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1. BUSINESS POLICY
Chandra Shekhar Pandey

2. Business policy is study of the function and
responsibility of Senior Management. The crucial
problems that affect the success of the in the
whole organisation and the decisions that
determine the direction of the organisation and
shape its future.

3. A policy is typically described as a principle or rule
to guide decisions and achieve rational
outcome(s).Policies are generally adopted by the
Board of or senior governance body within an
organization where as procedures or protocols
would be developed and adopted by senior
executive officers.

4. Few examples of business policies are• A company will not consider any cost reduction options
if it means
compromising quality.
• A company decides to grow only through retained
earnings.
• A company will not consider adding new products with
less than
10 percent return on investment.
• A company sells exclusively on cash terms.
.

5. • A rental company charges a deposit for rented
material.
• A rental car company charges extra money for
delivering the rented car in another location.
• A company hires personnel with experience only.
• A company prepares guidelines on how to collect
debts from its customers.
• A company will not question customers’ returns of
items purchased earlier.
• A company responds to 50 percent of customer
inquiries within three working days

6. Steps in policy formulation
Environmental Analysis
2. Identification of Policy Alternatives
3. Evaluation of Policy Alternatives
4. Choice of Policy
1.

7. I) Environmental Analysis
. There are basically two environmental factors:
internal and external.
The two together provide for identification of
problem areas with respect to which the policies
could be made

8. 2.Identification of Policy
Alternatives
The environmental analysis helps to determine the
opportunities and threats facing the company and
also its strengths and weakness. When the
organization is engaged in the matching of its
strengths with the opportunities, various policy
options emerge

9. 3. Evaluation of Policy Alternatives
.The evaluation of policies is known as policy audit.
The alternatives can be evaluated on the basis of
their consequences in terms of their contribution
to corporate goals. Several criteria could be used
for evaluation like growth, unit, profitability,
development, organizational goals, etc.

10. 4.Choice of Policy
The evaluation helps in the selection of the best
possible policy. If any of the alternatives are not
acceptable and not consistent with company’s
objectives then the process reverts back to the
identification of alternatives where fresh
alternatives are looked for. The search begins
again.
After the policy has been made, it becomes
necessary to review it from time to time so that it
does not become obsolete.

11. TYPE OF POLICIES:
Basically there are three main types of policies
 1. Basic Policies:- These are framed by the top
management and spell out the basic approach of
a company to its activities and its environment.
 2.General Policies:- These are framed by the
middle level management and are more specific.
They apply to large segments of the organization.
 3.Specific Policies:- These are framed by the
foremen and supervisors and are very specific in
nature. They are applicable to routine activities.