Business policy refers to integrated decisions made for the whole organization by top management. These decisions consider all functional areas and are made in light of the organization's macro and micro environment as well as its strengths and weaknesses. Business policy deals with strategic issues that determine the organization's direction and shape its future.

1. BUSINESS POLICY:- MEANING
Every business orgn has two sets of decisions:-
 Decisions relating to functional areas such as production , marketing,
finance or personnel &
 Integrated decision for the whole orgn after taking all the functional areas
into account…this is BUSINESS POLCY
The busi decisions regarding acquisition or merger is taken by the top mgt in
the light of macro & micro environments & the strength and weaknesses of
orgn as a whole…THIS FALLS IN THE CATEGORY OF BUSI POLICY DECISIONS…
B.P. decisions are taken by top mgt only…routinized or short term decisions are
taken by the functional mgrs for their respective dept’s…
B.P. has also been used in the past for:
-corporate planning
-mgt policy
-strategic planning
-& more recently for STRATEGIC MGT

2. DEFINITION:-
 CHRISTENSEN & OTHERS HAS DEFINED B.P. AS “ THE STUDY OF THE FUNC’S &
RESPONSIBILITIES OF SENIOR MGT, THE CRUCIAL PROBLEMS THAT AFFECTS SUCCESS IN
THE TOTAL ENTERPRISE &THE DECISIONS THAT DETERMINE THE DIRECTIONS OF THE
ORGN & SHAPE ITS FUTURE”.
HE FURTHER STATED THAT THE B.P. IS ALSO CONCERNED WITH “ THE MOBILIZATION OF
RESOURCES FOR THE ATTAINMENT OF GOALS IN THE FACE OF COMPETITION OR ADVERSE
CIRCUMSTANCES.”
THE ABOVE DEFINITION CONTAINS THE FOLLOWING CHARACTERISTICS OF THE BUSINESS
POLICY:-
1. IT IS CONCERNED WITH SUCH GOALS & OBJ’S WHICH AFFECT THE SUCCESS OF THE
TOTAL ENTERPRISE.
2. IT IS CONCERNED WITH THE STUDY OF FUNCTIONS & RESPONSIBILITIES OF SENIOR
MGT (TOP MGT)
3. IT DEALS WITH THE FUTURE COURSE OF ACTION AFTER TAKING INTO ACCOUNT THE
BUSI ENVTT IN WHICH IT IS OPERATING.
4. TO REALISE ITS GOALS & OBJ’S, THE ORGN HAS TO MOBILIZE RESOURSES FOR
EFFECTIVE & EFFICIENT APPLICATION.
5. IT INVOLVES THE CHOICE OF PURPOSE WITH A VIEW TO ADOPT SUCH A COURSE OF
ACTION WHICH WILL ENSURE SUCCESS TO TOTAL ENTERPRISE.

3. Business policy cld be divided into the following:-
• Economic policies- All businesses aim at profit. Profit is the biggest incentive for work
and it is vital for the survival & growth of the orgn. Any business’s eco policy wld
naturally be geared towards the profit motive.
• Social policies:-An orgn is part of society. As such it has a no of social obligation to
fulfill. That includes improving products & services, generating more employment &
keeping the envtt safe and clean, thus improving the standard of living.
• HR policies:- employees are org’s greatest asset. An orgn’s HR policies shd be aimed at
ensuring fair wages & incentives, good working conditions ,scope of growth & due
recognition of creativity & contributions.
• National policies:- an orgn that does well contributes to the development of the
nation. An org’s policies shd abide by the local, state and national govt laws promotes
overall social justice develops skilled personnel, promotes the growth of
enterpreneurs & increase a nations global trade potential by developing exports.

4. IMPORTANCE OF B.P.//B.P. AS A DISCIPLINE
 Was introduced for the first time in 1911 in Harvard Business School.
 The obj was to enhance the students general mgt capabilities.
 B.P. as a seprate subject discipline came about in 1959 thru two reports:-
1. The Gordon & Howell report &
2. The Pierson report
 In 1969, the American institute of collegiate school of business made the
course mandatory for all business schools.
 As a result business schools in America made B.P. a core subject.
 India adoted a similar approach with the Indian institute of mgt (IIMS) & other
business schools.
 Igor Ansoff, Kenneth Andrews, Alfered D. Chandler & William F. Glueck
contributed to this subject.

