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    SM-IV - Corporate Policy

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    Mudit Bansal
    Corporate policy is a documented set of broad guidelines formulated by a firm's board of directors that lays out the firm's response to known situations and circumstances. It determines strategy formulation and implementation and directs plans, decisions, and actions toward achieving objectives. There are differing views on whether corporate policy and strategy are synonymous or whether policy implements strategy. Corporate policy is important as it provides guidance for decision-making, delegation, focus of activities, stability, problem-solving, resource use, image, objectives, and coordination. Without clear policies, efficiently meeting objectives and directing business activities would be difficult.

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    SM-IV - Corporate Policy

    Uploaded by

    Mudit Bansal
    26 views14 pages
    Corporate policy is a documented set of broad guidelines formulated by a firm's board of directors that lays out the firm's response to known situations and circumstances. It determines strategy formulation and implementation and directs plans, decisions, and actions toward achieving objectives. There are differing views on whether corporate policy and strategy are synonymous or whether policy implements strategy. Corporate policy is important as it provides guidance for decision-making, delegation, focus of activities, stability, problem-solving, resource use, image, objectives, and coordination. Without clear policies, efficiently meeting objectives and directing business activities would be difficult.

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    SM-IV- Corporate Policy

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    Corporate policy is a documented set of broad guidelines formulated by a firm's board of directors that lays out the firm's response to known situations and circumstances. It determines strategy formulation and implementation and directs plans, decisions, and actions toward achieving objectives. There are differing views on whether corporate policy and strategy are synonymous or whether policy implements strategy. Corporate policy is important as it provides guidance for decision-making, delegation, focus of activities, stability, problem-solving, resource use, image, objectives, and coordination. Without clear policies, efficiently meeting objectives and directing business activities would be difficult.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    26 views14 pages

    SM-IV - Corporate Policy

    Uploaded by

    Mudit Bansal
    Corporate policy is a documented set of broad guidelines formulated by a firm's board of directors that lays out the firm's response to known situations and circumstances. It determines strategy formulation and implementation and directs plans, decisions, and actions toward achieving objectives. There are differing views on whether corporate policy and strategy are synonymous or whether policy implements strategy. Corporate policy is important as it provides guidance for decision-making, delegation, focus of activities, stability, problem-solving, resource use, image, objectives, and coordination. Without clear policies, efficiently meeting objectives and directing business activities would be difficult.

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    © All Rights Reserved
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    Download as pptx, pdf, or txt
    of 14

    TOPIC 4: Corporate Level Strategy

    Corporate Policy

    Dr. Vijay Kumar Pandey


    Professor, Symbiosis Law School, Noida
    MBA (Marketing), M.Phil. (Management), PhD (Management),
    UGC NET (Management)
    Introduction

    • According to Koontz and O’Donnell, “Policies are plans in that they


    are general statements of principles which guide the thinking,
    decision making and action in an organization.”

    • Corporate Policy is usually a documented set of broad guidelines


    formulated after an analysis of all internal and external factors that
    can affect a firms objective, operations & plans.
    • Formulated by the firms board of directors, corporate policy lays
    down the firm’s response to know and knowable situations and
    circumstances.
    • It also determines the formulation and implementation of strategy
    and directs and restricts the plans, decisions and actions of the
    firm’s officers in achievement of its objectives.
    Corporate policy helps the manager in identification of the solutions
    to the problem. It provides the framework in which he has to take
    the decisions. The distinct views regarding policies can be
    categorized into the following three broad groups:

    The first category holds the opinion that policy and strategy are
    synonymous. Corporate policy has been defined by William
    Glueck as “Management policy is long range planning. For all
    practical purposes, management policy, long range planning and
    strategic management mean the same thing.”
    However, this view is quite controversial as strategy and corporate
    policy do not mean the same thing. Strategy includes awareness of the
    mission, purpose and objectives. It has been defined as, “the
    determination of basic long term goals and objectives of an enterprise,
    and the allocation of resources necessary to carry out these goals”,
    while policies are statements or a commonly accepted
    understandings of decision making and are thought oriented
    guidelines. Therefore, strategy and corporate policy cannot be used
    interchangeably as there is a clear line of differentiation between the
    two terms.
    The second group of experts view corporate policy as the process of
    implementing strategy. In the words of Frank I. Paine and William
    Naumes, “Policies guide and channel the implementation of strategy
    and prescribe how processes within the organization will function and
    be administered. Thus the term policy refers to organization
    procedures, practices and structures, concerned with implementing
    and executing strategy.”
    Supporting this view, Robert Mudric has defined corporate policy as
    “A policy establishes guidelines and limits for discretionary action by
    individuals responsible for implementing the overall plan.” The view
    represents corporate policy to be:
    • Restrictive
    • Laying stress only on the tactical side and ignoring the strategic
    dimension.
    The third view considers corporate policy to be decisions
    regarding the future of an organization. In this view, Robert J.
    Mockler defines corporate policy as, “Strategic guidelines for
    action. They spell out what can and what cannot be done in all
    areas of a company’s operation.” According to the policy manual
    of General Electric Company, “Policy is definition of common
    purpose for organization components of the company for benefit
    of those responsible for implementation, exercise discretion and
    good judgment in appraising and deciding among alternative
    courses of action.”
    The views of different management scholars differ because of following
    reasons:
    • There is no clear differentiation of policy from other elements of
    planning.
    • There are different policies made at different levels of management
    for directing executives.
    • Corporate policy encompasses and relates to the entire process of
    planning
    IMPORTANCE OF CORPORATE POLICY IN TODAY’S SCENARIO

    For effective management, the solving of day-to-day problems is not


    enough. What is required is the proper assessment of all kinds of
    activities and operations taking place in the organization. After the
    assessment, they are to be defined in clear cut way, so that objectives
    could be met. For definition of the business activities and their efficient
    implementation, the selection and application of policies is required.
    Without a guiding light, it would become very difficult for the business
    to go on and policies act as guide and facilitate the manager to direct all
    activities towards the same goals.
    The importance of Corporate Policy may be well seen in following
    areas:
    (a) Policies are needed to carry out the business activities in a smooth
    manner.
    (b) They provide a clear cut course of attainment of business
    objectives.
    (c) If a paper explicit policy has been formulated, many of the details
    could be conveniently handled by the subordinates and management
    would not unnecessarily waste its time and energy in doing them
    (d) Policies provide a guide and frame work for decision making.
    (e) Policies encourage delegation of power of decision making.
    (f) Good policies provide a direction in which all management
    activities are focused.
    (g) Policies provide stability to the action of the members of the firm.
    (h) Policies deter the subordinates to rethink on the day to day issues
    and thus avoid repetitive analysis of issues.
    (i) Policies facilitate evaluation of performance by acting as a
    standard.
    (j) They help in solving the problems optimum utilization of scarce
    resources.
    (k) The sound policies help in building good public image of the
    business.
    (l) Policies provide the firm with clear objectives with which the
    managers can decide about the future course of action.
    (m) They act as tool for coordination and control.
    Reference
    Johri, D. C., Saraf, V., & Ghosh, A. (2014). Corporate Policy-its Determinants and Importance in Present
    Corporate Scenario. International Journal on Emerging Technologies, 5(1), 14.

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