DMBA401 Unit-06

DMBA401: Strategic Management & Business Policy Manipal University Jaipur (MUJ)
MASTER OF BUSINESS ADMINISTRATION

SEMESTER 4
DMBA401
STRATEGIC MANAGEMENT &
BUSINESS POLICY
Unit 6: Business Policies 1

Unit 6
Business Policies
Table of Contents
SL Topic Fig No / Table SAQ / Page No

No / Graph Activity
1 Introduction - -
3
1.1 Learning Objectives - -
2 Overview of Business Policy 1 1 4-7
3 Types of Business Policies - 2, I 8-11
4 Definitions: Policy, Procedures, Process, 2 3 12-13
Programs
5 Policy Statement 3 4, II 14-16
6 Corporate Culture 4 5 17-19
7 Summary - - 20
8 Glossary - - 21
9 Case Study - - 21-22
10 Terminal Questions - -
23-26
10.1 Answers - -
11 Suggested Books and E-References - - 26

1. INTRODUCTION
Every company exists to make a profit -- and the principles by which it will be run are closely
related to that reason. These concepts are referred to as Policy in the corporate world. A
policy is a course or principle of action adopted or proposed by an organization or individual.
Every business needs to have standards that are enshrined in

STUDY NOTE
policy. Policy is a set of rules for making decisions, not a final
A collection of people who get
together to pursue a shared judgement. It is a term used in the business world to describe
objective is referred to as an
organisation. a set of principles.
An organization is made up of a large number of employees.

There is a clear distinction between management and ownership. As a result, it becomes
necessary to establish guidelines for management and employees to run a firm.
The top management establishes broad parameters, or basic limitations, within which
managers can conduct business. Policies are the broad principles that govern all employees’
thoughts and actions.
A business policy is a set of guidelines and a road map for any organization to follow. It
ensures that companies provide the desired quality of products and services, and customer
satisfaction, within a set of guidelines. It supports, promotes, and improves an organization's
performance.
In this chapter, you will learn more about business policy and related concepts in business
management. We will also discuss the arguments in favor of a company policy and
application of policies in a business.
1.1 Learning Objectives

After studying this chapter, you will be able to:
❖ Elucidate a policy's purpose and its characteristics

❖ Describe how to distinguish between policies, procedures, processes, and programmes
❖ Discuss the many types of policies and policy statements, a company may create
❖ Determine how corporate culture influences policy formulation

2. OVERVIEW OF BUSINESS POLICY

The term, policy, comes from the Greek word politeia, which means governance or policy.
Policies are framed by the leader in an authoritarian system. However, policies are defined
by the people in a democratic system.
Policy, according to Flippo, is: a man-made rule of pre-determined course of action designed
to direct the execution of work toward an organization's purpose. It is a sort of standing plan
that instructs subordinates on how to do their tasks.
According to George R. Terry, policy is defined as: a spoken, written, or inferred overarching
guidance putting up boundaries that give the broad bounds and directions in which
administrative operations will take place.
It is impossible to consult senior management about a course of action to be taken every time
the need arises. Policies define the parameters within which subordinates can make
decisions. Lower-level management can address situations by referring to these principles
in a company.
Any and every type of company action can be the subject of a policy. It could be related to
goods, pricing, advertising, finances, and so on. A policy statement is a document that codifies
STUDY NOTE
such principles. The stakeholders and top management's
thinking is reflected in policies.
The scope or domains within
which in an organisation can
make choices are defined by Simply put, a policy is what an organization or employee plans
business policy.
to do or does. As a result, business policy refers to what a
company plans to accomplish. Its purpose is to help an organization offer services that satisfy
the demands and expectations of a company's goals.
It allows junior-level management to deal with difficulties and concerns without having to
engage senior-level management every time a decision has to be made. The standards that
an organization develops to regulate its operations are known as business policies.
Importantly, these set boundaries around which decisions must be made. Business policy
also addresses the requirement of resources necessary to fulfil corporate objectives.

