BUSINESS POLICY

As defined by the Christensen and others, Business Policy is the Study of the functions 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.

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

This definition is very comprehensive and covers many aspects of business policy

Firstly, it is considered as the study of functions and responsibilities of the senior management related to those organizational problems which affect the success of the total enterprise. Secondly, it deals with the determination of the future course of action that an organization has to adopt .

Thirdly, it involves choosing the purpose and defining what needs to be done in order to mould the character and identity of the organization. Lastly, it is also concerned with the mobilization of resources, which will help the organization to achieve its goals.

Senior Management consists of those managers who are primarily responsible for long term decisions and who carry designations such as, CEO , President , GM, ED. They are not concerned with day to day problems but are expected to devote their time and energy to thinking and deciding about the future course of action,evolving a business policy which results in a long term plan to be followed by the organisation.

While deciding the future course of action , senior management has a mental picture of the type of the organization they want their company to become . While deciding about a future course of action sr. mgt. is confronted with a wide array of possible decisions and actions.

A choice has to be exercised on the basis of given circumstances and which in the opinion of senior management would lead the organization in a specific direction. By moving in a predetermined direction an organization can attain its planned identity and character.

Organizational decisions are not made in isolation and managerial actions cannot be taken without providing the resources necessary for them.While deciding about the future course of action, sr. mgt., concern themselves with the financial, material and human resources that would be required for the implementation of long term plans. In these slides we have discussed Definition and Nature of business Policy.

The Importance of Business Policy

Business Policy is important as a course in the management curriculum and as a component of executive development programmes for middle level managers who are preparing to move up to Sr. Mgt. Level. Study of business policy fulfills the needs of management students as well as those of middle level managers.

There are four areas where study of Business Policy can be very beneficial and thus establishes its importance:

For Learning the Course For Understanding the Business Environment For Understanding the Organization For personal Development

FOR LEARNING THE COURSE:

Business policy seeks to integrate the knowledge and experience gained in various functional areas of management. It enables the learner to understand and make some of the complex interaction that takes place between different functional areas.

Business policy deals with the constraints and complexities of real life businesses. In contrast the functional area courses are based on a structured, specialised and well developed body of knowledge, resulting from a simplification of the complex overall tasks and responsibility of the management

Business policy cuts across the narrow functional boundaries and draws upon a variety of resources-----other courses in management curriculam and a wide variety of disciplines, like economics, sociology, psychology, political science etc. In doing so,business policy offers a very broad perspective to students.

Business policy makes the study and practice of management more meaningful as on can view business decision making in its proper perspective. Example of sacrificing short term gain to a sub unit in interest of long term gain to the organisation as a whole.

FOR UNDERSTANDING THE BUSINESS ENVIRONMENT:

Business policy helps in creating an understanding of how policies are formulated and helps managers at every level. By gaining an understanding of the business environment managers become more receptive to the ideas and suggestions of sr. mgt. This makes the task of policy implementation simpler. When managers become capable of relating environmental changes to policy changes within an organization they feel themselves to be part of greater design. It helps to reduce their feeling of isolation.

FOR UNDERSTANDING THE ORGANISATION:

Business policy presents a basic frame work for understanding strategic decision making while a person is at the middle level of management. Such a framework combined with the experience gained while working in a functional area enables a person to make preparations for handling general management responsibilities and the same is beneficial for the organisation in a variety of ways.

Business policy, like other areas of management brings the benefit of years of distilled experience in strategic decision making to the organisation and also to the managers.

Understanding of business policy may also lead to an improvement in job performance. As a middle level manager , a person is enabled to understand the linkages between the different sub-units of an orgn. And how a particular subunit fits into the overall picture. It has far reaching implications for managerial functions like co-ordination and communication and also for the avoidance of interdepartmental conflicts.

FOR PERSONAL DEVELOPMENT:

Study of business policy offers considerable scope for personal development It is a fact of organisational life that the different subunits within an orgn., have a varying value and importance at different times. A company which has followed a production orientation as a matter of business policy gradually shifts emphasis on marketing, may be due to increasing competition and as a result executives in production department have fewer opportunities for career advancement as compared with their colleagues in marketing department.In this case it is beneficial for an executive to understand the impact of policy shifts on the status of ones department and on the position one occupies .

