who are preparing to move up to the senior management level. A study of business
policy fulfills the needs of management students as well as those of middle-level managers. To
highlight the importance of business policy, we shall consider four areas where this course
proves to be beneficial.
Learning the Course

Business policy seeks to integrate the knowledge and experience gained in various
functional areas of management. It enables the learner to understand and make sense of the
complex interaction that takes place between different functional areas.
 Business policy deals with the constraints and complexities of real-life businesses. In
contrast, the functional area courses are based on a structured, specialized and well-developed
body of knowledge, resulting from a simplification of the complex overall tasks and
responsibilities of the management.

To develop a theoretical structure of its own, business policy cuts across the narrow
functional boundaries and draws upon a variety of sources – other courses in the management
curriculum and a wide variety of disciplines, like economics, sociology, psychology, political
science, and so on. In so doing, business policy offers a very broad perspective to its students.

Business policy makes the study and practice of management more meaningful as one can
view business decision-making in its proper perspective. For instance, in the context of
business policy, a short-term gain for a department or a sub-unit is willingly sacrificed in the
interest of the long-term benefit that may accrue to the organization as a whole.

Understanding the Business Environment

Regardless of the level of management a person belongs to, business policy helps to create
an understanding of how policies are formulated. This helps in creating an appreciation of the
complexities of the environment that the senior management faces in policy formulation. By
gaining an understanding of the business environment, managers become more receptive to the
ideas and suggestions of the senior management. Such an attitude on the part of the
management makes the task of policy implementation simpler. When they become capable of
relating environmental changes to policy changes within an organization managers feel
themselves to be a part of a greater design. This helps to reduce their feeling of isolation.

Understanding the Organization

Business policy presents a basic framework for understanding strategic decision-making

while a person is at the middle level of management. Such a framework, combined with the
experience gained while working in a specialized functional area, enables a person to make
preparations for handling general management responsibilities. This benefits the organization
in a variety of ways.

Business policy, like most other areas of management, brings the benefit of years of
distilled experience in strategic decision-making to the organization and also to its managers.
Case study
– which is the most common pedagogical tool in business policy – provides illustrations of real-
life business strategy formulation and implementation. An understanding of business policy
may also lead to an improvement in job performance. As a middle-level manager, a person is
enabled to understand the linkage between the different sub-units of an organization and how a
particular sub- unit fits into the overall picture. This has far-reaching implications for
managerial functions like coordination and communication, and also for the avoidance of inter-
departmental conflicts.

Personal Development

A study of business policy offers considerable scope for personal development. It is a fact
of organizational life that the different sub-units within an organization have a varying value
and importance at different times. It often happens that a company which has followed a
production- orientation as a matter of policy gradually shifts emphasis to marketing may be
due to increasing competition. In the changed situation, executives within the production
departments have fewer opportunities for career advancement as compared to their colleagues
in marketing. In this case, it is beneficial for an executive to understand the impact of policy
shifts on the status of one’s department and on the position one occupies. In extreme cases,
many positions may become redundant due to policy shifts and retrenchment is inevitable.
Business India cautions executives, especially those who work for multinationals. It says ―….
persons who have devoted their lives working for one company suddenly find bewildering
changes at head offices in the UK and US‖, and adds that reorganization and changes at the top
level can have a dramatic impact on individuals. ―It is only too common for divisions of a
company to be shut down worldwide or to be sold off to another company‖. 22 An
understanding of business policy enables executives to avail an opportunity or avoid a risk with
regard to career planning and development.

While making a career choice, a study of business policy provides an adequate grounding
for understanding the macro factors and their impact at the micro level. By gaining an
understanding of such an impact, an executive is better placed to identify the growth areas. For
instance, in the current business situation in India, a career in the computer industry,
especially in software, would offer better personal growth opportunities than, say, the steel
industry. Business policy offers a unique perspective to executives to understand the senior
management’s viewpoint. With such an understanding the chances that a proposal made by or
an action taken by an executive will be appreciated by senior managers is decidedly better.
An interesting by-product of the business policy course is the theoretical framework
provided in the form of the strategic management model. The applicability of this model is not
limited to businesses alone. It can be applied to organizations like, services, educational
institutions, family, government, public administration, and to many other areas. In fact, the
model provides powerful insights for dealing with policy-making at the macro level as well as at
an individual level through self-analysis. The importance of business policy stems from the fact
that it offers advantages to an executive from multiple sources. Apart from the intangible
benefits, an executive gains an understanding of the business environment and the
organization he or she works in. such an understanding can help considerably in career
planning and development.

The Purpose of Business Policy

‗Business policy‘ is a term associated with the integrated management course, which is
generally studied in the latter part of the degree or diploma, and is preceded by the study of
functional area courses in finance, marketing, operations and personnel (Kazmi, 2006). A
business policy course seeks to integrate the knowledge gained in various functional areas so
as to develop a generalist approach in management students. Such an approach is helpful in
viewing organizational problems in their totality. It can also create awareness about the
repercussions that an action taken in one area of management can have on other areas
individually, and on the organization as a whole.

The viewpoint adopted in business policy is different from that adopted in the functional
area courses. For instance, a marketing problem is not viewed purely as a problem of
‗marketing‘ but as an organizational problem. A course in business policy helps in
understanding a business as a system consisting of a number of sub-systems. Any action taken
in one sub-system has an impact on other sub -systems, and on the system as a whole. It is of
vital importance for the top management in any organization to adopt such a systems approach
to decision-making. Business policy helps a manager to become a generalist by avoiding the
narrow perspective generally adopted by the specialists, and to deal with business problems
from the viewpoint of the senior management.

The problem of declining sales volume is apparently a marketing problem. However, an

analysis of the problem will show that its roots may probably lie anywhere in the organization.
Declining sales volume may be due to a rising level of competition, inefficient distribution,
faulty sales promotion, inappropriate recruitment policies, misdirected training, inadequate
sales promotion, limited commission to sales personnel, falling quality standards, a decrease in
the variety of products offered, outdated design, underutilization of capacity, demotivating
credit policies and so on. a problem, which apparently seems to be a marketing problem, may
be due to factors not necessarily within the control of the marketing department. A solution to
the problem would necessitate transgressing the artificial boundaries between the functional
areas, each of which is looked after by a team of specialists. These specialists, due to their
background, training and, possibly, loyalty to their disciplines are unaware and ill-equipped to
deal with all the problems in entirety. They may come up with short-term solutions but these
are only like first-aid to a victim when a thorough diagnosis and treatment is required to
mitigate the misery. A generalist, on the other hand, is better qualified to deal with
organizational problems and can come up with solutions that will have a lasting effect. On the
basis of the above discussion, we can say that the purpose of business policy is three-fold:

 to integrate the knowledge gained in various functional areas of management;

 to adopt a generalist approach to problem-solving, and
 to understand the complex inter linkages operating within an organization
through the use of a systems approach to decision-making and relating these to
the changes taking place in the external environment.