A company policy is an implicit overarching guide that establishes boundaries that provide
a general limit and direction for managerial activity. A business policy is one that focuses on
the distribution of limited resources, strategically.
A company's business policy reflects the management's thinking on how to attain goals in
the current economic and social environment. As it helps management to align an
organization's activity to its business environment.
2.1 Features of a Business Policy

In company management and administration, policy is critical. It aids management in
achieving organizational objectives. It supports a company's operations to be efficient and
cost-effective. To this end, everyone in an organization should be able to comprehend the
policy, which therefore needs to be clear, positive, and specific.
The type of company policy followed in an organization is determined by an organization's

goals and objectives. The key features of a policy are as follows:
A. Simple and Clear: A policy is supposed to be clear, simple and free of any ambiguity. It
is written in an easy-to-understand language, avoiding technical jargon. This will help
line managers and other employees to read policies correctly.
B. Adaptable: Policies need to be adaptable which should be reviewed, changed, or
amended on a regular basis. Remember, a policy is expected to be in effect for a long
period. Being adaptable will make a policy practical to be applied in different situations.
C. Uniformity: A policy must be uniform. Consistency, especially across functions and
management levels, allows employees to operate efficiently while dealing with
repeated issues.
D. Relevance: Policies are relevant to an organization's goals. They are relevant to the
present business environment and applicable in different scenarios.
E. Comprehensive: A policy covers a broader range of business activities, leaving no
concern unaddressed. A thorough policy statement ensures flexibility in decision-
making. This also prevents line managers from approaching senior management
unnecessarily.

F. Long-Term: A policy exists on a long-term basis. It has to address business goals, which
in turn are long-term.
2.2 Importance of Business Policy

Well-articulated policies provide significant benefits to an organization. They help make
judgments within a clear set of parameters. Managers can operate efficiently, not requiring
close monitoring by senior management. The following are some points that illustrates the
importance of business policy:
CLARITY
HIGH
CONTROL
MORALE
IMPORTANCE OF
BUSINESS POLICY
SELF COORDINATION
RELIANCE
POICY
COMMUNICATION REVIEW
Fig 1: Importance of Business Policy
A. Regulation and Management: Policies make it easier to manage and control an

organization's operations effectively. These help in the supervision and control over
managers at various levels without interfering with their daily operations.
B. Clear Communication: Policies are typically written down, well-drafted statements.
This reduces the risk of misunderstanding or misinterpretation. Policies ensure there
is no room for personal prejudice and bias.
C. Policy Review: It's important to review policies on a regular basis to ensure that
they're still relevant in the current situation. Regular policy reviews allow for the
anticipation of future conditions and situations, as well as the resolution of how to deal
with them.
D. Coordination and Efficiency: Policies ensure that functional activities at all levels of
the organization are coordinated. The actions and responsibilities are assigned in such

a way that all functions of an organization, from operations to support, are successfully
integrated.
E. High Morale of Employees: Well-defined policies allow employees at all levels to work
towards a common goal. This helps build trust and boosts an organization's overall
morale.
F. Understanding the Business Environment: When policies are framed after many
deliberations, they help the entire organization relate with the business and the
environment they work in. Especially the challenges and the changes. This helps the
entire organization understand the big picture.
SELF-ASSESSMENT QUESTIONS – 1
1. A policy needs to be:

a) Adaptable
b) Irrelevant
c) Ambiguous
d) Unstable
2. The Greek word politeia means __________________________.
3. The lower-level management's thinking is reflected in policies. [True/False]
4. ___________________ allow for the anticipation of future conditions and situation.

