Business Policy

&
Strategic
Management
Name – kiran
CONTENT
• Evolution of business policy
• Definition
• four paradigm
•Pointer too future
•features
• Indian scenario
• example of business policy
•essentials
• objectives
• Scope
• From business to strategic
management
 “Without Business Policy and Strategy, an
organisation is just like a ship without rudder,
going around in circles. It’s like a trump; it has
no place to go”. – Joel Ross and Michael kami
EVOLUTION
Origin – 1911- Hayward business school – integrated course in
management aimed at providing general management capability.

Hofer: strategic management – A casebook in policy and planning: the

business policy evolution has undergone four paradigm shifts. This
transition is of overlapping nature.

Development of subject of business policy has always followed the

demands of real life business.

1930 -1960: environment change: new products: continuously changing

market: ford foundation recommended report, by Gordon and Howell,
suggested a “capstone” course of business policy which would give the
students an opportunity to pull together what they have learned in the
separate business fields and utilise this knowledge in the analysis of
complex business problems.
FOUR PARADIGM
Paradigm one: ad-hoc policy – making.
1900 -1930: era of mass production – maximising output, normally a single
product, standardised and low cost product, catering to unique set of customers
servicing limited geographical area – informal control and co-ordination. The
strategic planning was centred on maximising output.
-the need for policy making arose due to the nature of American business firms
in that period.

Paradigm two: planned policy formulation.

1930-1940: changes in technology, turbulence in political environment,
emergence of new industries, etc. By planned policy formulation and shifting
attention towards functional areas in rapid changing environment.
Paradigm three: strategy.
1940- 1960: planned policy became irrelevant due to increasingly complex and
accelerating changes. Firms had to anticipate environmental changes. A strategy needed to
be formed with critical look at basic concept of business and its relationship to the existing
environment then.

Paradigm four- strategic management

1980 ‘s :Shifting of focus to strategic management process and the responsibility of
general management in resolving strategic issues.
Everything out side the four walls is changing rapidly and this phenomenon is called as
‘discontinuity’ by Mr. Peter ducker.
Past experiences are no guarantee as science and technology is moving faster. the future
is no more extension of the past or the present.
Sources of competitive advantage within the firm.
- this approaches and methods of analysis of strategic management ‘have not yet
coalesced into a theory of “how to manage an enterprise.”.
POINTERS TO THE FUTURE
- The resolution of strategic issues that affects the future of a
business firms has been the continual Endeavour in the
subject of the business policy.
- The Endeavour is based on the development of strategic
thinking.
- In this “they very definitely do represent a powerful way of
thinking to resolve strategic issues”.
- it is an alternative model of strategic management that
may well be pointed to the future development.
Indian scenario
1. Management education received a big boost in early
60’s after the setting up of Indian institutes of
management (IIM) and the Administrative Staff College of
India.
2. Almost all management education institutes offer the
strategic management and business policy courses usually
in the later part of the degree or diploma programs.
3. ‘Business today’ and ‘Business world’ magazines are
also devoting more space to developments in the Indian
corporate sector.
4. Business policy is the preferred nomenclature but
strategic management is being progressively adapted.
DEFINITIONS

BUSINESS POLICY is the study of -

• the roles and responsibilities of the senior management
related to those organisational problems ,
• the crucial problems that affect success in the total
enterprise and
• the decision that determine the direction of the
organizational and shape its future. – By Christensen

It includes guidelines , rules, procedures established to

support effort to achieve the stated objectives.
Senior Management Involves ????

Chief
executive
officers

President

General
managers

Executive
directors
BY DIFFERENT AUTHORS
1. 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
(R.E.Thomas).

2. A BUSINESS policy is an implied overall guide setting up

boundaries that supply the general limits and directions, in
which managerial action will take place. (George Terry)
DEFINES AS
Business policy defines as each policy is principles
and rules for action that provide for successful
attainment of organisational goals.
Principles is fundamental truth while a Rule of
Action is a restrictive statement of the principle in
a given situation.

RULES ORGANISATIO-
PRINCIPLES FOR
NAL GOAL
ACTION
World oil crisis

During 1970s has forced many manufactures 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.
EXAMPLE of BUSINESS POLICY

Google provide lots of benefits to their

employees such as
• they provide parental leave policies,
retirement policies,
• pay vacations
• employee agreement
• use of company assets
ESSENTIALS OF BUSINESS POLICY
- Objective based
The policy uphold the purposes and objectives and business
house. it shows the intentions of the organisation.

- Clearity and Simplification

The policy fails if it is not clear. Clear cut policies minimise the
situations.

- Put in black and white

It should be in written because it is conceived as management
tool. written policies bring commitment on the part of employees.

