Unit-7 Business Policy and Decision Making

Program Semester Subject Code Subject Name Unit Number

: MBA : IV : MB0052 : Strategic Management :7

Unit Title
Lecture Title

: Business Policy and Decision Making

: Business Policy and Decision Making

Lecture Number : 7

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Unit-7 Business Policy and Decision Making

Business Policy and Decision Making

Objectives

The objective of this lecture is to discuss:

Business policy and steps involved in framing policy.

Policy cycle and role of policies in strategic management.

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Unit-7 Business Policy and Decision Making

Lecture Outline
Introduction Factors Considered before Framing Business Policy Steps Involved in Framing Business Policies Policy Cycle Implementation of Policy Change

Role of Policies in Strategic Management

Interdependence Between Policy and Strategy Summary Check Your Learning Activity

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Unit-7 Business Policy and Decision Making

Introduction

Business policy forms a sphere during decision making process to assess the strategies implemented in the operating environment. It provides a guiding procedure for the organisation to implement organised business activities.

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Unit-7 Business Policy and Decision Making

Factors Considered before Framing Business Policy

The factors considered before framing the business policy are: Resources of the organisation Economic conditions Competition Political and legal forces Technology Internal environment of the organisation

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Unit-7 Business Policy and Decision Making

Steps Involved in Framing Business Policy

Policy formulation refers to the process designing policy. The policies are framed depending on the underlying objectives of the organisation.

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Unit-7 Business Policy and Decision Making

Policy Cycle
Policy cycle is the process of analysing, planning, designing and implementing the policies in an organisation and it involves the following stages:

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Unit-7 Business Policy and Decision Making

Implementation of Policy Change

The changing environment in the organisation enforces the

implementation of policy change so that the stakeholders can adhere to

the newly introduced policies. The following steps are involved in implementing a policy change: Step 1 Analysing existing policy in the organisation

Step 2 Selecting the subordinate group of decision makers

Step 3 Gathering data Step 4 Initialising policy formulating team Step 5 Developing detailed policy

Step 6 Presenting the proposed policy change

Step 7 Approval of new policy

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Unit-7 Business Policy and Decision Making

Role of Policies in Strategic Management

Business policy plays an important role in strategic management. The various roles of the policies are it: Interrelates the objectives of the organisation. Governs and controls the managerial actions. Evaluates the current status of the organisation. Supports organisation during uncertain situations. Abides to the government rules.

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Unit-7 Business Policy and Decision Making

Interdependence between Policy and Strategy

The interdependency between the policy and strategies are developed with collective ideas contributed towards achieving desired results. Strategies are framed as guiding principles for the stakeholders in the organisation which brings coherence in the business activities. Policy supports the guiding principles and provides a collaborative work in the strategic outcomes. The separation of strategy and policy generates risks of unachievable objectives in the organisation. Hence it is important to collaborate policy and strategy to gain effective outcome in the organisation.

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Unit-7 Business Policy and Decision Making

Summary

Business policy acts as guidelines and forms boundary for the

stakeholders in the organisation.

Policy formulation is the process of designing policy and policy change creates space for understanding the need for policy. The interdependency between policy and strategy helps the

organisation to work effectively in an efficient direction and achieve

desired outcomes.

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Unit-7 Business Policy and Decision Making

Check Your Learning

1. What are the stages of policy cycle? ANS: Setting policy agenda Writing and implementing policy Enforcing policy Reviewing and updating policy 2. What factors contributes in implementing policy change? ANS: The changes in organisation such as privacy issues, human resource, safety concerns, finance led to the implementation of policy change. 3. What is the role of policy in strategic management? ANS: Business policy interrelates objectives, governs and controls managerial actions, evaluates the current status of the organisation and supports organisation during uncertain situations.

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Unit-7 Business Policy and Decision Making

Activity
Refer http://www.libraryindex.com/pages/3208/Chemical-Industry.html and identify the chemical hazards in the European chemical industry and policies adopted by United States for importing chemical stocks from European countries which are environment friendly.

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