3. TYPES OF BUSINESS POLICIES

There are numerous classifications for business policy. . These classifications have many
bases, which are as follows:
A. Nature of Origin: The policy-makers define these types of policies. These, again, have
many sources, as listed below:
• Developed by Managers: This type of policy is created by top management or
experienced managers. The aim is to set rules and regulations for junior employees.
For example, a marketing director may develop policies and then delegate the
execution to junior executives.
• Imposed by State: A policy that is imposed by external forces, such as the
governments at the national or state levels. Business organizations are bound by
these policies. For example, the Ministry of Labour develops labour policies that are
binding on businesses.
• Appeals: When a unique situation arises, managers may appeal to their superiors
for assistance in resolving the issues. In that case, policies are designed to deal with
the current unexpected situation. The regular policies may obstruct job
performance in such a situation. The new appealing policy may also be replaced
with the older policies.
B. Structure of an Organization: This type of policy is made by an organization for itself
for internal and external compliance. These are as follows:
• Internal Policy: The management of any organizatin creates internal policies that
serve as guidelines for employees. These are the norms and boundaries that
subordinates must follow. These internal policies provide the working environment
and cover functions, from recruiting and selection, to budgeting, marketing, and so
on.
• External Policy: These policies are designed to address external issues. In response
to environmental conditions or influences, organizations rethink or formulate new
policies. For example, changes in pollution norms imposed by the state goverment,
can compel organizations to rethink their environmental policy to comply with the
new standards.

C. Mode of Communication:
• Written Policy: Written policies are policies that are communicated as written
statements. A written down policy eliminates ambiguity and misunderstanding.
• Verbal Policy: A verbal policy is one that is issued solely by word of mouth. In
comparison with written policies, these policies are simple to explain and
implement. On the flip side, being unwritten means, these may be confusing and
often create ambiguity.
• Implied Policy: Implied policy does not have to be written or conveyed verbally.
Such policies can be deduced from subordinates' or seniors' actions. They are not
stated explicitly. For example, a company may create items at a price range that is
affordable to the middle class. This may imply that the company's policy is to serve
those in the middle class.
D. Levels of Importance:
• Basic Policy: This refers to a company's overall ideology. The senior management
sets the basic policies.
• Major Policies: These policies deal with the most important concerns of the
organization.
• Minor Policy: Minor policies are established to deal with everyday issues. For
example, for managers on the front lines, these might be related to the amount and
timing of discounts.
E. Scope of the Project:
• General Policy: The middle management sets the tone for these policies.
• Specific Policies: Specific policies are policies that are not broad in nature.
• Directive Policy: When decentralized, discretion is not possible. Or when it may be
detrimental to a company's overall interests, a directive policy is required.
F. Management Levels:
• Top Management Policies: These policies cover long-term planning in general.
The senior-most management makes the policies. For example, policies related to
budgeting and product launches.
• Upper Middle Management Policies: The departmental head decides on these
policies in tandem with an organization's primary policies.

• Middle Management Policies: These policies are set by the junior managers.
These policies could be related to sales, financing, and so on.
G. Situational Needs:
• Standard Policy: Standard policies are framed to guide employees in their day-to-
day functional activities. These policies serve as a guide for employees, especially in
dealing directly with customers.
• Contingent Policy: These policies assist subordinates in dealing with ambiguous
and unusual situations.
H. Administrative and Functional:
• Administrative Policy: These policies deal with an organization's administration.
It covers a wide range of administrative subjects. These are required to regulate
the workforce.
• Composite Policy: A composite policy is one that is created by combining all the
policies that have been submitted by each department. Each department in an
organization presents its policy to the budget officer, who coordinates the
preparation of a unified statement. The term ‘Composite Policy’ refers to a policy
statement that has been adopted by the Board.
• Supplementary Policy: Supplementary policy addresses issues not addressed by
the composite policies.
• Departmental Policy: Departmental policies are policies created by individual
departments for their daily operations. For example, Personal Department’s Policy.

5. Which policy is designed to deal with the current unexpected scenario?

a) Composite Policy
b) Contingent Policy
c) Standard Policy
d) Appeals Policy
6. What kind of policy can the middle level management design?
7. Departmental Policy is created by combining all the policies submitted by
each department. [True/False]
8. _________ refers to a company's overall ideology.
9. What kind of policy is imposed by external forces?
a) Imposed Policy
b) External Policy
c) Implied Policy
d) Administrative Policy
10. When decentralised discretion is not possible, a directive policy is required.
[True/False]
11. Written policy and oral policy are based on _____________.
Activity 1
Visit different organisations. Find out which type of policies discussed above do they
follow in different situations.