5. BUSINESS POLICY:- AN INTEGRATED APPROACH
 B.P. manifests an integrated approach to the functioning of the whole orgn.
 It is a comprehensive concept to ensure efficiency & durability to the orgn.
 Hence it focuses on strategic planning & strategic mgt.
 B.P. incorporates foll elements:-
i. Mission, Obj’s & goals
ii. Environmental Analysis
iii. SWOT Anaysis
iv. Strategic Alternatives
v. Strategic Analysis
vi. Strategic implementation &
vii. Strategic evaluation & control
 Six major operations are to be integrated into the B.P. process…which are:-
PRODUCTION,MARKETING,FINANCE,PERSONNEL,R&D,LEGAL

6. PREMISES & OTHER CONNECTED ISSUES OF B.P.
Summarized as follows:-I) PREMISES :-
i) Mission
ii) Objectives
iii)Goals
iv)Policy
v)Forecast
vi)Plans
vii)Tactics
viii)Budgets
II) POLICY &STRATEGY
III)STRATEGY
IV) LEVELS OF STRATEGY
V)PLANNING PARADIGM(PATTERN)

7. i) MISSION:- orgn’s are formed to achieve mission or purpose. Without a mission
the group of person may not be accepted as an orgn.
Mission or Purpose is a generalized statement abt the major course of activity with a view to
serve people or society. No Co can afford to exist if it conflicts with the national or public
interest.
Mission statement is the basic premise for B.P. to be meaningful & socially relevant.
ii) OBJECTIVES:- Obj’s are the open ended postulates, the orgn purpose to achieve in the
long run. They give direction to the orgn, they are timeless & boundryless postulated, which
may not necessarily be achievable . They are neither precise nor specific.
Whereas GOALS are the close ended postulates, specific & bound by the time frame. They
are achievable. The orgn is committed to increase production- is not a sufficient basis to
plan production of orgn. Important is that it shd lay down the rate of growth of production
say @ 5% in the 1st yr & 8% in the 2nd or 3rd yr for evaluating the performance of the orgn.

8. iii) POLICY:-is defined as “a core or general rule which states the establishment
procedure to be followed in the securing situation.”
A more comprehensive def:- “ Policies may be defined as the percepts by which all
admisnistrative & operating decisions are determined of the enterprise will be properly
directed towards definite objectives.
iv) FORECASTS :- is most essential & equally difficult component of B.P.. It may be
stated as rational & educated assumption about future trends &events. Forecasting has
been complex due to political, economical, technological, socio- cultural changes under
which policy decisions have to be taken.
Managers therefore ought to rely on published environmental forces & identify key
opportunities & threats to the business enterprise. If published data is not available
then the orgn must arrange its own forecasting mechanism.( u can have more detail
from N.S.Gupta)

9. v) PLANS:- is an indispensable(absolutely necessary)function for achieving the
desired goals/obj’s
either by individual or by the orgn. Greater the efficiency of the plan- greater are the chances of success for realizing
either individual or business goals.
Infact B.P. decisions are contingent on the effectiveness of plans of the organization.
vi)TACTICS:- Tactics has been derived from military literature, it goes with strategy. In fact, it is part of strategy
whereas strategy relates to major plans to be undertaken & allocation of resources.
Tactics are the means to execute the plans.
Tactics means the ways strategies are implemented for instance, the strategy of product expansion may bank on the
tactics of distribution of free samples & demonstration of efficacy of the product.
Tactics are the action plan through which strategy is executed. In strategic mgt literature obj’s, strategies &
tactics(OST) go together. To be specific to achieve an organisational obj’s
Strategies are designed & to implement these strategies- tactical prog’s commensurate as strategies are designed to
be implemented by departmental heads.
DO (vii) POINT BUDGET FROM BOOK(GUPTA)

10. 2. POLICY & STRATEGY:-
 Broadly Policy refers to guide lines, methods , procedures, rules, norms & administrative
practices to support the course of action towards achieving desired goals.
 Policies naturally set the boundary limit or constraints within which decisions shd be taken by
the orgn. For eg:- Policy of Finch printing press not to publish/print material which is of
irreligious nature sets the boundary for the operation of the orgn.
 Policies are also helpful in work distribution, decentralization of authority & decision making
process apart from problem solving.
 Policies are infact the means to carry out strategic decisions.