In order to make the study of business policy purposeful, specific objectives need to be
defined, which we shall do in the next section.

The Objectives of Business Policy

It is essential that we should first state the objectives of business policy and only then
proceed further. The objectives of business policy have been stated in terms of knowledge, skills
and attitudes which could be derived from the purpose of business policy.

Knowledge

The learners of business policy have to understand the various concepts involved. Many of
these concepts, like, strategy, policies, plans, and programs are encountered in the functional
area courses too. It is imperative to understand these concepts specifically in the context of
business policy.

A knowledge of the external and internal environment and how it affects the functioning
of an organization is vital to an understanding of business policy. Through the tools of analysis
and diagnosis, a learner can understand the environment in which a firm operates.

Information about the environment helps in the determination of the mission, objectives,
and strategies of a firm. The learner appreciates the manner in which strategy is formulated.

The implementation of strategy is a complex issue and is invariably the most difficult part
of strategic management. Through the knowledge gained from business policy, the learner will
be able to visualize how the implementation of strategic management can take place.

To learn that the problems in real-life business are unique and so are the solutions is an
enlightening experience for the learners. The knowledge component of such an experience
stresses the general approach to be adopted in problem-solving and decision-making. With a
generalized approach, it is possible to deal with a wide variety of situations. The development of
this approach is an important objective to be achieved in terms of knowledge.

To survey the literature and learn about the research taking place in the field of business
policy is also an important knowledge objective.

Skills

The attainment of knowledge should lead to the development of skills so as to be able to

apply that which has been learnt. Such an application can take place by an analysis of case
studies and their interpretation, and by an analysis of the business events taking place around
us.

The study of business policy should enable a student to develop analytical ability and use
it to understand the situation in a given case or incident.

Further, the study of business policy should lead to the skill of identifying the factors
relevant in decision-making. The analysis of the strengths and weaknesses of an organization,
the threats and opportunities present in the environment, and the suggestion of appropriate
strategies and policies form the core content of general management decision-making.

The above objectives, in terms of skills, increase the mental ability of the learners and
enable them to link theory with practice. Such an ability is important in managerial decision-
making where a large number of factors have to be considered at once to suggest appropriate
action.

As a part of business policy study, case analysis leads to the development of oral as well as
written communication skills.

Attitude

The attainment of the knowledge and skill objectives should lead to the inculcation of an
appropriate attitude among the learners. The most important attitude developed through this
course is that of a generalist. The generalist attitude enables the learners to approach and
assess a situation from all possible angles.

By acting in a comprehensive manner, a generalist is able to function under conditions of

partial ignorance by using his or her judgement and intuition. Typically, case studies provide
only a glimpse of the overall situation and a case analyst frequently faces the frustrating
situation of working with less than the required information. Experience has shown that
managers, especially in the area of long-range planning, have to work with incomplete
information. A specialist would tend to postpone or avoid a decision under such conditions but
a generalist would go ahead with whatever information was available. In this way, he or she
acts more like a practitioner rather than a perfectionist.

For a general manager information and suggestions are important to possess a liberal
attitude and be receptive to new ideas. Dogmatism with regard to techniques should be
replaced with a practical approach to decision-making for problem-solving. In this way, a
general manager can act like a professional manager.

It is important to have the attitude to “go beyond and think” when faced with a
problematic situation. Developing a creative and innovative attitude is the hallmark of a general
manager who refuses to be bound by precedents and stereotyped decisions.

An Alternative Viewpoint on the Objectives of Business Policy Course

Anisya S. Thomas of Florida International University says that the fundamental objectives
of the capstone business policy course have remained relatively stable over a long period of
time. There is broad agreement among textbook writers and instructors that these objectives
encompass content as well as process dimensions, that is, they deal with the core concepts and
theories and also seek to teach an analytical process that incorporates multiple perspectives.
More specifically, these objectives are as below:

Integration of functionally specific knowledge. Business policy acts as an integrative,

capstone course demonstrating the interdependence between separate functional areas, such as
marketing, finance, and so on.

Understanding the “big picture”. Communicating the appreciation of the synergy created
by managing the interdependence among the functional areas is a critical objective of business
policy. A general management perspective aids in exposing the student to the tradeoffs involved
in achieving superior performance by balancing the internal competencies with the external
requirements.

Working in, managing, and leading a team. Working with and managing a diverse and
flexible team is a critical priority with the corporate recruiters. (Interestingly, a similar view is
expressed on the basis of surveys conducted by the Indian business magazines too.) Business
policy tries to build up the teamwork spirit by illustrating the finer aspects of group dynamics
 and by bringing together students from different specialization areas.

Enhancement of comprehension and communication skills. Business policy lays great

emphasis on allowing students to be active participants in the learning process. In contrast to
the functional courses, there is a stress on using methodologies, such as case discussions, and
oral and written presentations and reports.

Ability to assess the applicability and relevance of strategic management research (theory
to practice). Theoretical advances in the field of business policy are taking place rapidly. It is
necessary for the students to evaluate the relative merit and applicability of theoretical
advances to deal with the rapid environmental and strategic changes that characterize the
business arena. So it is imperative that the students not just learn but also learn how to learn
(Kazmi, 2006).

Having looked at the above alternative view of the objectives of business policy course,
you will be in a position to gain further insight into the issue. The objective business policy, in
terms of knowledge, skills and attitude could be further extended to the areas of behavior and
performance. After having attained knowledge of the objectives in the classroom, or in an
executive development program, the learner is expected to exhibit appropriate behavior and
good performance on the job. The structure of business policy, built through the accumulation
of experience as one moves up the managerial ladder. The richness and variety of experience
gained as one moves up the managerial ladder in business offers opportunities of testing,
validating, and replicating the mental images and models learnt in the business policy course.
Such an approach imparts an added impetus to the development of general management
capability which is the sine qua non for a manager who wishes to succeed in his or her job and
make a meaningful contribution to the organization he or she works for.

