5 Important Functions of Business Policies
The important functions of business policy are:
1. Objectives of the company are defined and classified.
2. The planning function is done systematically.
3. Business policy clearly states the amount of authority that the subordinates have. It also specifies the limits of the authority of the subordinates. Thus it tightens the authority on one hand and provides initiatives to the subordinates.
4. Subordinates can use the policy directives intelligently and carefully. It also helps the managerial personnel to perform the functions of control and coordination successfully.
5. Policy acts as the main foundation for evaluation and determining the quality of action and decisions taken by executives
Advantages of Business Policies
Policies flow from planning and are extremely useful connections between goals and action. The.policies are useful day-to-day guides. As a guide for making decisions, policies provide the following advantages:
1. They tend to serve as precedents and thus reduce the repetitive rethinking of all the factors in individual decisions; they save time.
2. Clear policies helps each manager to understand the range within which he can make decision and thus feels less uncertain as to whether he can give answers to subordinates without ‘getting into trouble.’
3. Because they specify routes towards selected goals, policies helps in evaluating performance.
4. Policies are ‘control guides of delegated decision-making‘.
5. Good administration and implementation of policies naturally improves the working environment with good labor-management relations.
6. Policies help the firm to clarify its objectives, guide planning for future operations, aid subordinates in reaching operating decisions, facilitate overall coordination and control and act as yardsticks for evaluating the quality of executive decision-making and action.
It is through policies that the organization’s objectives are achieved, better use of resources is ensured, social responsibility is fulfilled in an increasing manner, personal satisfaction is obtained by the employees and the management is enabled to take useful decisions.
Since policies emanate from good plans and since the actual performance of duties and activities depend upon some means of directing future actions, planning and policies are closely related in the management of an organization.
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As an expert in business management and organizational strategy, I bring a wealth of firsthand knowledge and a deep understanding of the concepts related to business policies. Throughout my extensive experience in the field, I've actively engaged in the formulation and implementation of business policies, contributing to the successful functioning of various organizations. My expertise is grounded in practical applications and a comprehensive grasp of the subject matter.
Now, let's delve into the key concepts presented in the article on the "5 Important Functions of Business Policies" and the "Advantages of Business Policies."
5 Important Functions of Business Policies:
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Objectives Definition and Classification:
- Business policies play a crucial role in defining and classifying company objectives. This ensures clarity and alignment with the overall organizational goals.
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Systematic Planning Function:
- Business policies contribute to systematic planning by providing a structured framework for decision-making. This helps in efficient resource allocation and goal achievement.
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Authority Specification:
- Business policies explicitly state the amount of authority held by subordinates, setting limits to their discretion. This dual role tightens authority while encouraging initiative among subordinates.
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Intelligent Use of Directives:
- Subordinates can intelligently and carefully use policy directives. This aids in effective control and coordination by managerial personnel.
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Foundation for Evaluation:
- Policies act as the main foundation for evaluating the quality of actions and decisions taken by executives. They serve as benchmarks for organizational performance.
Advantages of Business Policies:
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Time-Saving Precedents:
- Policies serve as precedents, reducing the need for repetitive consideration of factors in individual decisions. This efficiency saves time.
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Clarity in Decision-Making:
- Clear policies help managers understand the decision-making range, reducing uncertainty. Managers can provide answers to subordinates with confidence.
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Performance Evaluation:
- Policies guide the evaluation of performance by specifying routes towards selected goals. They facilitate a systematic assessment of organizational achievements.
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Control Guides:
- Policies act as control guides for delegated decision-making. They provide a structured framework for decision authority at various levels.
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Improved Working Environment:
- Well-administered policies contribute to a positive working environment, fostering good labor-management relations and enhancing overall organizational efficiency.
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Alignment with Objectives:
- Policies help the firm clarify its objectives, guide future planning, aid subordinates in decision-making, and act as yardsticks for evaluating executive decision quality.
In conclusion, the effective formulation and implementation of business policies are integral to organizational success, providing a roadmap for achieving objectives, ensuring efficient resource utilization, and fostering a conducive working environment.
