This document provides an overview of business policies, including definitions, the policy development process, characteristics of business policies, policy levels, trends influencing policies, and the importance of studying business policies. Specifically, it defines business policies as guidelines that help guide decision-making and ensure consistency, equity, and stakeholder awareness. The policy development process involves scanning the environment, developing objectives and policies, implementing plans, and evaluating outcomes. Business policies should incorporate internal and external factors, have a long-term perspective, and focus on customers, stakeholders, and matching resources to needs.

1. LESSON ONE:
THE NATURE AND SCOPE OF BUSINESS POLICIES
1.1: INTRODUCTION
Welcome to this lesson that deals with application of principles that are learnt in the
lower level management courses. This lesson deals with the scope and overview of
business policies. It gives a summary of the content of the whole unit. It also deals with
the definitions that are used in this unit.
1.2: Lessonsobjectives
At the end of this Lesson, you will be able to:
i) To define the terms: business policies, business policy framework, policy levels
and policies characteristics
ii) To describe the policy development process.
iii) Explain the importance of this unit as an area of study.
iv) Explain the trends that are likely to influence the performance of policies in
future.
LessonsOutcomes
1. Apply proper business policies
2. Understand how a policy framework can affect the performance of a business.
3. Be able to design a policy frame wok geared towards the attainment of specific
goals.
1.3: LESSON ONE: NATURE AND SCOPE OF BUSINESS POLICIES
1.3.1: Definitions
Policy:
There are two major definitions of the term policy hence the following two perspectives.
1. Policies are defined as guidelines that help to guide the decision
making activities of the organization so as to ensure
• Consistency in decision making

2. • Equity in organization's activities
• Consistency in the relationships with stakeholders.
• Stakeholders’ awareness of what LessonsOutcomes to expect.
2. Policies can also be defined as long term plan (s) of action that
help(s) to ensure survival and growth of the organization in the long
term future. In this context, policies help to guide the following:
 The size of the organization
 The destiny of the organization
 Identity of the organization
 Allocation of resources to meet organization’s objectives
Business policy framework (BPF)
Business Policy framework defines the parameters within which policy
decisions are made. BPF comprises of five variables:
 Environment – all the positive and negative dynamics or forces that
are likely to influence the performance of policies. The dynamics can
be within the business thus referred to as internal environment or
controllable environment; or outside the business referred to as
external or non-controllable environment.(refer to Lesson 2)
 Overall purpose – this is the broad objective of the business. The
reason for business existence.
 Identity – this is defined as the unique characteristic that differentiates
the business from any other business. It might be related to a unique
customer, product, service etc.
 Resources – this includes all the factors of production at the disposal
of the business.

3.  Activities – refers to what the business does with the available
resources to undertake and fulfill its overall purpose and maintain its
identity.
Policy development process
This is a step by step process that comprises of
 Environment scanning
 Developing vision, mission and objectives
 Formulation of policies
 Choice of organization’s portfolio plan
 Implementation of chosen portfolio
 Evaluation of the implementation process
 Social responsibility and ethics
Policy levels
1. Functional level –policies at the department or sectional level dealing
with specific products or services or area of operation.
2. Organization level – policies developed for the whole organization.
They deal with the strategic actions of the whole organization’s future.
3. National level – policies developed to deal with the affairs of a
specific state.
4. Zonal or regional level –policies developed for operations of a given
region such as EAC, COMESA region etc.
5. International level
6. Global level
Activity

4. Describe the policy development process
1.3.2: Characteristics of Business policies
• Entrepreneurial in nature. This is where policy makers or managers
are expected to act like entrepreneurs who are able to identify the
opportunities, gather the necessary resources and exploit the
opportunities for some gain in the implementation of the portfolio.
• Incorporate both internal and external environmental dynamics.
This emphasizes that the policy development process must carefully
consider the controllable and non-controllable environmental factors.
The internal dynamics can be changed to accommodate the new
policies. Whereas the policies can be adaptive in nature to
accommodate non-controllable dynamics.
• Intellectual in nature. When policy developers are making the
policies, they should use the highest level of skills, that is, conceptual
skills so as to be able to conceptualize the extent of the impact of the
new portfolio chosen even before it is implemented.
• Policies should be relatively fixed for a given period of time but
flexible to accommodate environmental dynamics. It should not be so
fixed because the environment keeps changing.
• Comprehensive assessment of all the competitive dynamics.
The managers must ensure there is effective and an all-inclusive
environment analysis so that all the required information for effective
policy development can be gathered.
• Customer focused, demand driven, market oriented. The policies
developed must have an outward orientation. Adhere to market
dynamics for example the 4 Ps of marketing. The market dynamics
must be used to direct the policies being developed. The tastes,
preferences and needs must also be incorporated in the policies.
• Incorporate all stakeholders. All the business stakeholders’ needs
must be identified, prioritized and trade-offs considered to ensure that

