Steps Involved in Framing Business Policies
Policy formulation is the process of designing the
policy. The major function of designing the policy relies upon the managers.
Policy framing is one of the phases of strategic planning in the organisation.
It is based on the underlying objectives of the organisation. Framing and
monitoring the policy is one of the critical tasks in the organisation.
The process of framing policies consists of the following
steps:
— Definition
of purpose – The first step
towards framing policies includes the process of identifying the objectives and
the philosophy of the organisation. The purpose is to select the guidelines for
measuring the performance based on the organisation’s strengths and weaknesses,
its available resources and the personnel. The basic concept of the business
activities is defined in this phase.
Example – The perception of the garment company is to develop the
finest cloth at less cost. Adding to such a conceptual view, the company must
define the purpose in terms of guidelines needed for measuring the performance
and obtaining the desired targets.
— Preparation
of strategic intelligence –
This step involves analysing the internal environment of the organisation. The
strategic intelligence is the process of detailed description of what the
company is and assessing its sphere of operations. The prediction of the future
happenings including the opportunities and risks must be known because it lays
heavy impact on the company’s position in the market.
— Policy
alternatives – Alternating
policies must be identified and analysed once the objectives of the
organisation are defined. The managers recognise the problems faced by the
organisation and discover the alternative policies. This step is the central
phase of framing a policy. A list of policy alternatives is generated by
considering the probabilities of the problems faced by the organisation.
Example –
Inventory systems in Das n Das Company
The Das n Das Company invested on control systems to
avoid taking decisions on the routine matter regarding the orders, timings of
production, etc. In such a situation, many factors are considered by the top
level management to increase the production rate and the size of orders. Hence
meetings are held to discuss the implementation of the policy that suits the
best.
