Business Policy and

Strategy
Business Policy
Why do business fail?
 Business fail , because
managers fail !!!
Managers have different backgrounds, skills, and abilities along with
different levels of training for systems and people
 What Managers Need
 The skills that management needs most is the
ability to formulate complex decision-problems
in understandable action terms.
 Management should decide on the best action
(after examining all alternatives) and take that
action.
 Causes of Business
Failures
 Neglect causes 3.6%
 Economic factors 63.5%
 Lack of experience 1.0%
 Finances 24.1%
 Fraud 2.2%
 Disasters 4.6%
 Strategic reasons 1.0%
 Finance Failures
 High levels of debt are burdensome
 Heavy operating expenses
 Insufficient capital
 Economic Factor Causes
 Inadequate sales 2.6%
 Industry weakness 22.5%
 Insufficient profits 37.3%
 Not competitive .6%
 Poor location .2%
 Poor growth prospects .2%
 Inventory difficulties .1%
 Business Policy, Defined
 Scope or sphere within which decision can be
taken by the subordinates in the organization.
 Guidelines developed by an organization to
govern its action.
 It defines the limits within which decisions must
be made.
Feature of Business Policy
Reliable/U
Specific Clear niform

Appropriat
Business Policy Simple
e

Inclusive/Com
Flexible Stable
prehensive
 Business Policy and
Strategy
Policy
 Blueprint of the
organizational activities
which are repetitive/routine
in nature.
 Policy formulation is
responsibility of top
management.
 Policy deals with routine/daily
activities essential for
effective and efficient
running of an organization.
Strategy
 Concerned with
organizational decision
which have not been
dealt/faced before in
same form.
 Strategy formulation is
basically done my middle
level management.
 Deals with strategic
decision.
 Business Policy and
Strategy
Policy
 Policy is concerned with both thought
and actions.
 A policy is what is, or what is not
done.
 Blueprint of the organizational
activities w/c are repetitive/routine in
nature.
 Responsibility of top level
management.
 Policy deals w/ routine/daily activities
essential for effective & efficient
running of an organization.
 Concerned with both thought and
actions.
 Policy is what is, or what is not done.
Strategy
 Strategy is concerned mostly with
actions.
 Strategy is methodology used to
achieve a target as prescribed by s
policy.
 Concerned with those organizational
decisions w/c have not been
dealt/faced before in same form.
 Done by middle management
 Deals with strategic decisions.
 Concerned mostly with action.
 Strategy is the methodology used to
achieve a target as prescribed by
the policy.
Strategy
“Nobody really knows
what strategy is.”
 Strategy as …...
 A consciously and purposefully developed plan.
 A ploy to outmanuever a competitor.
 A pattern in a stream of actions, whether
intended or not.
 A position defined either with respect to a
competitor, in the context of a number of
competitors, or with respect to markets.
 A perspective, i.e. a certain mindset of how to
perceive the world.
 Strategy
 It is a business approach to a set of competitive
moves that are designed to generate a
successful outcome.
Strategy is management’s
game plan for…
 Strengthening the organization’s competitive
position.
 Satisfying customers
 Achieving performance targets.
Big questions involved in
a strategy
 Where are we now ?
Defining business and stating a mission
Where do we want to
go?
Setting measurable objectives and
crafting a strategy to achieve
objectives
How will we get there?
Implementing a strategy
How do we know if
we got there?
Evaluating performance of the strategy,
reviewing new developments and taking
corrective action