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Features of Business Policy

An effective business policy must have

following features1.

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
1. Policies
must be known and understood
have a wide scope, a policy must be
by all who are affected by them. Written
policies are most effective because they are
spell out what organization members should
or should not do under a given situation.

2. Policies should be stable. If policies are to

serve as guides to actions, they should not
Flexible- Policy should be flexiblebe changed frequently. Careful study should
therefore taken in formulating policies.
in operation/application. This does not imply
that a policy should be altered always, but it
3. Policies must be consistent within the
should be wide in scope so as to ensure that
company at all levels and departments of
the line managers use them in
the organization.
repetitive/routine scenarios.
Stable- Policy should be stable 4. Policies must be sincere. Policies are
public pronouncement of the philosophy
else it will lead to indecisiveness and
uncertainty in minds of those who look intoand beliefs of the company. The wording of
policies should include real intention,
it for guidance.
otherwise, they become mere writings on
paper and meaningless in practice.
Difference between Policy and Strategy
The term policy should not be considered as5. Policies must be realistic. Present
situations or conditions must be considered
synonymous to the term strategy.
if policy statements are to be implemented.
The difference between policy and
They should not be a mere statement of
strategy can be summarized as followsideals and commitments which cannot be
implemented if conditions were different.
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.


6. Policies must be joined up. Policy

making should be built around
shared corporate goals and values,
not around organizational structures
or existing functions.
7. Policies should be future proofed.
Reflects identified prospective trends
and not only on past performance.
As is commonly stated: the past is
not a guarantee of the future.
8. Policies must be goal based. Focus
on outcome delivered without
unnecessary emphasis on the
method by which it is to be
9. Policies must be inclusive. Policy
makers take as full account as
possible of the impact the policy will
have on different groups who are
affected by the policy. Brings
together the view points of the
regulator and the regulated to find
the best middle ground.