11. POLICY STRATEGY
1. Guidelines to the thinking & action of those
who have to take decision.
1. It is considered with the direction in which the
material & HR have to be employed.
2. Policy is contingent(part of) on decisions. 2. Strategy is the role or making decisions.
3.Service policy provides the guidelines for
decision making that may be delegated
downward.
3.Strategy cannot be delegated as it is
formulated by top mgt.
4.Policies support the strategy. 4.Strategy influences policy.
5.Operating policies may be for short term
duration also.
5.Strategy is concerned primarily with long
term goals & obj’s of the orgn.
6.There are functional policies which are of
decentralized nature.
6. Strategy is unified & integrated plan of
action to achieve long term goals & obj’s of
orgn. There are also functional strategies.

12.  What was B.P., Corporate planning, is now Strategy management..
 Alfered Chandler was the pioneer in developing the concept of strategy in 1962..
 Chandler defined strategy as “The determination of the basic long term goals & obj’s of
an enterprise & the adoption of courses of action & allocation of resources necessary for
carrying out theses goals”…
 Kenneth Andrews is one of the pioneer for developing B.P. as a course at Harvard
business school. He developed the technique of teaching B.P. thru the case method.
 Kenneth defined it as “ The pattern of obj’s, purposes & goals and the major policies and
plans for achieving these goals stated in such a way so as to define what business the Co
is in or is to be & the kind of Co it is to be”.
 This definition concentrates on :-
i. i) It deals with the business objectives..
ii.
3.STRATEGY

13. ii) It provides major policies & plans to achieve goals .
iii) It states the present position of the Co
iv) It indicates the direction in which Co will develop in future
PROFESSOR IGOR ANSOFF DEFINES STRATEGY AS “ The common thread among the orgn
activities & product markets that defines the essential nature of business that the
orgn was or plan to be in future.”
There are four components of Strategy according to him
1. Product market scope
2. Growth vector
3. Competitive advantage
4. Synergy

14. WILLIAM F. GLUECK has defined strategy as a unified comprehensive and integrated
plan designed to assure that the basic obj’s of the enterprise are achieved.
Glueck talks of an integrated approach to realise the basic obj’s of an enterprise.
Arthur sharplin defines Strategy as “ a plan of course of action which is vital,
pervasive or continuing importance of the orgnal as a whole”.
Arthur sharplin mention Strategy as comprising the following components:-
1. It is the plan- may be the long term plan..
2. It provides a course of action for the success of organization..
3. It is the course of action which is all pervasive(every where), which means
influencing all components of the organization.
4. The course of action is a continuous process.

15. 4.PLANNING PARADIGM:- planning may be broadly divided into the following heads:-
Short range planning
Long range planning
Operational planning
Corporate planning
Straregic planning
1. SHORT RANGE:- in nature of such plans, covers period of 1mth or less than 1yr.
Most often complementary to long range plans..
2. LONG RANGE:-covers period between 2 to 5 or max 10yrs..
• It is formulated after estimating correctly international & national environment
• 2nd step in the process is to define corporate goals in terms of:
 Precise growth rate
 The time span
 Risk involved & the
 Attitude of personnel for the implementation.

16. • Next step is to evaluate the performance & finally the application of control
mechanism
• The coordination of long term & short term plans is executed for achieving the obj’s
& goals of the orgn.
• Short term goals help in achieving long term goals of product mix, product
diversification, market spread etc.
3. OPERATIONAL PLANNING:- are like the sub goals of major goals of orgn, focuses on
the ways & means to be adopted for realizing the obj’s & goals of the orgn. For this
purpose it concentrates more on internal & external envt.
For operating operational plans– operating level managers or middle level executives
make effort to realise goals under guidance of senior managers of diff dept’s..
Operational managers are guided by policies,rules,forecasts,targets,budgets.
4. CORPORATE PLANNING:-C.P. includes the setting of obj’s , organizing the work,
people & system to enable those obj’s to be attained, motivating thru the planning
processes & thru the plans, measuring performance & so controlling progress of the
plan & developing people thru better decisions

17. Corporate planning is considered indispensable as it provides new direction to
uncertain future. The top mgt by following C.P. acquires an insight into the envt which
the orgn has to exploit its strength & avoid weaknesses for realizing the organizational
goals.
5. STRATEGIC PLANNING :- Robert N. Anthony defines S.P. as:- “ the process of
deciding on obj’s of the orgn, on changes of theses obj’s , on the resources used to
attain these obj’s & on the policies that are to govern the aquisition ,use &
disposition of these resources”.