Application
of New Teaching Methods
Knowledge
Time Required:
10 minutes ACROSTICS

Instruction: Listed on the left side are every letter which make up the word BUSINESS
POLICY. Write statements for each letter that describes business policy as a discipline and the
characteristics of policy as learned from the lesson.
B - _______________________________________________________
U - _______________________________________________________
S - _______________________________________________________
I - _______________________________________________________
N - _______________________________________________________
E - _______________________________________________________
E - _______________________________________________________
S - _______________________________________________________
S - _______________________________________________________

P - _______________________________________________________
O - _______________________________________________________
L - _______________________________________________________
 I - _______________________________________________________
C - _______________________________________________________
Y - _______________________________________________________

Assessment
of New Teaching Methods
Knowledge

ESSAY

Instruction: Answer each question below using at least a paragraph consisting of not less than
five (5) sentences.
Time Required:
10 minutes
1. Business policy is a capstone, integrative course. Explain.
2. In what direction is strategic management likely to move in the future?
3. What are the different aspects of the nature of business policy? Discuss each
one of them with the help of suitable examples.
4. What are the objectives set for a business policy course in terms of knowledge,
skills and attitudes?

References and Supplementary Materials

Kazmi, C. (2006). Business Policy and Strategic Management, 15th Edition, (New Delhi: Tata McGraw-Hill Publishing Company
Limited), ISBN: 0-07-044470-6, pp. 1 – 23.

Christensen, C.R., et. al., Business Policy – Text and Cases, 5th edn, (Homewood: 3rd Richard D.

Irwin, 1982), quoted from preface.

Gordo, A. and J.E. Howell, Higher Education for Business, (New York: Columbia University Press, 1959), pp. 206 – 07.

Glueck, W.F. and L.R. Jauch, (1984), Business Policy and Strategic Management, 4th edn, (New York: Mc Graw-Hill, pp. 4-5.

Hofer, A, et. al., Strategic Management – A Casebook in Policy and Planning, 2nd edn, (Minnesota: West Publishing, p. 8.

Thompson, A., Jr. and A.J. Strickland III, Strategic Management – Concepts and Cases, 3rd edn, (Plano, Texas: Business Publication,
1984), quoted from preface.

Whitefield, A.N., The Aims of Education and Other Essays, (New York: American Library, 1963), p. 62.

Camerer, C., ―Redirecting Research in Business Policy and Strategy‖, Strategic Management Journal, (6): 13.

Ansoff, H., Implanting Strategic Management, (Englewood Cliffs, New Jersey: Prentice-Hall, 1984), quoted from preface.

Rumelt, R.P., D.E. Schendel and D.J. Teece, Fundamental Issues in Strategy: A Research Agenda, (Boston, Mass: Harvard Business
School Press, 1994), pp. 39 – 47.

Mote, V.L., ―Management Education in India – The Role of the Institutes of Management‖, Vikalpa, (10) 4: 371 – 85.

AICTE, Norms and Standards, (New Delhi: AICTE, 1995).

AIMS, A Standard Curriculum for Indian Management Schools, (Bangalore: AIMS, 1989).

A.S. Thomas, ―The Business Policy Course: Multiple Methods for Multiple Goals‖. Journal of Management Education, (22) 4: 486 – 87).

Murthy, K.P.S., A Survey of Research in Business Policy (1970 – 1982), (Ahmedabad: IIM, Feb. 1984), ―Working Paper No. 495‖, pp. 22-
23.

Ahmad, A. and T. Agarwala, A Decade of Management Research in India, (Bengalore: AIMS, 1994).

The examples have been quoted from Business India, May 17 to 30, 1999. Christensen et. al., op. cit., p. 3

Steiner, G.A., J.B. Miner and E.R. Gray, Management Policy and Strategy – Text, Readings and Cases, 2nd edn, (New York: Macmillan,
1982), pp. 206 – 07.
Course Name: BUSINESS POLICY
TOPIC TITLE: UNIT 4: CHARACTERISTIC OF BUSINESS POLICY
UNIT 5: TYPES/KINDS OF POLICIES
TIME ALLOTMENT: 1.5 hours / 3rd week
MODULE #: Module 1 – Unit 4 and Unit 5
Period/Term: Prelim Term

Lesson Learning Objectives:

At the end of this unit, you should be to:
 explain the characteristics of policy;
 list and discuss the sources of a policy;
 State the features that make a good policy;
 describe how policies are formulated;
 list the types of Policy;
 enumerate the reasons for formulating policies;
 highlight the uses of polices for management effectiveness;
 explain how policies are integrated in relation to objectives;
 itemize management policy areas; and
 state the role of workers in policy formulation.

Learning Part

Activate Prior
Teaching Methods
Knowledge
INTRODUCTION:

Most organizations produce statements and explanations on what they are trying to
achieve in particular areas. Policies are subdivided and stated in terms of procedures i.e. series
of related steps or tasks expressed in a chronological order, and rules i.e. prescribed course of
actions that explicitly state what are to be done under a given sets of circumstances. Many
organizations provide parameters within which decisions must be made. Some of these will be
written by specialists in different operational areas, like employment matters which may focus
Time Required:
10 minutes
on hiring and firing, sales and marketing departments may provide guidelines of pricing and
credit facilities; purchasing department policies may prohibit gifts from suppliers. Some
policies focus on materials/stock and others on capital and equipment. Some describe
objectives and others means.

In general, policies may be classified in relation to personnel, capital, objectives, means

and specific organizational areas. This is an arbitrary but convenient way to classify policies. It
should be noted that these categories are not mutually exclusive but frequently overlap.

Acquire New
Teaching Methods
Knowledge
Time Required:
60 minutes UNIT 4: CHARACTERISTIC OF BUSINESS POLICY

Characteristics of Policy

Sound policies usually contain a combination of the following characteristics:

Destiny Communicated to Staff
Top Management Approval & Commitment Genuine Intention & Application
Intellectual Input Balanced Interpretation
Consistency & Long-term in Nature Acceptability Alignment with Objective
 Sources of Policy

Kalejaye (1998) examined the major sources of policies and classified them as originated,
appealed, implied and externally-imposed. These are explained as follows:

Originated Source – The most acclaimed source of policies is the one from top management
which originates for the express purpose of guiding the company’s operations. Originated
policies flow basically from the objectives of the enterprise, as they are defined by top executive
authority. These types of policies may be broad in scope, allowing key subordinates to give
them clearer definition or they might be promulgated so completely and comprehensively as to
leave little room for definition or interpretation.

