DWARAKA DOSS GOVERDHAN DOSS VAISHNAV COLLEGE

DEPARTMENT OF HUMAN RESOURCE MANAGEMENT

Business Policy and Strategic Management

Presenter: Mansi Iyer, Ishan Bant, Venkatakrishnan Date: 20.02.2015

Faculty Name: Prof. Sayee Kumar. V
Topic: Business Policy and Corporate Strategy
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Definition of Business Policy

Business Policy defines the scope or spheres within which decisions can be taken by the
subordinates in an organization. It permits the lower level management to deal with the problems
and issues without consulting top level management every time for decisions. Business policies
are the guidelines developed by an organization to govern its actions. They define the limits
within which decisions must be made. Business policy also deals with acquisition of resources
with which organizational goals can be achieved. Business policy is the study of the roles and
responsibilities of top level management, the significant issues affecting organizational success
and the decisions affecting organization in long-run.

Corporate strategy

The overall scope and direction of a corporation and the way in which its various business
operations work together to achieve particular goals.

Features of Business Policy

An effective business policy must have following features-

1. Specific- Policy should be specific/definite. If it is uncertain, then the implementation

will become difficult.
2. Clear- Policy must be unambiguous. It should avoid use of jargons and connotations.
There should be no misunderstandings in following the policy.
3. Reliable/Uniform- Policy must be uniform enough so that it can be efficiently followed
by the subordinates.
4. Appropriate- Policy should be appropriate to the present organizational goal.
5. Simple- A policy should be simple and easily understood by all in the organization.
6. Inclusive/Comprehensive- In order to have a wide scope, a policy must be
comprehensive.
 7. Flexible- Policy should be flexible in operation/application. This does not imply that a
policy should be altered always, but it should be wide in scope so as to ensure that the
line managers use them in repetitive/routine scenarios.
8. Stable- Policy should be stable else it will lead to indecisiveness and uncertainty in
minds of those who look into it for guidance.

Difference between Policy and Strategy

The term “policy” should not be considered as synonymous to the term “strategy”.
The difference between policy and strategy can be summarized as follows-

1. Policy is a blueprint of the organizational activities which are repetitive/routine in nature.

While strategy is concerned with those organizational decisions which have not been
dealt/faced before in same form.
2. Policy formulation is responsibility of top level management. While strategy formulation
is basically done by middle level management.
3. Policy deals with routine/daily activities essential for effective and efficient running of an
organization. While strategy deals with strategic decisions.
4. Policy is concerned with both thought and actions. While strategy is concerned mostly
with action.
5. A policy is what is, or what is not done. While a strategy is the methodology used to
achieve a target as prescribed by a policy.

Eight elements to create a winning corporate strategy

1. Business definition

This is the classic Drucker question: “What is my business and how is it positioned in the
competitive market?” For non-profits and governments, the question might be, “What is our
mandate?”

2. Financial management

This focuses on the sourcing, allocation and management of the financial capital the organization
has at its disposal. The strategists must consider performance and controls as they develop a
financial management strategy.

3. Growth

This concentrates on the type and rate of the organization’s growth. This can involve not only
growing but also deciding to get smaller, perhaps by leaving certain markets. “Some companies
want to stay the same size, which is the toughest,” Alan Kennedy noted.

4. Marketing

This involves identifying and capturing customers, through value that will appeal to them.
Developing marketing strategy usually requires thinking through the balance between new and
old products, and between current products and new products. (In non-profits and governments,
where the term “marketing” might chafe, “communications” could substitute.)

5. Organizational management

This requires thinking through the sourcing, allocation, and management of the human resources
of the enterprise – the HR strategy.

6. R&D/technology

This is the development and management of technology and intellectual property. You could use
it for competitive advantage (as in pharmaceuticals, for example), or for productivity (as when
introducing a new computer system). Research might be needed to develop the technology, or it
might be purchased.

7. Risk

This illuminates the possible occurrence of the unacceptable, which could include lost
opportunities as well as threats. Strategists can assemble the risks on a grid that indicates the
likelihood of it occurring (from high to low) and the severity of impact (again, high to low).

8. Service delivery

The organization must take its marketing promise and deliver to the intended audience (through
manufacturing, production or service). Key issues to consider are effectiveness and efficiency.

The authors note that each of these eight elements is actually a strategy in itself, and that
companies usually have a senior manager charged with each one (chief financial officer, chief
marketing officer, chief risk officer).Their most intriguing insight, however, is that organizations
must arrange their strategies into the following array: One strategy, which they call the Alpha,
will be the ultimate driving force and focus for the organization; two or three strategies are the
Influencers, because they provide the most guidance and constraint on that Alpha; and the other
strategies are Enablers, helping it all to work.

References:

1 http://www.managementstudyguide.com/business-policy.htm

2 http://www.businessdictionary.com/definition/corporate-strategy.html

3 http://www.theglobeandmail.com/report-on-business/careers/management/eight-elements-to-
create-a-winning-corporate-strategy/article11996557/

Questions
Part-A
1. What is Business policy?
2. What is corporate Strategy?
Part - B
1. What are the key features of business policy?
2. Differentiate between Business policy and corporate strategy?

Part- C
1. Explain in detail the eight elements to create corporate strategy.

Key words:- Blue print, Intellectual property, Effective, Efficient.