Business policy and strategy management

1. Unit-1

2.  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 the long-
run.
 Business Policy defines the scope or spheres within which
decisions 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 decisions.

3.  Business Policy deals with decisions regarding the
furture of an ongoing enterprise.
 Such policy decisions are taken at the top level
after carefully evaluating the organisational
strengths and weaknesses(in terms of product,
price, quality, leadership position, resources, etc.)
in relation to its environment.
 The policy decisions shape the future of the
company, channel the available resources along
desired lines and direct the energies of people
working at various levels towards predetermined
goals.

4.  As and when circumstances change in a major
way, the firm is forced to shift gears, rethink and
reorient its policies.
 Policies are basically formulated by the two -
management or the general management for
guiding, directing and facilitating the thinking and
acting process of the various functional
executives, to ensure the best contribution
towards the corporate objectives and goals. Policy
can either is formal or informal, which can be
applied, implied or imposed.

5.  It originates from the top management for the
express purpose of guiding themselves and their
subordinates to make use of their operational tools
as effectively as possible. It also enables to set
objectives for the whole organization in general
and for the various functional areas in particular.
 It is the corporate policy that creates a sense of
mission and purpose in the executive value
judgment, and in their managerial operations,
because a direct and purposeful preparation to
face the challenges, opportunities and threats of
the day-to-day business activities, is provided by
the business policy from time to time

6.  Shaping high-level, long-range corporate
objectives and strategic that will be matched, to
both company capacities and to external realities
in a world marked by rapid technological,
economical, social and political change.
 Casting up an effective well-matched set of
general policies for the pursuit of that strategy.
 Guiding the organization in accordance with that
strategy.

7.  Perception of industry and economic trends that affect the
prospects of the economy.
 Clearly understanding the needs, opportunities, threats,
strengths, weakness and problems.
 Selecting the best opportunity or opportunities from an array of
them, this can cope with the capacity of the company.
 Formulating of a strategy taking into account the opportunity and
availability of resources.
 Development of operating plans for the pursuit of the chosen
strategy and policies.
 Creation of organizational relationships, organizational climate,
and an atmosphere for the proper implementation of policy.
 Evaluating the performance and the progress, and
 Periodic re-evaluation of positions in the light of developments
within the organization and its environment.

8.  Business policies cover such a wide variety of
subjects and are so broad-based that every
possible matter that affects the interests of any
one in the organization, the community and the
government are included in them.
 In fact, business policies cover all the functional
areas of business- production, marketing,
personnel and finance. These functional areas are
generally covered by the term as “major policies”
and “minor policies”.

9. An effective business policy must have following features-
 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 to have a wide scope, a policy
must be comprehensive.
 Flexible- Policy should be flexible in operation/application. This does
not imply that a policy should be altered always, but it should be wide in
scope so as to ensure that the line managers use them in
repetitive/routine scenarios.
 Stable- Policy should be stable else it will lead to indecisiveness and
uncertainty in minds of those who look into it for guidance.

10. 1. It should cover all the aspects of business.
2. It includes the functions and responsibility of
senior employees.
3. Deal with determination of future course of action.
4. Involves a choice of purpose and defining the
needs.
5. Include the resources by the help of which
organization can achieve its goal.

11. The term “policy” should not be considered as synonymous to
the term “strategy”. The difference between policy and
strategy can be summarized as follows-
 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

12.  Planning is the process of deciding in advance
what should be accomplished and how to
achieve them. Strategic planning unlike short-
term planning involves an extended time-frame,
the deployment of a large percentage of the
resources of an organisation, a wide spectrum
of activities and a major eventual impact.
 Planning is carried out at the macro and micro
level. Managers need to create broad objectives
and mission statements as well as take care of
the day-to-day running of the company.

16.  A strategic plan is a high-level overview of the entire business, its
vision, objectives and values. This plan is the fundamental basis
of the organization and will dictate long-term decisions.
 The managers of each level will be based on the strategic plan to
guide their decisions. It will also influence the culture within the
organization and how to interact with customers and the media.
Therefore, the strategic plan for business must look forward, be
robust but flexible, and be focused on accommodating future
growth.
 The key components of a strategic plan are:
 1. Vision
 How do you want to influence the world? These are some of the
questions you should ask yourself when shaping the vision of
your organization. It’s fine if this vision is great and idealistic. If
there is a place to add some romanticism to a plan, it is here.
Clinging to ambitions such as “leaving a mark on the Universe”
(Apple / Steve Jobs) is acceptable, as is the more realistic
version of creating “the most customer-focused company on
Earth” (Amazon).