Special caution for executives working in multinational companies:

While making a career choice, study of business policy provides an adequate grounding for understanding the macro factors and their impact at the micro level. By gaining an understanding of such an impact, an executive is better placed to identify the growth area. Business policy offers a unique perspective to executives to understand the sr. mgts viewpoint.

An interesting by product of the business policy is theoretical framework provided in the form of the strategic management model. The model has wide aplicability and provides powerful insights for dealing with policy making at the macro level as well as at an individual level through self analysis.

Importance of business policy stems from the fact that it offers advantages to an executive from multiple sources. Apart from the intangible benefits, an executive gains an understanding of the business environment.Such an understanding can help in career planning and development.

PURPOSE OF BUSINESS POLICY:

Specialist in functional area Vs Generalist approach. Case of declining sales volume in marketing department--Views of functional manager and general managers.

Broadly the purpose of business policy is three fold:

To integrate the knowledge gained in various functional areas of management. To adopt a generalist approach to problem solving To understand the complex inter-linkages operating within an organization through the use of systems approach to decision making and relating these to the changes taking place in the external environment.

THE OBJECTIVES OF BUSINESS POLICY

In order to make the study of business policy purposeful specific objectives need to be defined. The objectives of business policy have been stated by Christensen and Steiner in terms of :

KNOWLEDGE SKILLS ATTITUDES

IN TERMS OF KNOWLEDGE:

Many concepts like strategy, policies, plans and programmes are encountered in functional area courses but for the learners of business policy, it is imperative to understand these concepts specifically in the context of business policy.

Knowledge of the external and internal environment and how it affects the functioning of an organization is vital to an understanding of business policy. Through the tools of analysis and diagnosis a learner can understand the environment in which a firm operates. Information about the environment helps in determination of the mission , objectives and strategies of a firm. The learner appreciates the manner in which strategy is formulated.

To learn that the problems in real life business are unique and so are the solutions is an enlightening experience for the learners. The implementation of strategy is a complex issue and is invariably the most difficult part of strategic management. Knowledge gained from business policy enables the learner to visualize how the implementation of strategic management can take place.

The knowledge component of such an experience stresses the general approach to be adopted in problem solving and decision making. To survey the literature and learn about the research taking place in the field of business policy is also an important knowledge objective.

IN TERMS OF SKILLS:

The attainment of knowledge should lead to the development of skills so as to be able to apply that which has been learnt. Such an application can take place by the analysis of case studies and their interpretation and by an analysis of business events taking place around us.

The study of BP should enable a learner to develop analytical ability and use it to understand the situation in a given case or incident. The study of BP should lead to the skill of identifying the factors relevant in decision making. SWOT analysis and the suggestions of appropriate strategies, policies form the core content of general mgt decision making

The above objectives, in terms of skills increase the mental ability of the learner and enables them to link theory and practice. Such an ability is important in managerial decision making where a large number of factors have to be considered at once to suggest appropriate action. As a part of business policy study, case analysis leads to the development of oral as well as written communication skills.

IN TERMS OF ATTITUDE:

The attainment of knowledge and skill objectives should lead to inculcation of an appropriate attitude among the learners. The most important attitude developed through study of BP is that of a generalist. The generalist attitude enables the learner to approach and assess a situation from all possible angles.

A generalist specially in the area of long range planning has to work with incomplete information, but he still goes ahead with whatever information is available whereas a functional specialist may post pone the decision in the absence of complete information.

For a general manager information and suggestions are important to possess a liberal attitude and to be receptive to new ideas. Dogmatism with regard to techniques should be replaced with a practical approach to decision making for problem solving.In this way a general mgr can act like a professional manager.

It is important to have the attitude to go beyond and think when faced with a problematic situation. Developing a creative and innovative attitude is the hall mark of a gen mgr who refuses to be bound by precedents and stereo typed decisions.