Appealed Source – In practice, in most cases, policies stem from appeal through the
hierarchical level of management authority. If occasion for decision arises for executives who
do not know whether they have sufficient authority or how such matters should be handled,
they appeal to their supervisors for the necessary support and action. As appeals are taken
upward and decisions are made on them, a kind of rules and procedures are established.
Precedent, therefore, develops and becomes guides for future managerial action and serves as
reference point.

Implied Source – Useful policies are developed from the actions which employees see about
them and believe to constitute them. Employees will readily understand what real policy is if
they work for a company that operate policies that produce high quality goals, or sound labor
policy, for instance, though the real policy is implied.

Externally-imposed Source – To a large extent, policies are externally-imposed by such

agencies as the government, trade unions, professional associations and others like trade
association. This might come in form of direct regulation or one of the many conditions of
accepting government aid or contract; it could also be to maintain industrial peace. Besides,
local and state governments, professional associations, social and charitable organizations do
influence the policies of organizations.

What Makes a Good Policy?

Wikipedia (2012) states that company policies are most effective as official written documents.
While policies often differ in form depending on company size, industry, and length of time in
business, policy documents generally contain certain standard components including:

Purpose Statement, outlining why the organization is issuing the policy, and what the
desired effect or outcome of the policy is.

Specifications, including statements indicating the specific regulations, requirements, and

organizational behavior that the policy is creating.

Implementation section, indicating which parties is responsible for carrying out individual
policy statements and how policy adherence will be ensured.

Effective Date, which indicates when the policy is considered in force (an executive signature
or endorsement can be useful to legitimize the policy).

Applicability and Scope Statement, describing whom the policy affects and which actions
are impacted by the policy.

Background, indicating any reasons, history, and intent that led to the creation of the policy,
which may be listed as motivating factors.
Definitions, providing clear definitions for terms and concepts found in the policy document.
UNIT 5: TYPES/KINDS OF POLICIES

Formulation of Policy

The studies or theories in which purposeful organizations formulate policies represent a

scholarly pursuit which has been carried on for years by management theorists. These scholars
have observed and analyzed the decision-making action of managers of business and other
organizations as they determined the direction and course of their respective organizations.

To influence policy thinking in an organization is one of the important goals of an

executive as he develops his career. The greater an executive’s influence on policy, the greater is
his contribution and the higher his status among fellow executives. This, in part, is what
contributes to the difference and respect generally accorded a company’s chief executive. His
thinking is all centered on policy issues and as you will note all policies are crucial to the
survival, health and success of an enterprise.

Policy decisions rest fundamentally on human judgement and intuition. Some policies
evolve informally over a long period of time without conscious or selective formulation. They
have their origin in slowly developing customs, traditions and attitudes. Others are formulated
quickly, because the situation requires rapid implementation. Both types may originate at the
top levels in the organization and work their way down; they may also arise in a given area and
remain in that area; or they may start at lower levels and permeate upward. In general, policies
should be formulated by those in organization who have the responsibility for accomplishing
the particular objectives to which the policies relate.

Policies from Top to Bottom

Some policies cut across all functional areas of the organization. Many are so interrelated
with all area of operations that their significance can best be understood by the top level
management. Policies that originate from the top arise out of broad, basic needs perceived and
defined by the top managers. In large corporations today, for instance, the Chief Accountant is
an important contributor to advance planning and policy formulation. Complex taxes, new
accounting procedures, mergers, computerization, insurance, pensions, investment options and
appraisal, profit sharing, and depreciation of assets and other many cost implication corporate
issues cause the Chief Accountant to become involved in areas that are broad than strictly
finance.

General policies or corporate policies affecting all areas of operation usually originate
from the top management. Descending levels in the organization structure will be guided by
these policies when formulating more limited policies at their own levels.

Policies within Functional Areas of Departments

Those in charge of functional areas, and/or departments are generally involved in

establishing policies for those areas. Marketing executives formulate marketing policies,
purchasing executive formulate purchasing policies; personnel managers formulate personnel
policies, etc. These are operational policies proposed and formulated at functional areas and
departmental levels. Managers must be consistent and operate within corporate policy
guidelines while formulating policies at these levels. Policy established within functional areas
may influence the formulation of policy in other functional areas as well as the strategies
developed to pursue those policies.

Policies from Bottom to the Top

There are lots of advantages and wisdom in inviting supervisors and other operating
personnel to participate in developing and implementing policies. Whenever possible, non-
management employees should have a voice in policy matters that will directly affect them or
their work. This kind of “Participative Management” engenders good human relations. It
gives the managers a chance to hear from the workers reactions to subject policies and to
accommodate them, but also to give the workers the opportunity to gratify deep seated needs
for recognition and influence on the group‘s functioning. Also, by participating in policy
making, a worker develops a managerial perspective and a tendency to consider the enterprise
as a whole, thereby contributing to its success.

One important thing to note in the above arrangement is that policies and suggestions
which may originate at or near the bottom of an organization and which may be useful never
get to the top except through strong influential pressures. If the higher-level management is
receptive to ideas, feelings and attitudes of those below, they will derive valuable policy inputs
from them. The openness of upward communication and the use of participative management
method can do much to generate upward policy formulation process.

In general, it is advisable that managers review all policies periodically, as some might
have outgrown their original purpose or usefulness. They should not be glorified and
perpetuated merely because they are policies, rather, they should be modified or replaced when
circumstances call for such a change. Once a policy has been adopted or modified, it should be
communicated to all affected by it. It is advisable to communicate policy statements at all levels
in writing and to maintain a policy file that is accessible to everyone. Persons expected to
conform to a policy have a right to know that such a policy exists, the purpose of that policy and
why it was formulated.

Since policy formulation is not a guess work, certain definite steps are stipulated to be
followed by decision makers when formulating new policies or modifying the existing ones.
These are (Kalejaye, 1998):

 Carefully study the organization‘s objectives.

 Identify the need for a policy in a given area.
 Source for and collect all possible and relevant information for the policy formulation.
 Consideration must be given to all alternatives especially as they relate to the policy.
 Analyze all possible available outcomes.
 Select the best policy statement so far made taking into consideration its possible
outcome.
 Review the policy statement with the employees and others who will be affected by its
application.
 Ensure the policy is in line with the other existing policies of the organization.
 Draw out the final policy statement including the effective dates of such a policy.

