Classifications of business policies1

CLASSIFICATIONS OF BUSINESS POLICIES1

1. CLASSIFICATIONS OF BUSINESS POLICIES Osamah Almaamari FIRST SEMESTAR 20172018

2. Classification of business policies There are four types of business policies: Production policies Personnel policies Financial policies Marketing policies

3. Production policies Production management deals with decision-making related to production processes, so that relating goods or services is produced according to the specifications in the amounts and by the schedule demanded and at a minimum cost. Thus, production and operation management is the process of covering inputs (raw materials, supplies, people, and machine) into value enhanced output. This function is most easily associated with manufacturing firms. However, it applies equally to all other types of businesses. It should be noted that manufacturing as well as service organizations alike have to decide on policies bearing on capacity, technology, purchasing and so on.

4. Production policies Pearce and Robinson opine that “functional strategies in production and operation management must guide decisions regarding: The basic nature of the firm’s production and operations management, seeking an optimum balance between investment input and production/operations outputs. location , facilities design, purchasing, and process planning on a short-term basis.

5. Key issues of production policy The major issues in production policy are as follows : Involvement of the firm in the production process. Choice of the production processes. Estimate of production capacity. Maintenance of the existence facilities.

6. PERSONNEL POLICY The basic objective of personnel policy in an organization is to ensure consistency of action and equity in its relations with employees . These policies constitute the basis for sound personnel practices and provide the yardstick by which implementation of strategic plans can be appraised . personnel or industrial relations policy provides guidelines for a wide variety of employment relationships in the organization

7. Principles of personnel policies Put the right man in the right place. Train everyone for the job to be done. Make the organization a co-ordinated team. Supply the right tool and the right conditions at work. Give security with opportunity, incentive, recognition.

8. Essential characteristics of a sound personnel policy The main features of a good personnel policy are : The statement of any policy should be definite, positive, clear, and easily understood by everyone in the organization. It should indicate that the management knows that workers prefer to deal with the management on an individual basis. It should recognise the desire of many workers for recognition as groups in relationships. It should be formulated with due regard for the interests of all the concerned parties the employers, the employees and the community. It must not only have the support of the managements but the employees at the floor level and in the office. It should be progressive and enlightened and must be consistent with profession, practice and philosophy

9. FINANCIAL POLICY Finance is the life blood of any industrial or commercial undertaking . It is needed for starting the business and also keep it going . It is also required whenever business is to be expanded . Finance is required in different activities of business related to before production and after sale actives of business and decisions regarding the need of finance, its volume and uses which is known as financial policy Essentially, financial policy issues relate to the procurement of funds and utilization of funds. It deals with raising, administering and distributing of funds by the organization for the purpose of business operations 1.Estimation of the fixed and working capital requirement; 2.Formation of the capital structure; 3.Procurement of fixed and working capital; 4.Usages of funds and management of earnings

10. The necessary factors that shape financial strategies The need for finance resources. The ability and image of the chief financial officer The company’s past actions and performance. Finally, the policy on debt leverage, capital spending, hurdle rates, dividends, cost reduction programmes , spin-off and write-offs, liquidity, and lead time for acquiring long-term capital.

11. ISSUES IN FINANCIAL POLICIES Source of finance and capital structure decisions. Investment decisions. Management of earning and dividend policy.

12. MARKETING POLICIES Today company must urgently and critically rethink their business mission and marketing strategies. Instead of operating in a market place of fixed and known competitors and stable customer preferences, today companies work in a war zone of rapidly changing competitors, technical advances, new laws, managed trade policies and diminishing customer loyalty . The marketing decision variables can be explained into three categories: 1.Goods and service mix 2.Distribution mix, and Communication mix. Goods and service mix is concerned with all the ingredients which comprise the bundle of utilities that consumer purchases. Distribution mix consists of channels of distribution and physical distribution. Communication mix involves all the persuasive (convincing) and informational ingredients that are employed in communicating with the market place.

13. MARKETING POLICY ISSUES MARKETING POLICY ISSUES: In the marketing policy decisions, each firm is naturally expected to use the set of decision variables best suited to its own strategy. In the early sixties, four P’s (product, price, place and promotion) have been considered the core areas of marketing. The position, packaging and people are included in it, as the boundaries of marketing spread beyond selling to encompass (take in) more of the organization. Walter Viera has changed the 4P’s into 4C’s as shown in the following table. These issues may be regarded as core policy issues in marketing. The following box shows some interesting examples of marketing policies adopted by large Indian corporations:

14. MARKETING : CORE POLICY ISSUES 4C’s 4P’s Customer solution Product Cost Price Convenience Place Communication Promotion