4. DEFINITIONS: POLICY, PROCEDURE, PROCESS, AND PROGRAM

Policy: Policy, according to Ralph Devis, is a declaration of a concept or set of principles,
along with their accompanying norms of conduct that conditions and controls the attainment
of specific corporate objectives.
The management's goals are expressed in a policy. It establishes the parameters within
which decision-makers must work. Policy is a type of planning that serves as a guide for
making administrative choices and outlines how things should be done.
Procedures: Procedures detail the processes required to complete a task. Procedures are a
set of instructions that must be followed in a certain order. For example, each company has
its own system for processing orders, collecting payments, and providing after-sales
assistance. Procedures are used to show how every task can be completed. They are the
vehicles through which decisions are carried out. Procedures should be examined and
modified on a regular basis. This results in simplifying and streamlining work, efficiency, and
cost savings.
A process statement is more precise and concrete than a policy declaration. It emphasizes
the order in which specific tasks are carried out.
Let us now understand the distinction between policy and procedures, as shown in Figure 2:
POLICIES PROCEDURE
Policies are guiding principles
that set a direction.
S
Procedures are guidelines
for action.
Top management determines These are formulated at the
the policies. lower managerial levels.
These form the basis for Procedure follows the
determining procedues. policies.
Policies are relatively flexible. Policies are deterministic.
Fig 2: Difference between Policies and Procedures

Process: A process is a set of actions followed to achieve a certain goal in a consistent and
repeatable manner. The big picture of flow of activities is defined by a process. Process is a
detailed analysis of every step-in order; hence it covers all the aspects and fields of the work
within the organization and so it emphasizes one of the most important aspects of business.
These aspects are captured in a procedure which also includes additional information
regarding functional rules, objectives, and methods in depth.
Program: According to the Oxford Dictionary, a program is: A series of connected

measurements or activities having a specific long-term goal. For example, a comprehensive
reform program. According to Business Dictionary, a program is: A plan of action intended
to achieve a defined corporate target, including information on what work is to be done, by
whom, when, and what methods and resources will be used.
12. Procedures are a set of instructions that must be followed in a certain order.
[True/False]
13. Policy helps to know what work is to be done, by whom and when.
[True/False]
14. ____________ results in simplifying and streamlining work, efficiency, and cost
savings.
15. Which one emphasises diversity in business?
a) Policy
b) Procedure
c) Process
d) Programme
16. Which among these accurately define process?
a) It governs administrative operations.
b) It is a collection of guiding principles.
c) It emphasises the order in which tasks are to be carried out.
d) It is a series of connected activities having a specific goal.

5. POLICY STATEMENT
Companies outline their expectations of employee behavior in a policy statement. Workplace
behavior may be divided into two categories: work behavior and personal behavior. By
defining standards, a policy statement establishes expectations of employee behavior.
Everyone in the organization is expected to follow these guidelines to the letter.
A policy statement, according to Business Dictionary, is: A formal document detailing how a
company plans to handle its affairs and act in certain circumstances. According to Collins
Dictionary, a policy statement is an organization's (or government's) objectives and
intentions.
A policy statement is a document that also specifies unacceptable techniques or behaviours

at the organizational level. A policy essentially outlines the method on how things are done
in a company. Employees may be required to acknowledge some policy statements. It will be
followed by all employees.
A policy statement, according to Business Dictionary, is: A formal document detailing how a
company plans to handle its affairs and act in certain circumstances.
The following is an example of a policy statement:

Raymond Corporation’s Environmental Policy

The Raymond Corporation recognises its responsibility to be a good steward of the
environment and contribute to a more sustainable planet. Across our organisation, we
work to minimise our direct and indirect impacts on the environment. This
commitment is integral to our corporate culture and business strategy.
Our environmental policy objectives include:
• Comply with all applicable environmental regulations
• Implement and maintain environmental management systems to continually improve

and enhance environmental performance.
• Review processes and procedures to reduce consumption of natural resources and

minimise potential environmental impacts.
• Reduce energy consumption and greenhouse gas emissions.
• Provide a safe and healthy workplace.
•Implement and maintain environmental management systems to continually improve

and enhance environmental performance.
• Review processes and procedures to reduce consumption of natural resources and

minimise potential environmental impacts.
• Reduce energy consumption and greenhouse gas emissions.
• Provide a safe and healthy workplace.
• Engage suppliers, partners, customers, employees, and other stakeholders to promote

our environmental objectives and targets.
• Incorporate environmental considerations into the design process for the life cycle of
our products.
Source: < https://www.raymondcorp.com/about-us/quality >

Fig 3: Policy Statement of Raymond Corporation’s Environmental Policy

Making a Policy Statement

The steps involved in making an organization’s policy statement are as follows:
• Examine an organization's goals in depth.
• Determine if a policy is required in a certain region.
• Find and collect all relevant information.
• Consider all options, especially those that are most important to the policy.
• Analyze all probable outcomes.
• Choose the best policy statement, considering the various outcomes.
• Corroborate with the employees and anyone who may be impacted by it.
• Ascertain that the policy is consistent with an organization's other policies.
• Finalize the policy statement specifying the validity dates.
Activity 2
Search various policy statements issued by corporations.
Find out the causes for implementing any policy, its consequences and impact on
organisation operations and human resources.
17. Workplace behaviour may be divided into two categories: _______ and _______.
18. A policy statement of an organisation's or government's objectives, is also
known as policy statement, and is intended by___________.
a) Flippo
b) McKinsey
c) Collin’s Dictionary
d) Ralph Devis
19. The expectations of a company for employee behaviour are outlined in
____________.

6. CORPORATE CULTURE
The set of assumptions, beliefs, values, and conventions held by an organization's members
is referred to as organizational culture. Culture is typically unwritten or implicit ideas,
attitudes, and beliefs, rather than declarations. It is important to understand the influence of
an organization’s culture on policy formation.
Culture is represented by the seventh S, Shared Values, in the Mckinsey 7-S framework
model. This model was established by Tom Peters and Robert Waterman, two consultants at
McKinsey & Company. They identified seven internal
Organizational Culture
The combined Values, attitudes, and feelings, among other things, is the most essential
element of corporate culture. Values, beliefs, and conventions manifest in power hierarchies,
routines, and the general working in an organization. These are often part of a long
evolutionary process.
Work ethics and culture followed by the senior management may impact employee behavior
and communication.
A strong work culture has a favorable influence on an organization's productivity, efficiency,

growth, and overall performance. On the other hand, a poor work culture may hamper
productivity, growth, and in meeting an organization's goals and objectives. A weak culture
fosters opposition to change and impedes policy development and execution.

Therefore, Policy-makers need to foster a healthy corporate culture. Policy formation is

usually easier when an organizational culture is strong.
Note that a business culture is rooted in the social fabric of a country or region. The cultural
legacy of a country influences the overall cultural context in which companies operate.
Organizations need to build their own business and work cultures in this context.
Many businesses prioritize developing a strong corporate culture. Researchers continue to

look at strategies to build and design a healthy organizational culture, one that is positive
and supportive of an organization's philosophy and goals.
Example-Organization culture of Google

Google is an amazing employer. It was the first to launch many of the perks and benefits that
startups are now known for. Google employees are synonymous with drive, talent and a
motivated workforce.
20. Which among these is a hard element, according to McKinsey 7-S model?
a) Skills
b) Staff
c) Style
d) Strategy
21. Which among the following do not form part of McKinsey 7-S model?
a) Structure
b) System
c) Simplicity
d) Skills
22. McKinsey's 7-S model is established by ______________ and ________________.
23. Policy formation is usually easier when an organisation's culture is weak.
[True/False]

