Introduction Business Policy Nature Of Business Policy Business policy basically deals with decisions regarding the future

of an ongoing enterprise. Such policy decisions are taken at the top level after carefully evaluating the organizational strengths and weaknesses in terms of product price, quality, leadership position, resources etc., in relation to its environment. Once established the policy decisions shape the future of a company. A business policy is one, which focuses attention on the strategic allocation of scarce resources. It represents the best thinking of the company management as to how the objectives may be achieved in the prevailing economic and social conditions. 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 senior management consists of those managers who are primarily responsible for long term decisions and who carry designations such as CEO, President, GM or Executive Director. 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 firms 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 tom 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. Business policies deal with the determination of the future course of action that an organization has to adopt. It is also concerned with mobilization of resources which will help organization to achieve its goal.

Types of policies 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.

Importance of Business policy Learning: 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 between different functional areas.
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Business policy deals with the constraints and complexities of reallife businesses. In contrast, the functional are course are based on a structured, specialized and well developed body of knowledge, resulting from a simplification of the complex overall tasks and responsibilities of 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. Business Environment: BP helps to make the study and practice of management more meaningful as one can view business decision making in its proper perspective. Short term gains for the department may be sacrificed in the interest of the long term benefit that may accrue to the organization as a whole.
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Understanding the organization : BP helps to create an understanding of how policies are formulated. It helps in creating an appreciation of the complexities of the environment that are faced by the senior management.
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Personal Development : beneficial for an executive to understand the impact of policy shifts on the status of ones department and the position one occupies. Understanding of BP enables an executive to avail of an opportunity or avoid a risk with regard to career planning and development.
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BP offers a unique perspective to executives to understand the senior managements view point. Purpose of Business Policy A business policy course seeks to integrate the knowledge gained in various functional areas so as to develop a generalist approach in management studies. Such an approach helps in viewing management organizational problem in totality. A generalists is better qualified to deal with the organizational problems. Purpose of BP is three fold 1. To integrate the knowledge gained in various functional areas of management 2. Adopt a generalist approach to problem solving Understand the complex interlinkages operating within an org. through the use of systems approach to decision making and relating these to the changes taking place in the external environment.
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Objectives 1. In terms of knowledge: The various concepts like strategy, policies, plan and programmes are encountered in the functional area courses too. It is imperative to understand these concepts specifically in the BP. 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 the firm. Learner appreciates the manner in which strategy is formulated. Implementation of strategy is complex and the most difficult part of strategic management. Through BP the learner can help visualize the implementation A general approach helps in dealing with a wide variety of situations. The development of such an approach helps in problem solving and decision making even though real life business are unique and so are the solutions. 2. Skills Attainment of knowledge should lead to skills in order to apply what has been learnt. This can take place by an analysis and interpretation of case studies as well as business event. Develop analytical skills. Develop skill of identifying the factors relevant in decision making. Analysis of SWOT and suggestion of appropriate strategies and policies form the core content of General Management decision making. 3. Attitude Inculcation of appropriate attitude amongst learners (development of a generalist) Function under partial ignorance conditions. In long range planning especially the manager has to make do with incomplete information. ------------------------------------------------------------------------------------------------------------------------------------Process of Strategic Management Strategic decision making is carried out through the process of strategic management. In strategic management the emphasis is on

those general management responsibilities which are essential to relate the organization to the environment in such a way that its objectives may be achieved. There are 4 essential phases in the strategic management process which are: Establishment of the hierarchy of strategic intent Formulation of strategies Implementation of strategies Performing strategic evaluation and control

While these phases are sequentially linked to each other and each successive phase provides a feedback to the previous phases, in practice the different phases of strategic management may not be clearly differentiable from each other. In fact they should be called phases rather than steps/stages. 1. Establishment of the hierarchy of strategic intent : Creating and communicating a vision Designing a mission statement Defining the business Setting objectives

2. Formulation of Strategies: Performing environment appraisal Doing organizational appraisal Considering corporate level strategies Considering business level strategies

Undertaking strategic analysis Exercising strategic choice Formulating strategies Preparing a strategic plan

3. Implementation of strategies : Activating strategies Designing structures and systems Managing behavioral implementation Managing functional implementation Operationalising strategies

4. Performing Strategic evaluation and control Performing strategic evaluation Exercising strategic control Reformulating strategies

Understanding Strategy
Strategy word is derived from the word strategos meaning the art of general. Different concepts and meaning Chandler defined strategy as : (1)the determination of the basic long term goals and objectives of an enterprise and the(2) adaptation of the courses of action and (3) allocation of resources necessary for carrying out these goals.

Igor Ansoff is a well known authority explained the concept of strategy as the common thread among the organizations activities and product markets that defines the essential nature of business that the organization was or planned to be in future. Glueck defined strategy as unified, comprehensive and integrated plan designed to assure that the basic objectives of the enterprise are achieved. Mintzberg : strategy as a pattern in a stream of decisions and actions. They emerge from an Organization without any formal plan. He distinguishes between intended strategy(plans that managers develop) and emergent strategy( actions that actually take place over a period of time) Porter: developing and communicating the companys unique position , making trade offs and forging fit among activities. Putting all these together : - Plan or course of action or a set of decision rules forming a pattern or creating a common thread. - Pattern of common thread related to the org. activities which are derived from its policies, objectives and goals - Related to pursuing those activities that move an organization from its current position to a desired future state. - Concerned with the resources necessary for implementing a plan or following a course of action - Connected with the strategic positioning of the firm making trade offs between its different activities and creating a fit among these activities.

Level at which strategic operates: Corporate level: Structure // Strategy

SBU level// Business level strategy

Function level// functional level Societal level: generalized view of how the corporation relates itself to the society in terms of a particular need/set of need it strives to fulfill. Corporate level strategy would then be based on societal strategy. Some strategies would be set at the lower level than functional level functional area would have a number of operation strategies. They would deal with a highly specific and narrowly defined area. The functional strategy at the marketing level would have a number of operational strategies for sales, advertising, distribution and pricing. Activities in each of these would be performed in such a way that they contribute to the functional objective of the marketing department. The functional strategy of marketing would be interlinked with those of finance, production and personnel departments. All these functional strategies would operate under the SBU level. Different SBU levels will operate under corporate strategy level which in turn is derived from the societal level of a corporation. Strategic decision making : decision making is the most important decision of any manager. While strategic decision making pertains to the responsibilities of the senior management. Issues in Strategic decision making : Strategic decision making is a complex process, it is difficult to perform, and cannot be analysed and explained easily. However the issues related to it are as given below : Criteria for decision making : The process of decision making requires objective setting. Obbjectives serve as a criteria for decision making. 3 major viewpoints regarding setting criteria for decision making:

a) The first is the concept of maximization. Behavior of the firm is oriented towards achieving these objectives and in the process maximizing its returns b) Concept of satisficing, which envisages setting of objectives in such a manner that the firm can achieve them realistically through a process of optimization. Incrementalism : Behavior of the firm is compelx and the process of decision making which includes objective setting is essentially a continually evolving political consensus building. The firm moves towards its objectives is small, logical and incremental steps.
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Rationality in decision making : exercising a choice from amongst the various alternative courses of action in such a way that it may lead to the achievement of the objectives in the best possible manner. Profit Maximisers consider a rational decision to be one which leads to profit maximization. While satisfying concept believe that the rationality takes into account the constraints under which a decision maker operates. Incrementalists are of the view that growth happens in steps ,slowly over time.