A] Policy

• Policies are predetermined guidelines, laid down by the senior management of an organisation to guide the thinking, decision-making & actions of managers and their subordinates in implementing on organisation’s strategy.

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• Purpose of Policies:

1. Framework to facilitate strategic decision-making.

2. Control & reinforce the implementation of functional strategies.

3. Uniform handling of similar situations occurring in different functional areas.

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• Different policies are:

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1. Personnel Policies-

• These relate to the personnel system, organisational & employee characteristics & industrial relations

• The major decisions & issues involved in this are:

1. Manpower planning, selections, development, compensation, etc.

2. Working condition, availability of developmental opportunities for employees.

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2. Marketing Policies-

• These policies are based on 4P’s of marketing mix (Product, Price, Place & Promotion)

• It includes:

1. Product Policy which relates to its quality, features, packaging, branding etc.

2. Pricing Policy which relates to Price setting, credit terms, payment period & so on.

3. Place or Distribution Policy which relates to distribution channels, logistics, coverage of markets.

4. Promotion Policy or Promotional Mix

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3. Financial Policies-

• The significant plans & policies that need to be formulated in Financial aspects are:

1. Sources of funds which relates to procurement of capital, reserves, relationship with lenders & banks.

2. Usage of funds which relates to capital investment, fixed assets acquisition, dividend decisions

3. Management of funds which relates to financial accounting, cost control & reduction, tax planning, etc