CLASSIFICATIONS OF BUSINESS POLICIES1

1. CLASSIFICATIONS OF BUSINESS POLICIES
Osamah Almaamari
FIRST SEMESTAR
20172018

2. Classification of business policies
There are four types of business policies:
Production policies
Personnel policies
Financial policies
Marketing policies

3. Production policies
Production management deals with decision-making related to production
processes, so that relating goods or services is produced according to the
specifications in the amounts and by the schedule demanded and at a minimum
cost.
Thus, production and operation management is the process of covering inputs
(raw materials, supplies, people, and machine) into value enhanced output.
This function is most easily associated with manufacturing firms.
However, it applies equally to all other types of businesses. It should be noted
that manufacturing as well as service organizations alike have to decide on
policies bearing on capacity, technology, purchasing and so on.

4. Production policies
Pearce and Robinson opine that “functional
strategies in production and operation
management must guide decisions regarding:
 The basic nature of the firm’s production and
operations management,
 seeking an optimum balance between
investment input and production/operations
outputs.
 location, facilities design, purchasing, and
process planning on a short-term basis.

5. Key issues of production policy
• The major issues in production policy are
as follows:
Involvement of the firm in the
production process.
Choice of the production processes.
Estimate of production capacity.
Maintenance of the existence facilities.

6. PERSONNEL POLICY
The basic objective of personnel policy in an organization is to ensure consistency of
action and equity in its relations with employees.
These policies constitute the basis for sound personnel practices and provide the
yardstick
by which implementation of strategic plans can be appraised.
personnel or industrial relations policy provides guidelines for a wide variety of
employment relationships in the organization

7. Principles of personnel policies
 Put the right man in the right place.
 Train everyone for the job to be done.
 Make the organization a co-ordinated team.
 Supply the right tool and the right conditions
at work.
 Give security with opportunity, incentive,
recognition.

8. Essential characteristics of a sound personnel policy
The main features of a good personnel policy are :
1. The statement of any policy should be definite, positive,
clear, and easily understood by everyone in the
organization.
2. It should indicate that the management knows that
workers prefer to deal with the management on an
individual basis.
3. It should recognise the desire of many workers for
recognition as groups in relationships.
4. It should be formulated with due regard for the
interests of all the concerned parties the employers,
the employees and the community.
5. It must not only have the support of the managements
but the employees at the floor level and in the office.
6. It should be progressive and enlightened and must be
consistent with profession, practice and philosophy

9. FINANCIAL POLICY
Finance is the life blood of any industrial or commercial undertaking. It is needed for
starting the business and also keep it going. It is also required whenever business is to be
expanded.
Finance is required in different activities of business related to before production and after
sale actives of business and decisions regarding the need of finance, its volume and uses
which is known as financial policy
Essentially, financial policy issues relate to the procurement of funds and utilization of
funds. It deals with raising, administering and distributing of funds by the organization for
the purpose of business operations
1.Estimation of the fixed and working capital requirement;
2.Formation of the capital structure;
3.Procurement of fixed and working capital;
4.Usages of funds and management of earnings

10. The necessary factors that shape financial strategies
 The need for finance resources.
 The ability and image of the chief financial
officer
 The company’s past actions and performance.
 Finally, the policy on debt leverage, capital
spending, hurdle rates, dividends, cost
reduction programmes, spin-off and write-offs,
liquidity, and lead time for acquiring long-term
capital.

11. ISSUES IN FINANCIAL POLICIES
Source of finance and capital
structure decisions.
Investment decisions.
Management of earning and dividend
policy.

12. MARKETING POLICIES
Today company must urgently and critically rethink their business mission and marketing
strategies. Instead of operating in a market place of fixed and known competitors and
stable customer preferences, today companies work in a war zone of rapidly changing
competitors, technical advances, new laws, managed trade policies and diminishing
customer loyalty.
The marketing decision variables can be explained into three categories:
1.Goods and service mix
2.Distribution mix, and Communication mix.
Goods and service mix is concerned with all the ingredients which comprise the
bundle of utilities that consumer purchases.
Distribution mix consists of channels of distribution and physical distribution.
Communication mix involves all the persuasive (convincing) and informational
ingredients that are employed in communicating with the market place.

13. MARKETING POLICY ISSUES
MARKETING POLICY ISSUES:
 In the marketing policy decisions, each firm is naturally expected to use the
set of decision variables best suited to its own strategy. In the early sixties,
four P’s (product, price, place and promotion) have been considered the core
areas of marketing.
 The position, packaging and people are included in it, as the boundaries of
marketing spread beyond selling to encompass (take in) more of the
organization.
 Walter Viera has changed the 4P’s into 4C’s as shown in the following table.
These issues may be regarded as core policy issues in marketing.
The following box shows some interesting examples of marketing
policies adopted by large Indian corporations:

14. MARKETING: CORE POLICY ISSUES
4C’s4P’s
Customer
solution
Product
CostPrice
ConveniencePlace
CommunicationPromotion