Types of Policies

The type of organization influences the type of policies muted out for compliance. The
regulations which guide decisions which guide decisions and actions vary considerably and cut
across the hierarchical structure of the organization depending on the nature and magnitude of
objective. There are many types of policies – marketing policies, financial policies, production
policies, personnel policies to name a few in every organization. Within each of these areas
more specific policies are developed. For example, personnel policies may cover recruitment
training promotion and retirement policies. Viewed from a systems angle, policies form a
hierarchy of guides to managerial thinking. At the top of level policy statements are broad. The
management is responsible for developing and approving major comprehensive company
policies. Middle managers usually establish less critical policies relating to the operation of
their sub units. Policies tend to be more specific at lower levels. The manager’s job is to ensure
the consonance of these policies, each must contribute to the objectives of the firms and there
should be no conflict between sub system policies.

Although it is customary to think of policies as written statements it is not necessarily the

case. For example, a firm may simply decline to consider handicapped employees in the
selection of new personnel. In effect, this becomes an effective policy even though the company
has never verbalized its position.

There are many types of policies. Examples include:

 hiring university-trained engineers;

 encouraging employees’ suggestions for improved cooperation;
 promoting from within, conforming strictly to a high standards of business ethics;
 setting competitive prices; and
 insisting on fixed, rather than cost-plus, pricing.

Hicks and Gullett (1985) expressed the opinion that every operating area ranging from
sales, procurement, manufacturing, personnel (human resources) and finance need a hierarchy
of supporting policies to drive the business. This move enhances policies as guide to decision
define the boundaries within the organization and they direct decisions toward accomplishing
objectives thereof. In the progression from objectives to policies to procedures to rules, the
limits become increasingly narrow.

Steiner (1969) stated that the regulations which guide decisions and actions very
considerably and cut across the hierarchical structure of the organization depend on the nature
and magnitude of mission to be accomplished. He therefore developed a pyramid to
demonstrate the relationship among various types of business policies will be used as a model
as discussed below:

Steiner‟s Pyramid of Business Policies

Major Policies
Major policies are formulated at the top of the organization and relate to the company’s main
purpose. They provide guide line pertaining to such things as the line of business and ethical
conduct of organization.

Secondary or Corporate Policies

These policies are broad and general policies formulated at the upper levels of management of
the organization. These policies apply to the entire organization and deal with business facets
such as the selection of major products and services and the selection of marketing areas. Much
of the information generated in the proper formulation of major policies can be used in
determining secondary policies, which are more specific than major policies.

Functional Policies
These deal with specific functional areas of the organization. They involve policies that
specifically related to marketing production, finance, and other functional areas. For instance,
the ABC Transport Company will accept customer exchanges or returns made within one
month after purchase is an example of functional policy related to marketing.

Minor Policies
They are subordinate to functional policies and define in details such matters as maintenance
of equipment, schedules, plant layout, absenteeism etc.

Procedure
This is a series of related steps or related steps or tasks expressed in chronological order to
achieve a specified purpose. Procedure defines in step-by-step fashions the method by which
policies are achieved. They outline precisely the manner in which an activity must be
accomplished. Procedure generally permits little flexibility and deviation.

Rules
This is a statement of what may, must or must not be done in a particular situation or when
playing a game. It explains in a lucid manner what an employee should do or is advised to do in
a particular situation. You can also describe rules as the habits, the normal state of things, or
what is true in most cases. Finally, a rule is a statement of what is possible according to a
particular system. Rules permit the use of discretion in performing a particular task.

Business policies

Business policies are sets of rules followed by a store or group of stores that define
business processes, industry practices, and the scope and characteristics of a store's or group of
stores' offerings. They are the central source and reference template for all allowed and
supported practices within a store or group of stores.

In WebSphere Commerce, business policies are enforced with a combination of one or

more business policy commands that implement the rules of the business policy. Each business
policy command is a Java class. A business policy command can be shared by multiple business
policies. The behavior of the business policy command is determined by the parameters passed
to the command.

Parameters affecting the function of a business policy command can be introduced in

three places:

the contract term and condition referencing the business policy

the business policy definition
the business policy command itself.

The business policy definition may specify a set of parameters that are automatically fed
into each invocation of any of commands associated with the policy. A business policy
command may specify additional parameters when it is invoked. Finally, a contract term and
condition may prove extra parameters for a business command unique to the term and
condition.

Business policy commands for the same type of business policy must have the same
interface. The following categories of business policies are provided in Web Sphere Commerce:

Catalog business policies

Catalog business policies define the scope and characteristics of the catalog of products for
sale in a store including prices and the categorization of products in a store's catalog.

Payment business policies

Invoicing, payment, and refund business policies define how a store accepts payments,
pays refunds, and the format of a store's invoices.
Returns business policies
Returns business policies define if refunds are accepted, the time period they are accepted
for, and any re-stocking fees applied to returns.

Shipping business policies

Shipping business policies define the shipping providers a store can use and the charges
associated with each type.

Referral interface business policies

Referral interface business policies define the relationship between a proxy store and a
remote store. Many contract terms and conditions reference business policies. This provides a
measure of control over the nature of contracts a store enters into while still providing
flexibility in creating the contract terms and conditions.

There are several types of Business policies being followed in the Business
Environment.

Business policies may be of the following types:

External Policies:

Policies framed to give effect to the decisions of the Government, judiciary, trade associations
and such other external forces are what are called external policies. For example, under the
Income-Tax Act, every employer is bound to deduct tax from the salary payable to the
employees every month. Similarly, the Government requires certain number of jobs to be
reserved for the backward sections of the society. To give effect to such orders, policies may be
formulated at the enterprise level.

Internal Policies:

Policies formulated to give effect to certain decisions taken by the owners of a business
establishment are what are called internal policies. For example, it may be the policy of a
certain private sector organization to appoint certain categories of workers purely on contract
basis. Similarly, a business organization may adopt a policy to produce only for the foreign
market.

Appealed Policies:

Such policies are formulated to give effect to the suggestions of the staff of an organization. For
example, the employees may make an appeal to the top management to give employment to an
eligible member of an employee‘s family after the latter‘s retirement. If such a proposal is
acceptable to the management, the same may be announced as a policy.

Explicit Policies:

Those policies of an organization that are stated outwardly are called explicit policies. Such
policies form part of the organization manual. Most of the policies of an organization are
explicit in nature. The sales policy, credit policy, etc., may be cited as examples.

Implicit Policies:

These policies are not stated outwardly. For Example, every organization follows certain policy
for the recruitment of employees. Such a policy is not usually stated explicitly. Even the existing
employees may not be aware of it.

