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Business Policies-Guidelines to Attain Goals

Business Policies – Framing and Execution

Business policies are the keystone in the arch of management and the life-blood for the successful functioning of business, because without well-laid down policies, there cannot be lasting improvements in the economic condition of the firm and labor-management relations.

A policy is a positive declaration and a command to its followers. It translates the goals of an organization into selected routes and provides the general guidelines that prescribe and proscribe programmes, which in turn, dictate practices and procedure.

Attainment of Objectives:

Buisness policies are general statement of principles for the attainment of objectives which serve as a guide to action for the executives at different levels of management. They pave a broad way in which the sub-ordinates tread along towards accomplishing their objectives.



For each set of objectives at each level, there is a corresponding set of policies.

  • The Board of Directors determine the basic overall corporate policies
  • The top management decides on the executive corporate policies
  • Managers decide on the departments / divisional policies
  • Middle managers handle  the sectional policies
business poilicies

Consistent Decisions contributing to the Objectives:

The policies delimit the area within which a decision has to be made; however, they do allow some discretion on the part of the man on the firing line, otherwise, they would be mere rules.

At the same time too much of discretion in policy matters may prove harmful to the accomplishment of organizational objectives and hence it is generally within limits.

Mutual Application:

Policies in general are meant for mutual application by sub ordinates. They are fabricated to suit a specific situation in which they are applied, for they cannot apply themselves.

Unified Structure:

Policies tend to predefine issues, avoid repeated analysis and give a unified structure to other types of plans, thus permitting managers to delegate authority while maintaining control.

Policies for all Functional Areas:

In a well-structured and managed organization, policies are framed for all functional levels of management.

  1. Corporate planning
  2. Marketing
  3. Research and Development
  4. Engineering
  5. Manufacturing
  6. Inventory
  7. Purchase
  8. Physical Distribution
  9. Accounting
  10. Finance
  11. Costing
  12. Advertising
  13. Personal Selling
  14. Special Promotion, are some areas that require clear-cut policies.

Clear-Cut Guidelines:

Policies serve an extremely useful purpose in that they avoid confusion and provide clear-cut guidelines. This enables the business to be carried on smoothly and often without break.

They lead to better and maximum utilization of resources, human, financial and physical, by adhering to actions for conservation.