A business policy is a document prepared by the Board of Directors of a company that deals with strategic objectives, business operations and policies. Business policy is basically the study of these roles and duties of senior level management, the most important issues impacting organizational performance and the most critical decisions affecting the company in the long term. It is designed to deal with various aspects of the company’s operations and affairs that are relevant to the interests of stakeholders.
Strategic objectives are generally formulated in terms of what the end results should be for the overall success of an organization. The main purpose of formulating a business policy is to define and lay down the plans necessary for achieving these goals, which are not only relevant to the short term but also to the strategic planning. The major issues that are usually addressed by such documents are the definition of the organization’s role, functions, objectives and process. A comprehensive description of the organization’s internal structures and processes as well as those of its external relationships is also included.
Policies lay down rules governing the manner in which various business processes take place. These processes include production, sales, marketing, customer service and research and development. While policies address these process in general terms they more often than not, deal with specific processes related to particular areas or functional areas of a business organization. It is for this reason that policies cover more than just the overall functioning of an organization.
Besides addressing the day to day functioning of an organization, business policies are also designed to address long-term organizational goals. These include development of strategic management plans and operations, rationalization of investment and human resource policies. Such documents are therefore very important for the proper functioning of any organization. A key factor that determines the significance of such documents lies in their ability to address long-term goals and their connection to organizational goals.
Business policies also play a key role in aligning an organization’s effort with its strategic objectives. They lay down procedures for ensuring that a business’s resources are employed for maximum productive output. They thus form an essential component of the overall strategy. Business policies thus form an important area of strategic management. Strategic management seeks to achieve certain business outcomes. These outcomes are generally long term and so they too are subject to change on a regular basis.
Business policies can thus affect the way in which employees interact with one another and with management as a whole. In other words, they determine how employees interact with one another and how effective the interactions are. This means that the effectiveness of business policies is dependent on how effectively they are implemented by employees and that employees themselves adopt and adapt the policies adopted by the organization as a whole.