NATURE AND IMPORTANCE OF BUSINESS POLICY.

1. BUSINESS
POLICY
NATURE & IMPORTANCE

2. DEFINITION OF BUSINESS
POLICY
• Business policies are the guidelines developed by an organization to govern its actions. They define
the limits within which decisions must be made. Business policy also deals with acquisition of
resources with which organizational goals can be achieved. Business policy is the study of the roles
and responsibilities of top level management, the significant issues affecting organizational success
and the decisions affecting organization in long-run.
• Business policy defines the scope or spheres within which decision can be taken by the subordinates
in an organization. It permits the lower level management to deal with the problems and issues without
consulting top level management every time for decision.
• ‘‘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’’.

3. NATURE OF BUSINESS POLICY
1. The study of the function and responsibilities of top management, the crucial problems that
effect success in the organization and the decisions that determine the directions of
organization and shape its future.
2. Policy is the study of responsibilities of senior management related to those organizational
problems which affect the success of total organization.
3. Policy decision 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 in environment.

4. IMPORTANCE OF BUSINESS POLICY
1. FORM THE VIEW POINT OF COURSE ITSELF:
• It “integrates knowledge and experience’’ gained in various functional areas of
management.
• It enables the learner to understand the complex interaction that takes place between
different functional areas.
• It makes the study and practice of management more meaningful and guides how to make
policy/decision.

5. IMPORTANCE OF BUSINESS POLICY
2.FOR THE UNDERSTANDING OF BUSINESS
ENVIRONMENT
• It creates an understanding of how policies are formulated.
• This helps in understanding the comlexity of the environment that the senior
management face in the policy formulation.
• By gaining an understanding of the business environment , managers become more
receptive to the ideas and suggestions of the senior management. Such an attitude makes
the implementation of policy simpler.

6. IMPORTANCE OF BUSINESS POLICY
3.FOR UNDERSTANDING THE ORGANIZATION:
• It provides a basic frame work for understanding strategic decision making.
• An understanding of organization in terms of business policy may lead to an
improvement in job performance.
• Business policies are an important too ensure that the business operates at maximum
efficiency. Written in these policies is the blueprint for the whole organization’s expected
behavior, role and reporting.

7. IMPORTANCE OF BUSINESS POLICY
4.FOR PERSONAL DEVELOPMENT:
• It is beneficial for an executive to understand the impact of policy shifts on the
status of one’s department.
• It enables the executives to avail an opportunity with regard to career planning and
development.
• It provides powerful insights in dealing with policy making at the macro level as
well as at an individual level through self-analysis.