Purpose and Objective of Business policy03/11/2022 0 By indiafreenotes
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.
The term “Business Policy” comprises of two words, Business and Policy. Business as we know means exchange of goods and services for increasing utilities. Policy may be defined as “the mode of thought and the principles underlying the activities of an organization or an institution.” Policies are general statements of principles which guide the thinking, decision- making and actions in an organization.
Business objectives are generally the endpoints associated with plans designed to reach company goals. Both policies and business objectives may be formulated into plans as determined by a business organization. While the objective is the end to a plan, policy is the mode and manner used to reach each objective
Purpose of Business Policy:
a) Specific: Policy should be specific/definite. If it is uncertain, then the implementation will become difficult.
b) Clear: Policy must be unambiguous. It should avoid use of jargons and connotations. There should be no misunderstandings in following the policy.
c) Reliable/Uniform: Policy must be uniform enough so that it can be efficiently followed by the subordinates.
d) Appropriate: Policy should be appropriate to the present organizational goal.
e) Simple: A policy should be simple and easily understood by all in the organization.
f) Inclusive/Comprehensive: In order to have a wide scope, a policy must be comprehensive.
g) 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.
h) Stable: Policy should be stable else it will lead to indecisiveness and uncertainty in minds of those who look into it for guidance.
Getting and Staying Profitable
Maintaining profitability means making sure that revenue stays ahead of the costs of doing business. Focus on controlling costs in both production and operations while maintaining the profit margin on products sold.
Excellent Customer Service
Good customer service helps you retain clients and generate repeat revenue. Keeping your customers happy should be a primary objective of your organization.
Productivity of People and Resources
Employee training, equipment maintenance and new equipment purchases all go into company productivity. Your objective should be to provide all of the resources your employees need to remain as productive as possible.
Mission-driven Core Values
Your company mission statement is a description of the core values of your company. It is a summary of the beliefs your company holds in regard to customer interaction, responsibility to the community and employee satisfaction. The company’s core values become the objectives necessary to create a positive corporate culture.
Employee Attraction and Retention
Employee turnover costs you money in lost productivity and the costs associated with recruiting, which include employment advertising and paying placement agencies. Maintaining a productive and positive employee environment improves retention.
Growth is planned based on historical data and future projections. Growth requires the careful use of company resources such as finances and personnel.
Dealing with Change
Change management is the process of preparing your organization for growth and creating processes that effectively deal with a developing marketplace. The objective of change management is to create a dynamic organization that is prepared to meet the challenges of your industry.
Maintaining a Healthy Cash Flow
Even a company with good cash flow needs financing contacts in the event that capital is needed to expand the organization. Maintaining your ability to finance operations means that you can prepare for long-term projects and address short-term needs such as payroll and accounts payable.
Reaching the Right Customers
Marketing is more than creating advertising and getting customer input on product changes. It understands consumer buying trends, being able to anticipate product distribution needs and developing business partnerships that help your organization to improve market share.
Staying Ahead of the Competition
A comprehensive analysis of the activities of the competition should be an ongoing business objective for your organization. Understanding where your products rank in the marketplace helps you to better determine how to improve your standing among consumers and improve your revenue.