Reasons for Formulating Policies

 Many professionally managed businesses acknowledged that it is necessary to have
policies in all the major functional areas of management. The focus areas will thus include
production policy, purchasing policy, marketing policy, selling and promotional policy, etc. All
these policies are expected to give support to the overall objectives of the organization as
defined by the top management and they complement each other. The major reasons for having
policies are as follows:

It is impossible and wrong to rely on expediency or precedents to solve problems which

arise intervally or regularly. To that extent, decision-making is more consistent and
detailed when policy is defined and known.

Policy provides continuity for the organization. They are more permanent than the
individuals who are employed and later leave for greener pastures or are sacked; thereby
providing an enduring foundation for continuity.

They help to facilitate expansion and integration of new businesses into the company so
that when growth occurs, there is already a firm foundation policy to apply in the new
situation.

They provide a yardstick with which to measure progress in the organization. For
example, policy on issue of stock items – stipulating that no condition on which stock
should be issued on verbal instruction. This may not be achievable instantly, but it sets a
standard against which progress can be measured as the policy is implemented.

They stimulate action, because managers and supervisors have the knowledge and
confidence to make decisions and take actions knowing fully well that they are following
the laid down policies.

Policies also save management time because the information is available and the
procedures for carrying them out are known. This, of course, assumes that the policies are
made freely available to those who require them.

They promote fairness in treating employee matters; provided the policies take account of
the needs of the entire organization and are interpreted consistently.

Policies serve as bases for the defense of the various organization actions and activities in
the event of challenges and litigation in the court of law.
 Application
of New Teaching Methods
Knowledge

INDIVIDUAL ACTIVITY

Instruction: Write down a new self-formulated policy for CMDI which conforms to Steiner’s
Types of Business Policy. Write each formulated policy in statement form.

Time Required:
10 minutes
 Assessment
of New Teaching Methods
Knowledge

ESSAY

Instruction: Answer each question below using at least a paragraph consisting of not less than
five (5) sentences.
Time Required:
10 minutes 1. What are the characteristics of a policy? List some of them and explain them briefly
2. Briefly explain the four major sources of policies that you know of.
3. What makes a good policy? List them and briefly explain.
4. Identify the various areas in which policies can be directed or addressed in an
organization.

References and Supplementary Materials

Kalejaye, A. (1998). Basic Management Practice Lagos: Mak-Jay Enterprise, ISBN: 978-027- 770-6, pp. 196 – 197.

Rama Rao, V. S. (2010). Business Policy. downloaded on November 3, 2010 from http://www.citeman.com/11809-nature-of-business-
policy.html#ixzz1naSwscRY

Gomez- Mejia, L. R., Balkin, D.B. & Cardy, R. L (2005) Management – People, Performance, Change New York McGraw-Hill Companies

Hicks, H. G and Gullett, C. R (1985) Management Singapore McGraw-Hill, Inc Kalejaye, A. (1998) Basic Management Practice Lagos
Mak-Jay Enterprise

Rogers, D.C.D. (1973). Corporate Strategy and Long Range Planning, Ann Arbor Mich, The Landis Press, p. 18.
Course Name: BUSINESS POLICY
TOPIC TITLE: UNIT 6: ORGANIZATIONAL POLICIES
UNIT 7: FUNCTIONS & RESPONSIBILITIES OF BUSINESS POLICY IN
MANAGEMENT
TIME ALLOTMENT: 1.5 hours / 4th week
MODULE #: Module 1 – Unit 6 and Unit 7
Period/Term: Prelim Term

Lesson Learning Objectives:

At the end of this unit, you should be to:
 explain the meaning of organization;
 discuss the purpose of organizational policies;
 differentiate between objectives and policies;
 discuss business policy as they relate to different organizations;
 enumerate the function of Business policy in management; and
 discuss the responsibility of Business policy in management.

Learning Part

Activate Prior
Teaching Methods
Knowledge
INTRODUCTION:

Abdullahi (2009) stated that corporate organizations operate within the ambit of the
necessary guides which are normally the organizational procedures and regulations for
effectiveness and efficiency. Basically, policies incorporate all the necessary operational
procedures and regulations of an organization. Therefore, all the operational activities of an
organization are circumscribed within the ambit of organizational policy. Hence, the issue of
Time Required: organizational policy cannot be compromised. All organizations must operate with policy as it
10 minutes is normally formulated for the good of healthy operations and interrelationships among the
various subsystems of the organization. In this unit of the study material, therefore, the
discussion is on organizational policy.

INDIVIDUAL ACTIVITY

Instructions: Describe what is an “ORGANIZATION” using at least three sentences.

Acquire New
Teaching Methods
Knowledge
UNIT 6: ORGANIZATIONAL POLICIES

Meaning of Organizational Policy

Time Required:
According to Pearce II and Robinson Jr. (1998, cited in Abdullahi, 2009), policies are
60 minutes specific guides for operating managers and their subordinates. Policies are powerful tools for
strategy implementation and control once they are clearly linked to operating strategies and
long-term objectives. In the opinion of Thompson Jr. and Strickland (1987, quoted in
Abdullahi, 2009), policies are directives designed to guide the thinking, decisions, and actions
of managers and their subordinates in implementing an organization ‘s strategy. Policies
provide guidelines for establishing and controlling ongoing operations in a manner consistent
with the firm ‘s strategic objectives. Often referred to as standard operating procedures,
policies serve to increase managerial effectiveness by standardizing many routine decisions and
controlling the discretion of managers and subordinates in implementing operational
strategies. Logically, policies should be derived from functional strategies (and, in some
instances, from corporate or business strategies) with the key purpose of aiding in strategy
execution. In essence, a policy is a guideline for organizational action and the implementation
of goals and objectives. Policy is translated into rules, plans and procedures; it relates to all
activities of the organization, and to all levels of the organization. Clearly stated, policy can help
reinforce the main functions of the organization, make for consistency and reduce dependence
on the actions of individual managers.

Policy clarifies roles and responsibilities of managers and other members of staff and
provides guidelines for managerial behavior. Securing agreement to a new or revised policy can
help overcome reliance on outdated practices and aid the introduction of organizational
change. Policy provides guiding principles for areas of decision-making and delegation, for
example, specific decisions relating to personnel policy may be to: give priority to promotion
from within the organization; enforce retirement at government pensionable age; employ only
graduate or professionally qualified accountants and permit line managers, in consultation
with the personnel manager, to appoint staff up to a given salary/wage level. Some policy
decisions are directly influenced by external factors, for example, government legislation on
equal opportunities.