We have learnt about various concepts in introducing business policy. Here in Figure 4, is an
overview of the concepts learnt so far.
BUSINESS POLICY
PROCEDURE POLICY STATEMENT
POLICY
PROCESS
PROGRAMME
TYPES OF
POLICIES
NATURE AND CORPORATE

RELEVANCE CULTURE
OF POLICY
Fig 4: Conceptual Map

7. SUMMARY
• Policy is a set of rules for making decisions, not a final judgement.
• A company policy is an implicit overarching guide that establishes boundaries and
direction for managerial activity.
• A policy should be as clear, unambiguous, adaptable, and stable.
• It is important to review policies regularly to ensure that they are relevant in the
current situation.
• There are numerous classifications for business policy, these are on the basis of: origin,
structure, situational needs, mode of communication, importance, scope of project,
management level, administrative and functional level.
• Procedures are used to show how each of the regular tasks in an organization can be
completed.
• A process statement is more precise and concrete than a policy declaration.
• By defining standards, a policy statement establishes expectations of employee
behavior.
• Values, beliefs, and assumptions manifest in power hierarchies, routines, and rituals,
among other things.
• Policy-makers need to recognize the culture of an organization and foster a healthy one
while developing policies.
• Researchers study strategies to design a healthy organizational culture.

8. GLOSSARY
Composite Policy: A policy created by combining all the policies that have been submitted
by each department.
Procedures: Procedures are a set of instructions that must be followed in a certain order.
Policy: Policy is a spoken, written, or inferred overarching guidance putting up boundaries
that give directions.
Process: Set of actions used to achieve a certain goal in a consistent and repeatable manner.
Program: A series of connected measurements or activities having a specific long-term goal.
Policy Statement: A formal document detailing how a company plans to handle its affairs
and act in certain circumstances.
9. CASE STUDY
Unilever, the world’s second-largest consumer goods company, received a jolt in 2004 when
its stock price fell sharply after management had warned investors that profits would below
than anticipated. Even though the company had been the first consumer goods company to
enter the world’s emerging economies in Africa, China, India, and Latin America with a
formidable range of products and local knowledge, its sales faltered when rivals began to
attack its entrenched position in these markets. Procter & Gamble’s (P&G) acquisition of
Gillette had greatly bolstered P&G’s growing portfolio of global brands and allowed it to
undermine Unilever’s global market share. For example, when P&G targeted India for a sales
initiative in 2003–04, profit margins fell at Unilever’s Indian subsidiary from 20% to 13%.
An in-depth review of Unilever’s brands revealed that its brands were doing as well as were
those of its rivals. Some-thing else was wrong. According to Richard Rivers, Unilever’s head
of corporate strategy, “We were just not executing as well as we should have.” Unilever’s
management realized that it had no choice but to make-over the company from top to
bottom. Over decades of operating in almost every country in the world, the company had
become fat with unnecessary bureaucracy and complexity.
Unilever’s traditional emphasis on the autonomy of its country managers had led to a lack of
synergy and a duplication of corporate structures. Country managers had been making
strategic decisions without regard for their effect on other regions or on the corporation as

a whole. Starting at the top, two joint chairmen were re-placed by one sole chief executive.
In China, three companies with three chief executives were replaced by one company with
one person in charge. Overall staff was cut from 223,000 in 2004 to 179,000 in 2008. By
2010, management planned close to 50 of its 300 factories and to eliminate 75 of 100
regional centers. Twenty thousand more jobs were selected to be eliminated over a four-
year period. Ralph Kugler, manager of Unilever’s home and personal care division, exhibited
that after these changes, the company was better prepared to face competition. “We are
much better organized now to defend ourselves,” he stated.
Discussion Questions:
1. Discuss about the corporate strategy used by Unilever to face the competition.
2. Discuss about other corporate strategies used by different MNCs to cope up with
changing business environment.
Source: Summarized from, The Legacy that Got Left on the Shelf, The Economist (February 2, 2008)
Business Policies are influenced by ___ sets of factors.
Ans: Two sets

