chapter 1.introduction of business policypptx

this is business policy subject and its a first chapter of introduction about business policy, types of policies, difference of policy and strategy and so on

1. Book By Dr. Pandey & Rastogi BUSINESS POLICY

2. Chapter One Business Policy and Scope

3. Description Business Policy defines the scope or spheres within which decisions can be taken by the subordinates in an organization. Business policies are the guidelines developed by an organization to govern its actions. They define the limits within which decisions must be made. It permits the lower level management to deal with the problems and issues without consulting top level management every time for decisions.

4. Definition As per the definition given by Christensen et. al. and Steiner and others, " the study of the function and responsibilities of senior management, the crucial problems that affect success in the total enterprise, and the decisions that determine the direction of the organization and shape its future”.

5. Few examples of policies • 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 than10 percent return on investment. • A company sells exclusively on cash terms . • A rental company charges a deposit for rented material. • A rental car company charges extra money for delivering the rented car in another location.

6. Cont examples; • 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

7. Features of Business Policy An effective business policy must have following features- Specific Clear Reliable/ Uniform Appropriate Simple Inclusive/ Comprehensive Flexible stable

8. Difference between Policy and Strategy The term “policy” should not be considered as synonymous to the term “strategy”. 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 the methodology used to achieve a target as prescribed by a policy.

9. TYPE OF POLICIES: Policies based on organizational level On the basis of source of policies Managerial policies

10. 1.Policies based on organizational level Top Management Policies: Theses policies are laid down by top level management and related to setting up of new plant or modernization of plan, mergers & acquisitions , budget policies etc. Middle Management Policies: These policies are for specific department or section like marketing manager will set policy for advertising, marketing research, pricing etc.

11. Foreman policies: these policies concerned with functioning of a sub-unit/ section headed by foreman. Policies like to give charge of work to most suitable person, to arrange proper tool, to ensure production on right track, etc. Operating force policies: These policies are found in every worker’s personal diary, rules & regulations regarding work, etc

12. 2. On basis of source policies Originated policies: These are policies which are formulated by the managers in the organization for their subordinates action as well as their own action. Appealed policy: Appealed policy arises from the appeal made by a subordinate to his superior for deciding an important case.

13. Implied policy: Sometimes policies are not clearly stated, and the actions of managers, particularly at higher levels, provides guidelines for actions at the lower level. Imposed policy: This policy arise from influence of some outside forces like government, trade unions, & trade associations.

14. 3. Managerial Policies These policies made for helping the managers. These policies are concerned with various aspects of job of managers. Like planning-long run, short run planning etc.

15. Business Policy Process Environmental Scanning Policy formulation Policy implementation Evaluation and control

16. I ) Environmental Scanning Environmental scanning is the monitoring, evaluating and disseminating of information from the external and internal environments to key people within the corporation. The simplest way to conduct environmental scanning is through SWOT analysis.

17. 2. Policy Formulation Policy formulation is the development of long-range plans for the effective management of environmental opportunities and threats, in light of corporate strengths and weaknesses. It includes defining the corporate mission, specifying achievable objectives, developing strategies, and setting policy guidelines.

18. Policy Formulation contt ,, Mission: An organization’s mission is the purpose or reason for the organization’s existence. A well-conceived mission statement defines the fundamental, unique purpose that sets a company apart from the other firms of its type and identifies the scope of the company’s operations in terms of products (including services) offered and markets served. A mission may be defined narrowly or broadly in scope.

19. One example of a mission statement is that of TTK Groups: To improve the quality of home life by designing building, marketing and servicing the best appliances in the world.

20. Cont, Objectives: Objectives are the end results of planned activity. They state what is to be accomplished by when and should be quantified if possible. The term ‘goal’ is often used interchangeably with the term ‘objective’. Example; “increased profitability” is thus a goal & An objective something like, “increase profits 10% over last year.”

21. Cont, Strategies: A strategy of a corporation forms a comprehensive master plan stating how the corporation will achieve its mission and objectives. It maximizes competitive advantage and minimizes competitive disadvantage.

22. The typical business firm usually considers 3 types of strategy: 1. Corporate Business and Functional.

23. Corporate Strategy describes a company’s overall direction in terms of its general attitude towards growth and the management of its various businesses and product lines. Business Strategy usually occurs at the business unit or product level, and it emphasizes improvement of the competitive position of a corporation’s products or services in the specific industry or market segment served by that business units.

24. Functional Strategy is the approach taken by a functional area to achieve corporate and business unit objectives and strategies by maximizing resource productivity. It is concerned with developing and nurturing a distinctive competence to provide a company or business unit with a competitive advantage.

25. For example, consider the following company policies: Intel: Cannibalize our product line (undercut the sales of your current products) with better products before a competitor does it to you. (This supports Intel’s objective of market leadership.) General Electric: GE must be number 1 or 2 wherever it competes. (This supports GE’s objective to be number 1 in market capitalization.) 3M: Researchers should spend 15% of their time working on something other than their primary project. (This supports 3M’s strong product development strategy.)

26. 3. Policy Implementation Policy implementation is the process by which strategies and policies are put into action through the development of programs, budgets, and procedures. Programs: A program is a statement of the activities or steps needed to accomplish a single-use plan. It makes the strategy action oriented. It may involve restructuring the corporation, changing the company’s internal culture, or beginning a new research effort.

27. Budgets: A budget is a statement of a corporation’s programs in terms of money. Used in planning and control, a budget lists the detailed cost of each program. Procedures: Procedures, sometimes termed Standard Operating Procedures (SOP), are a system of sequential steps or techniques that describe in detail how a particular task or job is to be done.

28. 4. Evaluation and Control: Evaluation and control is the process in which corporate activities and performance results are monitored so that actual performance can be compared with desired performance. For evaluation and Control to be effective, managers must obtain clear, prompt and unbiased information from the people be low them in the corporation s hierarchy.

29. The End