- Stable yet flexible

Stable policy is one which matching to the changing situations.
policies that change too often create doubt and insecurity that
might hamper the very health of the organisation.
- Complementary and supplementary
Policies add value and bring synergist results, should be
supplemented to one another.
- Comprehensive
it should be broad enough to include all the issues that are
of interest to the business house.
- Consistency
it means that policy is fair, just and reasonable to all people,
all the time.
- Pro-ethical
Ethics are a set of moral principles norms or values. ethics
speak good and bad. It is in tune with ethical standards of
business.
- Individualistic
blind coping leads to the doomsday because a business policy
what is good for company A need not be good for company B.
Features of business policy

Objective oriented

Hierarchy studded

Both restrictive and permissive

Long lasting

A Standard For Measurement

OBJECTIVES OF BUSINESS POLICY

- Integrate the knowledge and methods learned in previous

course having a functional flavour such as production,
finance, marketing, accounting etc.
- Develop analytical skills and decision making capabilities of
participants through the extensive use of ease, research
report industry specific studies.
- Promote positive attitude , genuine ethical values and
healthy ways of thinking taking a holistic view of the
concerns of internal as well as external stakeholders of an
organisations.
SCOPE OF BUSINESS POLICIES
1. The scope of business policy is very broad.
2. Based on the coverage or scope , these business
policies can be classified into two broader
categories namely by ‘major’ and ‘minor’. These
are well called as organisational and functional.
3. Organisational policies relates to organisational
level objectives, procedures, control covering
entire organisation. EG. Capital structure, pricing
structure etc.
4. Functional policies related to raw material,
services of workers, shift working etc. these are
day to day policies decided by departmental
heads.
Strategy vs. policy
The term “policy” should not be considered as synonymous to the term
“strategy”. The difference between policy and strategy can be
summarized as follows-
1. 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.
2. Policy formulation is responsibility of top level management. While
strategy formulation is basically done by middle level management.
3. Policy deals with routine/daily activities essential for effective and
efficient running of an organization. While strategy deals with strategic
decisions.
4. Policy is concerned with both thought and actions. While strategy is
concerned mostly with action.
5. 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.
 STRATRGY VS. POLICY
• Deals with strategic decisions that • It offers guidelines for managers
decide the long term health of an to take appropriate decisions.
enterprise. it is comprehensive
plan of action designed to meet
certain specific goals.
• It is general course of action with
• it is means of putting a policy no defined time limit.
into effect within certain time
limit.
• Deals with those decisions which • It is a guide to action in areas of
have not been encountered repetitive activity.
before.
• Deals with crucial decisions • Once policy decisions are
whose implementation requires formulated these can be
constant attention of top delegated and implemented by
management. others independently.
CASE STUDY
INTRODUCTION
In 1962- "Sam" Walton was an American businessman and entrepreneur
best known for founding the retailers Wal-Mart and Sam's club.
First Wal-Mart discount store located in Rogers, Arkansas.

IN 1980- First Sam's club opened, serving small business and individuals
and first Wal-Mart supercentre opened.

NOW - Wal-Mart serve more than 200 million customers weakly.

Effects On Competitive Stakeholders

1) Wal-Mart Predatory policy.

2) Some activist groups and citizen have refused to all Wal-

Mart to take up residence in their areas.

3) During 2008 -09 economic downturn ,money cards to help

low income families in this spending this helped the
consumers to purchase with low prices. It increases the sale
of Wal-Mart.
 Problems Face By Wal-Mart
With Revenues Of US$219.8 Billion And Profits Of US$6.7 Billion. It Has
Remained There Every Year, Except In 2006 TO 2009.

1) FOR EMPLOYEES
They provide low wages to employees.
Fail to provide health insurance for more than 60% of its
workers.
Company paid to female workers less than male workers in
same position.
2) FOR UNION
No need for union to come between managers and workers.

3) FOR WORKPLACE CONDITION AND DISCRIMINATION

It denies rest breaks and altered time cards to prevent
overtime.
SOLUTIONS
IN 2011 , Wal-Mart with revenues of US$398.5 billion and profits of US$
8.2 billion.

1) Business practices inspected carefully.

2) raise pay to improve relations.
3) agree to pay up to settle lawsuits.
4) open door policy.
5) offering lower deductible to improve its health packages.

MORE SUSTAINABLILTY
IN 2010, Wal-Mart has taken sustainability policy for being greener
company to address its environmental stakeholders. they take
environmental leadership to achieve sustainability objectives. E.g.:
“Daylight"., ZERO waste, PALM OIL. With this their revenues is
increases by US$3.5Million.
References

Azhar kazmi book

C.N. Sontakki book
corporate.waltmart.com
management guide.com