Nature of Organizational Policy

Policies in their nature can vary in their level of strategic significance. Some, such as travel
reimbursement procedures, are really work rules that are not necessarily linked to the
implementation of a specific strategy. A policy, for instance, couched that requirement that
every location invest a certain percent of gross revenue in local advertising are virtually
functional strategies. Policies can also be externally imposed or internally derived depending
on the ownership interest. Policies regarding equality of opportunity practices are often
developed in compliance with external (government) requirements. In the same vein, some
organizational policies regarding leasing or depreciation may be strongly influenced by current
tax regulations. Regardless of the origin, formality, and nature of the policy, the key point to
bear in mind is the valuable role policies can play in strategy implementation. In utmost
consideration, the carefully constructed policies enhance strategy implementation in several
ways. Obviously, it is imperative to examine existing policies and ensure the existence of
policies necessary to guide and control operating activities consistent with current business and
functional strategies. Ensuring communication of specific policies will help overcome
resistance to strategic change and foster greater organizational commitment for successful
strategy implementation.

On the basis of the organization’s ideology of philosophy, the goals of the organization are
translated into objectives and policy. Terminology and use of the two terms vary but objectives
are seen here as the “what”, and policy as the “how”, “where” and “when” – the means that
follow the objectives.

The Purpose of Policies

According to Abdullahi, (2009), policies are designed to communicate specific guides to

decisions. They are designed to control and reinforce the implementation of functional
strategies and the grand strategy, and they fulfill this role in several ways such as discussed
below:

Policies establish indirect control over independent action by making a clear statement
about how things are now to be done. By limiting discretion, policies in effecting control
decisions and the conduct of activities without direct intervention by top management.

Policies promote uniform handling of similar activities. This facilitates coordination of

work tasks and helps reduce friction arising from favoritism, discrimination, and disparate
handling of common functions.

Policies ensure quicker decisions by standardizing answers to previously answered

questions that would otherwise recur and be pushed up the management hierarchy again and
again.

Policies help institutionalize basic aspects of organization behavior. This minimizes

conflicting practices and establishes consistent patterns of action in terms of how
organizational members attempt to make the strategy work.

Policies reduce uncertainty in repetitive and day-to-day decision making, there providing
a necessary foundation for coordinated, efficient efforts.

Policies can counteract resistance to or rejection of chosen strategies by organization

members. When major strategic change is undertaken, unambiguous operating policies help
clarify what is expected and facilitate acceptance, particularly when operating managers
participate in policy development.

Policies offer a predetermined answer to routine problems, giving managers more time to
cope with non-routine matters; dealing with ordinary and extraordinary problems is greatly
expedited – the former by referring to established policy and the latter by drawing on a portion
of the manager’s time.

Policies afford managers a mechanism for avoiding hasty and ill-conceived decisions in
changing operations. Prevailing policy can always be used as a reason for not yielding to
emotion-based, expedient, or temporarily valid arguments for altering procedures and
practices.

A policy can either in writing and documented or implied. In other words, policies may be
written and formal or unwritten and informal. The positive reasons for informal, unwritten
policies are usually associated with some strategic need for competitive secrecy. Some
unwritten policies, such as ―consultation with the employees‖, are widely known (or
expected) by employees and implicitly sanctioned by management. On the contrary, unwritten,
informal policies may be contrary to the long- term success of a strategy. Still, managers and
employees often like the latitude ―granted‖ when policies are unwritten and informal.

There are inherent advantages in the use of formal written policies such as follows:

Managers are required to think through the policy’s meaning, content, and intended use.
The policy is explicit so misunderstandings are reduced.

Equitable and consistent treatment of problems is more likely. Unalterable transmission

of policies is ensured.

Authorization or sanction of the policy is more clearly communicated, which can be

helpful in many cases.

A convenient and authoritative reference can be supplied to all concerned with the policy.

Indirect control and organization-wide coordination, key purposes of policies, are

systematically enhanced.

Distinction between Objectives and Policy

While objectives set out more specifically the goals of the organization; the aims to be
achieved and the desired end-results, policy is developed within the framework of objectives. It
provides the basis for decision-making and the course of action to follow in order to achieve
objectives. The relationship between the organization, its objectives and management is
espoused as one of the managerial duties of an organization, which it is to ensure that the
human and material organization is consistent with the objective, resources and requirements
of the concern. The established objectives and policy therefore constitute an integral part of the
process of management and a necessary function in every organization. The objectives of an
organization are related to the input-conversion-output cycle. In order to achieve its objectives
and satisfy its goals, the organization buys inputs from the environment, through a series of
activities transforms or converts these inputs into outputs and returns them to the
environment as inputs to the systems. The organization operates within a dynamic setting and
success in achieving its goals will be influenced by a multiplicity of interactions with the
environment.

Regardless of the type of organization under consideration, there is need for lines of
direction through the establishment of objectives and determination of policy. Objectives and
policy form a basis for the process of management. The choice of objectives is an essential part
of the decision-making process including future courses of action. Objectives may be set out
either in general terms or in more specific terms. General objectives are determined by top
management. Specific objectives are formulated within the scope of general objectives and
usually have more defined areas of application and time limits.

Objectives may be just implicit but the formal, explicit definition of objectives will help
highlight the activities which the organization needs to undertake as the comparative
importance of its various functions. An explicit statement of objectives may assist
communications and reduce misunderstandings, and provide more meaningful criteria for
evaluating organizational performance. However, objectives should not be stated in such a way
that they detract from the recognition of possible new opportunities, potential danger areas,
the initiative of staff or the need for innovation or change. Objectives emphasize aims and are
stated as expectations, but policies emphasize rules and are stated in the form of directives. In
terms distinction between objectives and policy, the figure below is very relevant.

Personnel Good labor relations Set up and maintenance schemes for Joint
Consultation, Job Evaluation, Wage Incentives.
Source: Daft, Richard (2009). Strategy Formulation and Implementation (Management 6th
Edition) p.26

Objectives and policy together provide corporate guidelines for the operation and
management of the organization. The activities of the organization derive the significance from
the contribution they make to achieving objectives in the manner directed. The formulation of
objectives and policy, and the allocation of resources, provide the basis for strategic planning
which is the first stage in the planning and control processes of business organizations.

UNIT 7: FUNCTIONS & RESPONSIBILITIES OF BUSINESS POLICY IN

MANAGEMENT

Business Policy in different Organizations

Hicks & Gullett (1985) stated that once goals have been established, a top-level manager
consider the numerous ways in which this goal could be accomplished. In the progression from
objectives to policies to procedures to rules, the limits become increasingly narrow. Rules are
specific statements what should and what should not be done.