10. TERMINAL QUESTIONS

SHORT ANSWER QUESTIONS
Q1. Define program.
Q2. What is a policy statement?
Q3. State the differences between major and minor policies.
LONG ANSWER QUESTIONS

Q1. What steps are to be followed while making a policy statement?
Q2. Explain the types of policies based on structure.
Q3. `If policies are presented clearly, they provide significant benefits to the management.’
Explain.
Q4. What do you understand by the terms policy and procedures?
10.1 ANSWERS
SELF ASSESSMENT QUESTIONS
1. A. Adaptable
2. Governance
3. False
4. Policy Review
5. D. Appeals Policy
6. General policy
7. False
8. Basic Policy
9. A. Imposed Policy
10. True
11. Mode of expression
12. True
13. False
14. Procedure

15. Process
16. C. It emphasizes order in which a specific task is carried out.
17. Work behavior and Personal behavior
18. C. Collins
19. Policy Statement
20. D. Strategy
21. C. Simplicity
22. Tom Peters and Robert Waterman
23. False
TERMINAL QUESTIONS
SHORT ANSWER QUESTIONS
Answer 1: A program is a series of connected measurements or activities having a specific
long-term goal. It is a plan of action intended to achieve a defined corporate target, including
information on what work is to be done, by whom, when, and what methods and resources
will be used.
Answer 2: A policy statement is a formal document detailing how a company plans to handle
its affairs and act in certain circumstances. It is a statement of an organization’s objectives
and intentions. A policy statement is a document that specifies unacceptable techniques or
behaviors at the organizational level.
Answer 3: Major policies deal with the most important subjects and concerns in an
organization. Whereas, Minor policies are established to deal with everyday issues.
LONG ANSWER QUESTIONS

Answer 1: The steps to be followed while determining a policy statement of an organization
are as follows:
➢ Examine an organization's goals in depth.
➢ Determine if a policy is required in a certain region.
➢ Find, and collect all feasible and relevant information.
➢ Consider all options and outcomes.
➢ Choose the best policy statement, considering the various outcomes.
➢ Corroborate the policy statement with the employees who may be impacted by it.

➢ Ascertain that the policy is consistent with an organization's other policies.

➢ Finalize the policy statement that includes the policy's effective dates.
Answer 2: Policies based on the Structure of an Organization can be of the following types:
• Internal Policy: The management of an organization creates internal policies that
serve as guidelines for junior employees. It provides the norms and boundaries that
subordinates must follow. It provides a working environment for subordinates.
Internal policies include things like recruiting and selection policies, budgeting policies,
and so forth.
• External Policy: These policies are designed to address external issues. In response to
environmental conditions or influences, organizations rethink or formulate new
policies. As a result, a change in policy results due to external causes such as
government enactments and circulars are examples of external policy.
Answer 3: The success of a company is determined by its policies. If policies are presented
clearly, they provide significant benefits to management. They make judgments within a set
of parameters. The following are some examples of the relevance of company policies: -
• Control: Policy makes it easier to maintain effective control over the organization's
operations without interfering daily operations.
• Clear Communication: Policies are typically written and well-drafted statements, which
avoids the risk of misunderstanding or misinterpretation.
• Self-reliance: Policy allows line managers to be self-sufficient. This boosts their self-
esteem and encourages them to work more.
• Coordination of Efforts: Policies ensure that efforts and activities at all levels of the
organization are coordinated. The actions and responsibilities are assigned in such a
way that all of the organization's operations are successfully integrated.
• High Morale: A well-crafted policy can boost an organization's overall morale.
Managers can grasp the management's intentions, thanks to policies.
• Understanding the Business Environment: Managers become more open to the ideas
and proposals of senior management as they develop a better grasp of the business
environment.