17.  2. Mission
 The mission statement is a more realistic view of the
purpose and ambitions of the company. Why does the
company exist? What are you trying to achieve during
your existence? A clothing company may want to
“bring high urban fashion to the masses,” while a
nonprofit company may want to “eradicate polio.”
 3. Values
 “Inspire. Get higher and further. Innovate. Ooze
passion Stay humble Have fun. “These are not
fragments of a motivational speech, but the values ​​of
Fab.com. As Fab, each organization has its own
values. These values ​​will guide the managers and
influence the type of employees they hire. There is no
template to lean on when you list your values. You can
write a 1000 page essay, or something as simple as
Google’s “Do not Be Evil” – it’s all up to you.

18.  The tactical plan describes the tactics that the organization plans to use to
achieve the ambitions described in the strategic plan. It is a short-term
document (ie with a scope of less than one year), low level that breaks down the
broad mission statements into smaller and executable pieces.
 The creation of tactical plans is usually carried out by middle level managers.
 The tactical plan is a very flexible document; It can contain anything and
everything necessary to achieve the goals of the organization.
 1. Specific Goals with Deadlines
 Suppose the purpose of your organization is to become the largest shoe
distributor in the city. The tactical plan will start this great ambition in smaller and
processable goals. The goals should be very specific and set deadlines to
encourage action – expand to two stores within three months, grow to 25% per
quarter, or increase revenues to $ 1mn within six months, and so on.
 2. Budgets
 The tactical plan must list the budget requirements to achieve the goals
specified in the strategic plan. This must include the budget to hire personnel,
marketing, supplies, manufacturing, and execute day-to-day operations of the
company. Listing the output and input flows is also a recommended practice.

19.  3. Resources
 The tactical plan should list all the resources
available to achieve the objectives of the
organization. It must include human resources, IP,
cash resources, etc. Again, it is advised to be
highly specific.
 4. Marketing, Financing, etc.
 Finally, the tactical plan should list the immediate
strategy of marketing, supplies, financing,
manufacturing, distribution, and PR. Its scope
must be aligned with the goals described above.

20.  The operating plan describes the day-to-day running of the company.
The operational plan draws a roadmap to achieve tactical objectives
within a realistic time frame. This plan is very detailed and emphasizes
short-term objectives.
 Creating the operational plan is the responsibility of the low level
managers and supervisors.
The operational plans can be single-use, or continuous use, as
described below:
 1. Single Use Plans
 These plans are created for events / activities that will only happen
once. This can be a sales program, a marketing campaign, a selection
process, etc. unique and exceptional. Single Use plans are usually very
specific.
 2. Permanent Plans
 These plans can be used in multiple configurations permanently. The
permanent plans can be of several types, namely:
 Policies: A policy is a general document that dictates how managers
should address a problem. It influences decision-making at the micro
level. Specific plans on hiring workers, finalizing the relationship with
suppliers, etc. they are examples of policies.

21.  Rules: The rules are specific regulations according to
which the company works. The rules have a rigid
character and must be strictly complied with. “Do not
smoke inside the facilities” or “Employees must show
up at 9 am” are two examples of rules.
 Procedures: A procedure describes a step-by-step
process to achieve a certain objective. For example:
most organizations have detailed guidelines for hiring
or training workers, or for the supply of raw materials.
These guidelines can be called procedures.
 Permanent plans are created with an ad-hoc character
but can be repeated and changed as necessary.
 The operational plans align the strategic plan of the
company with the day to day of the company. This is
where the macro meets the micro.