18. UNDERSTANDING STRATEGY:- MEANING & DEFINITION
The word “strategy” has been taken from the Greek word ‘strategia’ which refers to a
general army or a military commander.
Strategies are treated as road maps to success at the time of wars & battles.
Busi orgn also need to develop busi strategies in order to achieve its obj’s which may be
capturing new market share & increasing demand for its goods & services.
PROCESS OF DEVELOPING STRATEGIES :- ITS SIGNIFICANCE:
not much of competition
1960 Industrialization was at its peak
prime obj was to set long term goals & chart of strategy
resource building to achieve these goals.

19. designing of strategy underwent a change
1970 New Companies started to come up
focus of orgn shifted to organizational growth
Diversification also gained popularity as a strategy to increase
organizational growth
highlighted competition with an increase in no of countries
1980 undergoing industrialization
focus was now on gaining competitive edge
mergers & acquisition gained momentum
focus more on CUSTOMER WANT. Providing customer with value added
goads

20. Revolution of information technology
21st century Globalization(international brands, export etc.)
Goals , Standards, Processes according to changing mkt
conditions become vital to sustain & survive for organizations.
STUDIES RELATED TO FIELD OF STRATEGY:-
IGOR ANSOFF PIONEERED THE CONCEPT OF STRATEGY:-
i. Obtaining knowledge through experience.
ii. Study of human origin, societies & culture.
& further developed by Henry Mintzberg & Michael Porter
ANSOFF’S STRATEGIC SUCCESS PARADIGM
i. Strategic mgt devised by Igor Ansoff
ii. He found that long term strategy are far more successful than short term

21. He listed following conditions to achieve optimum profits:-
1. There exists no universal formula for success that can be applied to all businesses.
2. According to turbulence(changing & competitive) environment business shd decide
aggressive strategy for achieving optimum success.
3. Success of strategy depends on levels of changes, instability or agitation(how to solve
those agitations)in the environment.
4. Many variables like psychological, cognitive, anthropological & sociological( known as
internal capability variables are needed.
His contribution is mentioned in book:- Corporate strategy & an analytical approach to
B.P. for growth & expectation.(published in 1965)

22. HENRY MINTZBERG:- STRATEGY AS CRAFT
His contribution to Strategic mgt was the addition of a new dimension- related to
mgr’s perspective as well.
He used more humane approach to the development & implementation of a strategy.
He coined the term ‘crafting’ a strategy..
Acc to him orgn must be
 A simple organizational structure
 Machine &professional bureaucracy(organizing large no of ppl who need to work
together)
 Adhocracy
 A divisionalized form
PETER DRUCKER’S CONTRIBUTION:-
DRUCKER suggested mkt is not impersonal in nature and can be controlled if mgt takes
measures to achieve objectives as set.
Concept of MBO was introduced by him in 1954

23. MBO shifted focus of mgt from processes to goals.
Assumptions of mgt were changed to self control instead of exercising control.
Drucker said that mgt is an activity which requires active, adaptive, and participative
behavior.
MICHAEL PORTER: STRATEGY AND COMPETITIVE ADVANTAGE
 He introduced 5 force model which involved a study of elements of strategic
management.
 Porter introduced generic strategies like Cost Leadership,Focus,Cost Differentiation..
In order to reduce the uncertainties of competitive environment..
He suggested that competition in any industry depends on following forces:-
i. Threats as posed by new entrants.
ii. Bargaining power of suppliers
iii. Threats as posed by substitute products
iv. Existing rivalry between the current players
v. Bargaining powers of buyers or customers

24. For busi to survive & sustain it is impt to understand 5 forces the way they work
&influence.
BENEFITS OF STRATEGIC MANAGEMENT:-
 S.M. helps in rationally allocating resources & improving coordination amongst
organizational divisions
 The planning process facilitates dialogue about the orgn’s future among its various
hierarchical levels.
 S.M aids mgr’s in foreseeing problem’s & thereby preventing them before their
occurrence
 It helps orgn’s with things that are strategically impt to its growth
 S.M. offers better understanding of the ever changing business environment.
S.M. answers important question’s such as:
 Where is the orgn now?

25.  Where does it want to be in next one year?
 Where does it want to be in next few years?
 Does the orgn have the answers or does it know what actions to be taken in case
there are no feasible answers.