Definition of business

policy and an over view

of business policies.
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.
Examples of Business Policy
HR Policy
Hiring and Firing
Employee Profile
Training
Transfers
Promotions
Wages
Incentives and Bonus
Sample policy for Firing an Employee
Sample Policy 1:
“There are two ways to terminate employment:
voluntary and involuntary. Voluntary terminations
include resignations, retirement, failure to return
from leave, failure to report to work for three
consecutive days without notifying the company, and
completion of a contract. Involuntary terminations
include layoffs and disciplinary action. Employees
who want to leave in good standing will give their
supervisor at least two weeks’ notice.”
Sample Policy 2:
“Certain conduct is so repugnant to the policies of XYZ that it will lead to immediate
discharge. Such conduct includes, but is not limited to:
Reporting for work under the influence of alcohol or controlled substances.
Possession, use, sale or distribution of controlled substances on XYZ property.
Theft.
Engaging in harassing conduct.
Fabrication of business documents, including resumes and expense reports.
Excessive absenteeism or tardiness.
Fighting on XYZ premises.
Abuse of equipment (including excessive personal use of office equipment).
Insubordination.
Gambling on XYZ premises.
Marketing Policy
A marketing policy is similar to a business
code of ethics. Although some are more
specific than others, each addresses
aspects of responsible marketing the
business considers most important.
For example
•Friendly’s Ice Cream marketing policy focuses
mainly on nutrition guidelines and guidelines for
marketing to children,
• Coca-Cola’s marketing policy, which also
focuses on children, includes guidelines for the
different marketing channels it uses as well as
for product placement in schools and youth
organizations.
 Distribution channels examples
B2B and B2C companies can sell through a single distribution
channel or through multiple channels that may include:
Wholesaler/Distributor.
Direct/Internet.
Direct/Catalog.
Direct/Sales Team.
Dealer.
Retail.
Examples of Business Policy
FINANCIAL POLICY

Revenues
Expenditures
Operating budget
Capital Asset Management
Long Term Financial Planning
Investment
Procurement etc.
 FINANCIAL MANAGEMENT POLICIES AND
PROCEDURES
1. GENERAL PURPOSE The purpose of these policies is to establish
guidelines for developing financial goals and objectives, making financial
decisions, reporting the financial status of the Agency, and managing the
Agency’s funds.
2. FINANCIAL RESPONSIBILITIES It is the responsibility of the Board of
Directors to formulate financial policies and review operations and
activities on a periodic basis. The Board delegates this oversight
responsibility to the Treasurer of the Board and the Finance Committee
of which the Treasurer is the Chair. This responsibility is shared through
delegation with the Agency CEO and the Head of Finance (or CFO).
3. CONFLICT OF INTEREST Members of the Board of Directors are
prohibited from activities that might present conflicts of interest.
The powers of directorship may not be used to personally benefit
the Director at the corporation’s expense. If a Director has a
financial interest in a corporate transaction, the Director must
fully disclose the interest and abstain from voting. Loans to
Directors are prohibited.
4. CASH FUND A cash fund of one-quarter to one-third of the
Agency’s annual operating expenses shall be maintained. When
the fund balance falls below this minimum, the Finance
Committee and the Board shall develop a plan and budget for
rebuilding it.
Features of Business Policy

Specific- Policy should be specific/definite. If it is

uncertain, then the implementation will become difficult.
Clear- Policy must be unambiguous. It should avoid use of
jargons and connotations. There should be no
misunderstandings in following the policy.
Reliable/Uniform- Policy must be uniform enough so that
it can be efficiently followed by the subordinates.
Features of Business Policy cont.
Appropriate- Policy should be appropriate to
the present organizational goal.
Simple- A policy should be simple and easily
understood by all in the organization.
Inclusive/Comprehensive- In order to have a
wide scope, a policy must be comprehensive.
Features of Business Policy cont.
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.
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-
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.
Policy formulation is responsibility of top level
management. While strategy formulation is basically
done by middle level management.
Policy deals with routine/daily activities essential for
effective and efficient running of an organization. While
strategy deals with strategic decisions.
Policy is concerned with both thought and actions. While
strategy is concerned mostly with action.
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.
Policies serve several important
functions:
Communicate values and expectations for
how things are done at your organization
Keep the organization in compliance with
legislation and provide protection against
employment claims
Document and implement best practices
appropriate to the organization
Support consistent treatment of staff,
fairness and transparency
Help management to make decisions that
are consistent, uniform and predictable
Protect individuals and the organization from
the pressures of expediency
 Defining policy and procedure
A policy is a formal statement of a principle or rule that
members of an organization must follow. Each policy
addresses an issue important to the organization's
mission or operations.
A procedure tells members of the organization how to
carry out or implement a policy. Policy is the "what" and
the procedure is the "how to".
Policies are written as statements or rules. Procedures
are written as instructions, in logical steps.