Dividend policy is another area in which management can affect the financing structure of
the company and examine whether changing dividend policy could perhaps add value.

In Unit 1 it was stated that policies are general statements that guide decision making.
Thus, a business organization requires policy as an added out-standing plan of organization.
There are policies in different organizations depending if it is service or product oriented.

Policies in each of these operational areas will be formulated. For example, in personnel
numerous policies would be established to provide consistent guides to action. Areas might
include securing, selecting, training and compensating employees. Working conditions,
employee services and industrial relations also might be considered.

Business policies generally have a long life. They are established after a careful evaluation
of various internal and external factors having an impact on the firm’s market standing. As and
when circumstances change in a major way the firm is naturally forced to shift gears, rethink
and reorient its policies. The World Oil crisis during the 70s has forced many manufacturers all
over the globe to reverse the existing practices and pursue a policy of manufacturing fuel
efficient cars. Therefore, policies should be changed in response to changing environmental
and internal system conditions.

There are many types of policies – marketing policies, financial policies, production
policies, personnel policies to name a few in every organization. Within each of these areas
more specific policies are developed. For example, personnel policies may cover recruitment
training promotion and retirement policies. Viewed from a systems angle, policies form a
hierarchy of guides to managerial thinking (Rama Rao, 2010). At the top of level policy
statements are broad. The management is responsible for developing and approving major
comprehensive company policies. Middle managers usually establish less critical policies
relating to the operation of their sub units. Policies tend to be more specific at lower levels. The
manager’s job is to ensure the consonance of these policies, each must contribute to the
objectives of the firms and there should be no conflict between sub system policies.

Many professionally managed companies acknowledge the fact that it is necessary to have
policies in all the major functional areas of management Kalejaye (1998).

The focus areas will thus include: Production policy - Purchasing policy - Financial policy
-Marketing policy - Credit policy - Selling and promotion policy - etc.
 All these policies are expected to give support to overall objectives of the organization as
defined by the top management and they complement each other. Although it is customary to
think of policies as written statements it is not necessarily the case. For example, a firm may
simply decline to consider handicapped employees in the selection of new personnel. In effect,
this becomes an effective policy even though the company has never verbalized its position.

Business Policy and Implementation in Organization

Business policies define areas within which decisions are made and ensure that decision
will be consistent with and contribute to an objective. For visionary management, policies help
decide issues before they become problems, make it unnecessary to analyze the same situation
every time it occurs and unify other plan thus permitting managers to delegate authority and
still maintain control over what their subordinate do (Weighrich & Koontz, 2005). The fabric of
our lives is held together by organizations. Managers and organization go together hand in
hand, hence establishing the need for managers in organization. They are there to make wise
decisions through dependable standing plans leading to the development of policies,
procedures and rules.

Managerial Functions and Policy Implementation

The basic management functions are planning, organization, motivation and controlling.

Planning develops objectives for each level of organization and how to achieve those
objectives. Strategies, policies, procedures, methods and budgets are examples of plans that
help to accomplish objectives

Organizing is also necessary as it takes place when work is divided among departments
and among individuals.

Motivating is in working with people in order to create conditions that encourage

employees to do good job.

Controlling measures, the results of activities, compares them against predetermined

objectives and takes corrective action if necessary.

These functions are made workable by established policy depending on the business
thrust of the organization

Business Policy – Issues, Challenges and Solutions

Business policy issues are basically that of decision making to achieve set goals and
objectives. The challenges gyrate around overcoming obstacles and giving solutions. The role of
Business policy in providing solution in a going concern matters so much in an organization.

The implementation policy depends on the type of organization and the service rendered.
Policy comes to form one of the structures of organization. It follows procedures, rules,
programs, budgets etc. All these gears to give policy reliable focus. Every organization including
business requires a policy as a decision rule to guide the activities and performance of the
business to eventually achieve goals and objective of the organization.

Policy Implementation

Set up a committee/working group. Setting up and engaging the correct people to devise
(and oversee) the policy is essential to the success of the planning and implementation.

Consult stakeholders. Consult employees, board, and other stakeholders who will be
affected by the policy about policy inclusions, how the policy will be implemented, and
assistance offered etc. throughout the development and implementation stages. This can be
 done via surveys/questionnaires, emails and team meetings.

Devise draft policy (see recommended policy content above). Circulate. Revise.

Have policies reviewed for legal accuracy. You may want to have policies reviewed to
make sure they are not requiring or prohibiting something that would violate the law.

If a board of directors or advisory board exists, do a board vote.

Set policy implementation date. Once the policy has been amended and agreed upon,
designate an implementation date, sign, and then promote.

Monitor and review. The staff responsible for monitoring the policy must ensure adherence
to the policy. It is good practice to review the policy at two yearly intervals.

Consider creating & distributing a Policy Manual. Keeping all of your policies in one
place makes them easy to refer to and review. Copies should be provided to all members of an
organization, along with applicable stakeholders.

Application
of New Teaching Methods
Knowledge

INDIVIDUAL ACTIVITY

Instruction: Fill in the semantic web below of terms and concepts related to Organizational
Policy. You can add more web and concepts’ circles if the illustration below is not enough for
your answers.

Time Required:
10 minutes

Organizationa
l Policy
 Assessment
of New Teaching Methods
Knowledge

ESSAY

Instruction: Answer each question below using at least a paragraph consisting of not less than
Time Required: five (5) sentences.
10 minutes
1. Differentiate between policy and objective in business functional areas.
2. In what way(s) does the function of management relate to implementation of
business policy in an organization?
3. Policy comes to form one of the structures of organization. Discuss

References and Supplementary Materials

Abdullahi, S.A. (2009). Corporate Management Strategy, MBA 726 Study Material for Management Students in the School of
Management Sciences.
Glueck, W. F. (1980). Business Policy and Strategic Management, New York: McGraw-Hill.

Pearce and David (1987). Strategic Planning and Policy, New York: Reinhold Pearce II, J. A. and Robinson Jr., R. B.
(1998). Strategic Management: Strategy Formulation and Implementation, Third Edition, Krishan Nagar, Delhi: All
India Traveller Bookseller.

Hill, C. W. L. and Jones, G. R. (2004). Strategic Management; An Integrated Approach, Sixth Edition, Indian Adaptation, New Delhi:
Biztantra, An Imprint of Dreamtech Press.