July 23, 2024

What is Business Policy?

Business Policy

What is Policy?

A Policy is a concise formal statement of principles which indicate how the organization will act in a particular area of its operation eg in relation to academic promotion or to racism. In short, policy provides members of the University with the approved way of operating in relation to a particular matter.

The Role of Policy

Policy plays an important role within the organisation. It provides the principles which dictate how the members of the organisation will act.

Those principles are derived from and shaped by: the law and regulations that govern the organisation; national standards and community expectations, and the values and mission the University articulates in its strategic plan.

It is the role of Policy to:

  • translate values into operations;
  • ensure compliance with legal and statutory responsibilities;
  • guide the University towards the achievement of its strategic plan;
  • set standards; and
  • Improve the management of risk.

The role of policy

The role of policy in an organisation is to:

  1. Provide general guidance about the organisation’s mission.
  2. Provide specific guidance toward implementing strategies to achieve the organisation’s mission
  3. Provide a mechanism to control the behaviour of the organisation

Examples of policy

Provide general guidance about the organisation’s mission
  • A policy that limits the industries in which the organisation will operate
  • A policy about the geographical region in which the organisation will operate
  • A policy about the general nature of the business i.e. profit making, non-profit making, community recreation or elite sport
  • A policy about affiliations with other organisations i.e. affiliation with a national body or a peak industry body
Provide specific guidance toward implementing strategies to achieve the organisation’s mission
  • A policy for athlete development
  • A policy for recruiting, training and utilising volunteers
  • A policy for employing staff
  • A policy for opening hours of a facility
  • A policy for promoting and staging events
  • A policy for doping control
Provide a mechanism to control the behaviour of the organisation
  • A policy for the inclusion of people with disabilities
  • A policy that sets up judiciaries or disciplinary hearings
  • A policy that regulates the election of office-bearers
  • A policy for dealing with complaints

Business Policy

 Business policy, as defined by Christensen and others, is

‘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 organisation and shape its future.

The problems of policy in business, like those of policy in public affairs, have to do with the choice of purposes, the moulding of organisational identity and  character, the continuous definition of what needs to be done and the mobilisation of resources for the attainment of goals in the face of competition or adverse circumstance’.

This comprehensive definition by Christensen and others covers many aspects of business policy.

First, it is considered as the study of functions and responsibilities of the senior management related to those organisational problems which affect the success of the enterprise as a whole.

Secondly, it deals with the determination of the future course of action by the organisation.

Thirdly, it involves a choice of purpose and defining what needs to be done in order to mould the character and identity of the organisation.

Lastly, it is also concerned with the mobilisation of resources by the help of which the organisation can achieve its goals.

The senior management consists of those managers who are primarily responsible for long-term decisions and carry designations such as the Chief Executive Officer, President, General Manager or Executive Direc­tor. These are the persons who are not concerned with the day-to-day problems but are expected to devote their time and energy to thinking and deciding about the future course of action.

Business policy, with its concern for determination of the future course of action, lays down a long-term plan which the organisation then follows.

The senior management, while determining the future course of action, has a mental picture of the type of organisation they want their company to become.

In deciding about the future course of action, the senior management is confronted with a wide array of decisions and actions that could possibly be taken. The senior management exercises a choice, depending on the given circumstances and which, in their opinion, would lead the organisation towards a specific direction.

Moving in a predetermined direction, the organisation attains the planned identity and character.

Organisational decisions are not made in isolation and managerial actions cannot be taken without providing the resources necessary for them. The senior management, while deciding about the future course of action, concern themselves with the resources—financial, material and human—that would be required for the implementation of the long-term plans.

 Objectives of Business Policy:

  • Understand various concepts, like. Strategy, policies, plans, programmes.
  • Knowledge of internal and external environment and how it affects the functioning of the organisation.
  • Application of generalised approach to deal with wide variety of situations.
  • Development of analytical ability to understand situation. Identify factors relevant to decision making. Analyse strength, weakness, opportunities and threats to organisation. Development of attitude of generalist and asses a situation from all angles.

Benefits of Business Policy

  • Business Policy seeks to integrate the knowledge and experience gained in various functional areas of Management. Normally functional areas are aloof of complexities of real life business situations. Business Policy cuts across the narrow functional boundaries. Business Policy helps us to create an understanding of how policies are formulated.
  • Managers become more receptive to the ideas and suggestions of senior Management. Managers feel themselves to be a part of a greater design.
  • Understanding Business Policy provides a basic framework for understanding strategic decision making and Improvement in Job Performance.
  • Study of business policy leads to personal development. Managers understand the impact of policy shifts on the status of one’s department and on the positions one occupies.
  • Understanding Business Policy enables manger to avail the an opportunity or avoid a risk to career planning and development
  • Understand senior management’s view point.


Strategy v/s Policies

•         Strategy & Policy are not synonymous.

•         Policy is guideline for decisions & actions to be taken by subordinates for the fulfilment of the set of objectives.

•         Policies are commonly accepted understanding of decision making.

•         Policies are thought oriented.

•         Policies have to be integrated so that Strategy is implemented successfully and effectively.

•         Strategy and policies both are the means directed towards meeting organisational objectives.


•         Strategies are concerned with the direction in which human and physical resources are deployed to maximise the chances of achieving organisational objectives in face of variable environment.

•         Strategies are specific actions suggested to achieve objectives.

•         Strategy is action oriented and empowers concerned to implement them.

•         Strategy cannot be delegated downwards.

•         Strategy is rule for making decision and Policy is contingent decision.


435 thoughts on “What is Business Policy?

  1. I like this post, enjoyed this one thank you for putting up. “What is a thousand years Time is short for one who thinks, endless for one who yearns.” by Alain.

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