The Chief Executive Officer (CEO) is accountable for managing the overall business organization. He is considered as the ultimate salesperson to the customers, main spokesperson to the market, and the leader in the business organization. Having such accountabilities is a real burden to business organization leaders, particularly if they were founders of their business desiring the “freedom they experienced during the organizations” formative years. During the 1960s, Kenneth Andrews first defined the concept of corporate strategy as “the goals of the firm and the pattern of policies and programs designed to achieve those goals”. During this time, the idea of corporate strategy was a novel idea.
II. Concept and Definition of Business Policy as a Field of Study
Business policy, as a field of business management, is the study of the: 1. Functions and responsibilities of top management.
2. Major problems that affect the success and failure of the total organization 3. Determine the direction of the organization.
Importance of Studying Business Policy
1. Deals with the constraints and complexities of real-life businesses. In contrast, the functional area courses are based on a structured, specialized and well-developed body of knowledge, resulting from a simplification of the complex overall tasks and responsibilities of the management.
2. Cuts across the narrow functional boundaries
It draws upon a variety of sources-other courses in the management curriculum and a wide variety of disciplines, like economics, sociology, psychology, political science, and so on. In so doing, business policy offers a very broad perspective to its students. 3. Makes the study and practice of management more meaningful One can view business decision-making in its proper perspective. 4. Create an understanding of how policies are formulated. This helps in creating an appreciation of the complexities of the environment that the senior management faces in policy formulation. 5. Managers become more receptive to the ideas and suggestions of the senior management. Such an attitude on the part of the management makes the task of policy implementation simpler. 6. Managers feel themselves to be a part of a greater design. They become capable of relating environmental changes to policy changes within an organization. 7. A basic framework for understanding strategic decision making Such a framework, combined with the experience gained while working in a specialized functional area, enables a person to make preparations for handling general management responsibilities. 8. Improvement in job performance.
As a middle-level manager, a person is enabled to understand the linkage between the different subunits of an organization and how a particular subunit fits into the overall picture. This has far-reaching implications for managerial functions like coordination and communication, and also for the avoidance of inter-departmental conflicts
9. Integrate the knowledge and experience gained in various functional areas of management. It enables the learner to understand and make sense of the complex interaction that takes place between different functional areas.
Characteristics of business policy
The following are the main features of business policies:
(a) Policies are always in writing
The policies in general are written procedures which specify limits or guidelines for perfection of work to be undertaken in future. (b) Directions towards goal achievements
A policy is formulated in context of organizational objectives. Therefore, the policy tries to contribute towards the achievements of organizational achievements by specifying limits. (c) Persuasive Function
Formulation of policy is a function of all managers whether manager of marketing, personnel, finance department etc. (d) Policy Differs from Strategy
A layman may think “there is no difference between policy and...