The role of polices is very crucial for the success of any program. The policies are a guideline statement that helps organizations and business in achieving its objectives and goals. Business policy defines the scope that set the path of decision making. A business that lacks policy will surely come to an end sooner or later due to mismanagement and chaos.
“Business policies are guidelines-statements guide to plans & decision making to facilitate predetermined objective on the mode and manner in the structural & functional aspects to achieve the objective formulated as plans at all levels of management in the business organization.”
Business policies mainly consist of company’s rule, its process and relationship. One can call business policies as mission statements as well. It is business policy that defines strategic management and helps in improving performance.
Features of Business Policy
An effective business policy must have the following features-
- Specific- Set specific policies pertaining to organization’s goals and objectives. Implement these policies smartly and achieve the goal
- Clear- Policy must be unambiguous. It should avoid use of misleading phrases and connotations. There should be no misunderstandings in following the policy.
- Reliable/Uniform- Policy must be uniform enough so that it can be efficiently followed by the subordinates.
- Appropriate- Policy should meet the organization’s goal, in short it has to be appropriate.
- Simple- A policy should be simple and easily understood by all in the organization.
- Inclusive/Comprehensive- Plan comprehensive policy for the better and secure future of the organization.
- Flexible- Policy should be flexible in operation/application. There should always be a scope of alteration in time of emergency. Though over flexibility could harm the organization but little flexibility in policy is required for healthy growth.
- Stable- Policy should be stable else it will lead to indecisiveness and uncertainty in the minds of those who look into it for guidance.
To beat the increasing level of competition organizations are planning their policies following the concept of SWOT.
SWOT analysis (alternately SLOT analysis) is a strategic planning method used to evaluate the Strengths, Weaknesses / Limitations, Opportunities, and Threats involved in a business venture. It involves specifying the objective of the business venture and identifying the internal and external factors that could cause hindrance in achieving business goals and marking the factor that could facilitate the growth of the business. The technique is designed to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies.
A SWOT analysis starts with setting objective for the organization. A SWOT analysis is incorporated into the strategic planning model. For the proper management of any business it is essential to identify the SWOT and work according to it. Identification of SWOT is important from the planning purpose.
First, the policy makers have to decide whether the objective is achievable if the objective is tough or unachievable then new objective has to be considered. The SWOT analysis is often used in many business areas including academics to highlight and identify strengths, weaknesses, opportunities and threats. It is particularly helpful in identifying areas for development.
Difference between Policy and Strategy
The term “policy” is totally different from strategy and two should not be used synonymously”. The difference between policy and strategy can be summarized as follows-
- Policy is a blueprint of the organizational activities. While strategy deals with strategic decisions.
- Policy is mostly formulated by the top level management whereas strategy is set by middle level management.
- Policy involves with routine/daily activities essential for running of an organization, policy is relate to both thought and action whereas strategy is mostly concerned with action alone.
There are various factors that affect business polices. The condition of market, global economic condition, competitors and most importantly customer’s area of interest plays crucial role in the business policies. To remain in the race and to be ahead businesses are spending time in reading current trend of market and buyers and introducing desired change in their business policy for the betterment. Follow the strategic planning and set realist business policies for further growth of the business.