5. the policies are all inclusive. The objectives of different stakeholders
must also be considered.
• Match between policy requirements and available resources.
There are various resources that are required in the whole policy
development process especially in the implementation. These
resources must be identified, mobilized, allocated, utilized and
controlled so that there will not be white elephant projects in the
organization.
• Long term perspective. The portfolio adopted must have long term
orientation. This helps to achieve one of the two major objectives of
any portfolio that there must be growth and longevity in the portfolio
adopted.
• Best mix between environment and the resources. The policy
makers should assess the environment to access the resources that
are available and those that can be available.
• Industry driven. The industry goes through cycles and seasons and
policy makers should align policies to the industry dynamics.
• Trends oriented. Policies should be aligned to the past, current and
future dynamics. Different methods of assessing the trends should be
incorporated before policies are developed.
• Must incorporate managerial or leadership values. The policies
must reflect values that will be incorporated in the portfolio. The
values however must be balanced to ensure they do not create
biases of the policy makers only but of the other stakeholders as well.
1.3.3: Trends influencing policies
• Technological trends such as cashless society, e-commerce, e-
learning, plastic money, smaller banking halls, etc.
• Demographic developments. The variables that are used to define a
group of people keep changing from time to time.

6. • Social cultural changes. Social-cultural characteristics about the
societal dynamics keep changing and they affect business policies.
• Global dynamics eg global boundaries, international zoning,
regionalization are also influencing the business policies dynamics.
• Political developments and liberalization. All over the world, there are
political dynamics that keep changing and influencing business
activities.
• Increased levels of awareness amongst the stakeholders. Right now
the dynamics and unrest in Middle East and other areas in the world
are affecting the way businesses are done. The level of technology is
bringing the awareness of what is happening at real time.
• There are increased levels of literacy and illiteracy in the societies.
Due to the gap between the rich and the poor in the world, literacy
and illiteracy levels are increasing. This forces the different policy
makers to re-evaluate the different effects of the above on policies.
• Need and emphasis on social responsibility. The society has so many
needs that have been ignored in the past, and now there is a need for
businesses to give back to the society through being responsive to
society’s needs.
• Increased levels of unethical practices in the business, amongst
individuals and in the society. This forces policy makers to be aware
of the unethical practices as they develop policies.
• Need and emphasis on entrepreneurial culture
• Increasing informal sector
• Growth of information society. Information technology has made the
current society sensitive and aware of the different kinds of things
and businesses happening in the world.
• Physical/ ecological changes. In so many places all over the world
there are drastic changes in the weather patterns, this has brought

7. about changes in the way businesses operate. It has also brought
about new needs and tastes amongst the stakeholders and the
businesses have to respond.
• Changes in legal structures
ACTIVITY
https://www.youtube.com/watch?v=KVvhaRakXXo
https://www.youtube.com/watch?v=0Ed6n9JkJT8
give the characteristics of business policy and explain the
current trends in business policy
1.3.4: Importance of this Unit as an area of study
• Helps managers when making choices amongst competing
alternatives
• Helps mangers to guide the future of the organization
• Helps in identification, mobilization, allocation, utilization and control
of resources
• Help in implementation activities
• Assists managers to identify where the organization is at, Where the
organization should go, what actions to take,
• Helps managers to identify Determinants of success or failure
• Helps in setting operational boundaries
• Helps to identify all the stakeholder and their respective needs
• Helps to be socially responsible and ethical in decision making
• Helps in evaluation of policy performance
• Gives legitimacy for business existence
• Settling disputes or conflict amongst stakeholders

8. • Helps in creating relationships within and outside the business
• Helps to develop and maintain organization's identity
• Helps organizations to curve a niche for their marketing activities
• Helps managers to be proactive and progressive Vs being reactive
and parochial
• Helps to identify the SWOT of the business Vs of competitors
• Acts as a frame of reference for all business activities both now and
in the future.
• Helps in identifying trends that are likely to influence business
formulation and choices of portfolio
ACTIVITIES
You should identify some large businesses in your neighborhood or an
organization recognized nationally. Explain the activities that the chosen
business undertakes.
1.4: SUMMARY
This lesson deals with the scope of business policies. Policies give
guidelines that act as guide to all the activities of the business, all
relationships of the business and the future of a business. Policies help
managers to plan, choose, implement and evaluate the activities of the
business. Policies sensitizes the business about the relationships with
stakeholders.
1.5: FURTHER READINGS
Review further definitions such as management, administration, and
leadership. Review the activities of planning, organizing and controlling, in
relation to policies.

9. 1.6: SELF TEST QUESTIONS
a) Define the term policy.
b) Outline the step by step process of policy development process.
c) List the five elements of business policy framework.
d) List and briefly explain the reasons as to why this unit is important.
e) List and briefly explain the different levels of policy development.
REFERENCES
Dubrin,A. j., (2009). Essentials of Management. South Western Cengange,
Canada.
Gamble, E.J., & Strickland, A. J. (2007). Crafting and Executing Strategy: Concepts and
Cases. McGraw Hill Irwin.
Hunger, D. J. & Wheelen, L. T. (2008). Strategic Management and Business Policy.
Pearson Prentice Hall ( 11th Ed)
Stearns, T. M. & Aldag R.I., (1981). Management. Harold Hoffman Inc.
Plunkett W. R. & Attner R. F. (1997). Management: meeting and Exceeding Customer
Expectations. South-western College Publishing.