Answer 4: A Policy is a declaration of a concept or set of principles, and norms of conduct,

that conditions and controls the attainment of specific corporate objectives. The
management's goal is expressed in a policy. It establishes the parameters within which
decision-makers must work. A policy serves as a guide for making administrative choices
and outlines how things should be done.
Procedures detail the processes required to complete a task. Procedures are a set of
instructions that must be followed in a certain order. Procedures are used to show how
everyday tasks can be completed. These are the vehicles through which choices are carried
out. Procedures should be examined and modified on a regular basis which results in
simplifying and streamlining work simplification, efficiency, and cost savings.
11. SUGGESTED BOOKS AND E-REFERENCES

BOOKS:
• Rao, P. S. (2007). Business Policy and Strategic Management: Himalaya Publishing
House.
• Kozami, A. (2002). Business Policy and Strategic Management, 2e: Tata McGraw-Hill
Education.
• Rao, C.A., Rao, B.P., & Sivaramakrishna, K. (2009). Strategic Management and Business
Policy: Excel Books India.
REFERENCES:
• Classification of business policy viewed on 14 June 2021
<https://www.slideshare.net/azadrocks/business-policy-31090132>
• Difference between policy and procedures viewed on 16 June 2021
<https://keydifferences.com/difference-between-policies-and-procedures.html>
• McKinsey 7S framework model viewed on 17 June 2021
<https://www.mindtools.com/pages/article/newSTR_91.htm>

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DMBA401: Strategic Management & Business Policy Manipal University Jaipur (MUJ)

MASTER OF BUSINESS ADMINISTRATION

Unit 6: Business Policies 1

SL Topic Fig No / Table SAQ / Page No

Unit 6: Business Policies 2

Every business needs to have standards that are enshrined in

An organization is made up of a large number of employees.

1.1 Learning Objectives

❖ Elucidate a policy's purpose and its characteristics

Unit 6: Business Policies 3

2. OVERVIEW OF BUSINESS POLICY

Unit 6: Business Policies 4

2.1 Features of a Business Policy

The type of company policy followed in an organization is determined by an organization's

Unit 6: Business Policies 5

2.2 Importance of Business Policy

Fig 1: Importance of Business Policy

A. Regulation and Management: Policies make it easier to manage and control an

Unit 6: Business Policies 6

1. A policy needs to be:

Unit 6: Business Policies 7

3. TYPES OF BUSINESS POLICIES

Unit 6: Business Policies 8

Unit 6: Business Policies 9

Unit 6: Business Policies 10

5. Which policy is designed to deal with the current unexpected scenario?

Unit 6: Business Policies 11

4. DEFINITIONS: POLICY, PROCEDURE, PROCESS, AND PROGRAM

Fig 2: Difference between Policies and Procedures

Unit 6: Business Policies 12

Program: According to the Oxford Dictionary, a program is: A series of connected

Unit 6: Business Policies 13

A policy statement is a document that also specifies unacceptable techniques or behaviours

The following is an example of a policy statement:

Unit 6: Business Policies 14

Raymond Corporation’s Environmental Policy

Our environmental policy objectives include:

• Comply with all applicable environmental regulations

• Implement and maintain environmental management systems to continually improve

• Review processes and procedures to reduce consumption of natural resources and

• Reduce energy consumption and greenhouse gas emissions.

• Provide a safe and healthy workplace.

•Implement and maintain environmental management systems to continually improve

• Review processes and procedures to reduce consumption of natural resources and

• Reduce energy consumption and greenhouse gas emissions.

• Provide a safe and healthy workplace.

• Engage suppliers, partners, customers, employees, and other stakeholders to promote

Source: < https://www.raymondcorp.com/about-us/quality >

Unit 6: Business Policies 15

Making a Policy Statement

Unit 6: Business Policies 16

A strong work culture has a favorable influence on an organization's productivity, efficiency,

Unit 6: Business Policies 17

Therefore, Policy-makers need to foster a healthy corporate culture. Policy formation is

Many businesses prioritize developing a strong corporate culture. Researchers continue to

Example-Organization culture of Google

Unit 6: Business Policies 18

NATURE AND CORPORATE

Fig 4: Conceptual Map

Unit 6: Business Policies 19

Unit 6: Business Policies 20

Unit 6: Business Policies 21

Business Policies are influenced by ___ sets of factors.

Ans: Two sets