Business policy refers to the guidelines developed by an organization to govern its actions and define the limits within which decisions must be made. It is a formal statement outlining the guiding principles and procedural framework an organization follows to achieve its objectives and manage its operations. Business policy is the study of the roles and responsibilities of top-level management, the significant issues affecting organizational success, and the decisions affecting the organization in the long run.
Features of a business policy include being specific, stable, flexible, and economical and efficient. Scopes of business policy include covering all aspects of business, including the functions and responsibilities of senior employees, determining the future course of action, defining the needs, and including the resources by which the organization can achieve its goals.
An effective business policy must have the following features:
- Specific: Policy should be specific/definite. If it is uncertain, then the implementation will become difficult.
- Stable: Policy should be stable else it will lead to indecisiveness and uncertainty in the minds of those who look into it for guidance.
- Flexible: A business policy can be flexible in changing parameters in the business, the industry, or the marketplace.
- Economical and Efficient: Policy should be economical and efficient in terms of operations and cost.
Business policies can be classified in various ways based on their scope, level of operation, and who they apply to. Some common types of business policies include organizational or corporate policies, functional policies, and executive policies.
The importance of business policy lies in its ability to define the scope and direction in which a businesss employees make decisions, and a businesss executive management. Business policies are important and affect everything from legal liabilities to employee satisfaction and a positive public image. Policies make sure everyone is on the same page when it comes to expectations of certain things, and a well-crafted policy can raise the overall morale of an enterprise.