22.  It refers to the steps by management converts a
firm’s mission, objectives and goals into a
workable strategy.
It has two parts-
 Information Process – It involves collecting and
analysing information about the external and
internal environments
 Decision process – It covers four steps –
Development of alternatives
Choice
Implementation
Assessment

23.  Strategic Analysis
 Strategic Choice
 Strategy implementation
 Strategy Evaluation

24.  Environmental Scanning- Environmental scanning refers to a
process of collecting, scrutinizing and providing information for
strategic purposes. It helps in analyzing the internal and external
factors influencing an organization. After executing the
environmental analysis process, management should evaluate it
on a continuous basis and strive to improve it.
 Strategy Formulation- Strategy formulation is the process of
deciding best course of action for accomplishing organizational
objectives and hence achieving organizational purpose. After
conducting environment scanning, managers formulate
corporate, business and functional strategies.
 Strategy Implementation- Strategy implementation implies
making the strategy work as intended or putting the
organization’s chosen strategy into action. Strategy
implementation includes designing the organization’s structure,
distributing resources, developing decision making process, and
managing human resources.
 Strategy Evaluation- Strategy evaluation is the final step of
strategy management process. The key strategy evaluation
activities are: appraising internal and external factors that are the
root of present strategies, measuring performance, and taking
remedial / corrective actions. Evaluation makes sure that the
organizational strategy as well as it’s implementation meets the
organizational objectives.

25.  Core Competence – It is something that an
organization does exceptionally well in
comparison to its competitors. E.g- superior
research and development, mastery of a
technology etc.
 Synergy – When organisational parts interact to
produce a joint effort that is greater than the sum
of the parts acting alone, synergy occurs.
Managers need as much market, cost, technology
and management synergy as possible when
arriving at strategic decisions.
 Value Creation – Value if the sum total of benefits

27. Step I- Strategic Analysis
 External Analysis
 Internal Analysis
Step II – Strategic Intent
 Vision
 Mission
 Objectives
 Goals

28. Corporate Level Strategy Formulation
 Growth /Expansion Strategy
 Stability Strategy
 Retrenchment Strategy
 Combination Strategy

29. Business Level Strategy Formulation
Functional Level Strategy Formulation
 Research and Development Strategy
 Operations Strategy
 Marketing Strategy
 Human Resource Strategy

30.  Strategic Intent- It is the leveraging of a firm’s
internal resources, capabilities and core
competencies to accomplish the firm’s vision,
mission and objectives in a competitive
environment.
The hierarchy of Strategic Intent :
 A broad vision of what the organization should be
 The organization's mission
 The strategic objectives and specific goals to be
pursued relentlessly
 The plans that are developed to accomplish the
intentions of management in a concrete way

32.  An inspirational picture of a future that can be
created , offering clarity amidst confusion, hope
against despair, and unity of purpose amidst
diversity of personal causes.

33.  Clarity
 Reachable and achievable
 Brevity
 Building a vision
 Creating a shared vision
 Strategic gains of a definitive vision

34. Harley Davidson
 Their vision is “To fulfil dreams through the experiences of
motorcycling.”
Toyota
 Their vision is “Toyota will lead the way to the future of
mobility, enriching lives around the world with the safest
and most responsible ways of moving people.”
Disney
 Their vision is “To make people happy.”
Netflix
 Their vision is “Helping content creators around the world
to find a global audience.”
Nestle
 Their vision is “To bring consumers safe, high quality foods
that provide optimal nutrition.”

35. Facebook
 Their vision is “To give people the power to share
and make the world more open and connected.”
Google
 Their vision is “To organize the world‘s information
and make it universally accessible and useful.”
Trip Advisor
 Their vision is “Help people to have the best
possible trip.”
Philips
 Their vision is “Improving people’s lives through
meaningful innovation.”

36.  “The mission reflects the essential purpose of the
organisation, concerning particularly why it is in
existence, the nature of the business(es) it is in,
and the customers it seeks to serve and satisfy”

37.  Clarity
 Broad and enduring
 Identity and image
 Realistic
 Specific
 Values, beliefs and philosophy
 Vision
 Dynamic

38.  Reference Point
 Educative Value
 Motivating Force
 Productive use of resources

51.  Critical Success Factors, also known as Key
Results Areas, are the areas of your business or
project that are vital to its success. Identifying and
communicating CSFs within your organization
helps to ensure that your business or project is
focused on its aims and objectives.