Business Policy - Definition and Features; Difference between Policy and Strategy (2024)

FAQs

What is the difference between business policy and strategy? ›

A Strategy is a special plan made to achieve a market position and to reach the organizational goals and objectives, but Policy refers to a set of rules made by the organization for rational decision making. Many people have confusion regarding the two terms, but they are not alike.

Key Differences Between Strategy and Policy

The strategy is the best plan opted from a number of plans, in order to achieve the organisational goals and objectives. The policy is a set of common rules and regulations, which forms as a base to take the day to day decisions.

Business policy is closely related to strategic management because the policies are essentially the strategies put into action. If the strategy calls for an increased market share, for instance, the business policies would be constructed to match this strategy.

Although different businesses may have different policies, any business policy has the same seven features. A business policy must be specific, clear, uniform, appropriate, simple, inclusive and stable.

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.

A policy strategy focuses the work of your organization by aligning it with the policy objectives that you are pursuing. This can help drive the type of work your organization undertakes, direct how resources are used, and how you work with your partners.

A business strategy refers to all the decisions taken, and actions undertaken by a business for achieving the larger vision. Knowing what business strategy is and how to execute it properly can help businesses become market leaders in their domain.

First you formulate a policy which is the principles or the protocols to guide decisions and next we can make a strategy and finally a detailed plan to achieve the strategy.

A policy is a set of ideas or plans that is used as a basis for making decisions, especially in politics, economics, or business. ... plans which include changes in foreign policy and economic reforms.

What is the definition of a strategy? ›

A strategy describes how the ends (goals) will be achieved by the means (resources). Strategy can be intended or can emerge as a pattern of activity as the organization adapts to its environment or competes. It involves activities such as strategic planning and strategic thinking.

Four types of policies include Public Policy, Organizational Policy, Functional Policy, and Specific Policy. Policy refers to a course of action proposed by an organization or individual.

Business policies are an important tool to ensure that the business operates at maximum efficiency. Written in these policies is the blueprint for the whole organization's expected behavior, role, and reporting.

Organizational policies and strategy provide guidelines for action. Unfavorable and ambiguous policies or strategy may affect the functioning of the employees adversely and they may experience stress. Organization wide policies are designed to achieve major organizational objectives.

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.

The four main types of public policy include regulatory policy, constituent policy, distributive policy, and redistributive policy. These four policy types differ in terms of what their goals are, and who they impact or benefit.

Examples include government policies that impact spending for welfare, public education, highways, and public safety, or a professional organization's benefits plan.

Examples of company policies include employee conduct policies, dress code, attendance policies, equal opportunity policies, and other areas related to the terms and conditions of employment.

What are the 3 types of strategy? ›

Mintzberg developed his 5 Ps of Strategy as five different definitions of (or approaches to) developing strategy. He first wrote about the 5 Ps of Strategy in 1987. Each of the 5 Ps is a different approach to strategy. They are Plan, Ploy, Pattern, Position, and Perspective.

A strategy is the direction and scope of an organization in the long run. It helps an organization achieve an advantage over its competitors through an efficient configuration of resources. It also ensures that the market's needs are met along with the expectations of all stakeholders.

As overarching managerial discipline, strategy provides an integrative overview of the most important internal and external factors to be taken into account by an organization. Such overview helps to align the organization both internally as well as with its external environment. Strategy guides organizational action.

This is important as it allows the reader to see the Policy in a wider context and understand the rationale behind it. (2) This section is aimed at providing definition for terms that have particular meaning or have a need for some interpretation related to the particular policy (i.e. unique to that policy).

Policies provide guidance, consistency, accountability, efficiency, and clarity on how an organization operates. This offers members of the co-operatives guidelines and principles to follow.

used to say that telling the truth is better than lying even when it is hard to do. He realized honesty is the best policy and told them what really happened to their car.

What is the definition of strategy PDF? ›

Definitions of strategy

Strategy is a rule for making decisions under conditions of partial ignorance whereas. policy is a contingent decision. Business strategy is the broad collection of decision. rules and guidelines that define a business' scope and growth direction.

The three types of public policies are regulatory, restrictive, and facilitating policies.

A strategy refers to an organization's long-term goals and how it plans to reach them. In other words, it shows the path to achieve the defined vision. A tactic refers to the specific actions taken to reach the set goals in line with the strategy.

Strategy provides a vision of the future, confirms the purpose and values of an organization, sets objectives, clarifies threats and opportunities, determines methods to leverage strengths, and mitigate weaknesses (at a minimum). As such, it sets a framework and clear boundaries within which decisions can be made.

A mission statement is a concise explanation of the organization's reason for existence. It describes the organization's purpose and its overall intention. The mission statement supports the vision and serves to communicate purpose and direction to employees, customers, vendors and other stakeholders.

First you formulate a policy which is the principles or the protocols to guide decisions and next we can make a strategy and finally a detailed plan to achieve the strategy.

Examples of company policies include employee conduct policies, dress code, attendance policies, equal opportunity policies, and other areas related to the terms and conditions of employment.

Examples of business strategy

A business strategy is a plan that outlines how a company will achieve its goals. There are many different business strategies, but some common examples include cost leadership, differentiation, and focus.

The purpose of policies is to help your organization tie together your mission, vision, values, and culture into clearly written and easily accessible documents for all employees to take to heart.

What are the 7 elements of strategy? ›

Here are the 7 basic elements of a strategic plan: vision, mission, SWOT analysis, core values, goals, objectives, and action plans.

Mintzberg developed his 5 Ps of Strategy as five different definitions of (or approaches to) developing strategy. He first wrote about the 5 Ps of Strategy in 1987. Each of the 5 Ps is a different approach to strategy. They are Plan, Ploy, Pattern, Position, and Perspective.

Summary : There are only five business strategies: cost, quality, distribution, technology, and intellectual property (IP). All business strategies break down into these five, or some combination of them. As a general principle, focusing your organization on one is the easiest to execute.

When leaders formulate a strategy, it helps them understand their strengths and weaknesses. This way, they can capitalize on what they are good at and improve on their weaker aspects. It ensures that every aspect of a business is planned. This means more efficiency and better and more effective plans.

Furthermore, there are four basic characteristics of a successful strategy: goals that are simple, consistent and long term; profound understanding of the competitive environment; objective appraisal of the resources; and, effective implementation.