Business Policy:
Business Policy refers to a set of guidelines, rules, and practices established by an organization to guide its actions and decisions. It provides a framework for making consistent and coherent choices that align with the organization’s overall objectives. Business policies serve as a foundation for day-to-day operations and contribute to the achievement of long-term goals.
Process of Strategic Management:
Strategic Management is the process of formulating, implementing, and evaluating strategies to achieve organizational objectives. It involves a series of interconnected steps:
- Environmental Analysis:
- Assess the external environment, including industry trends, market conditions, competition, regulatory factors, and technological advancements.
- Internal Analysis:
- Evaluate the organization’s internal strengths, weaknesses, resources, and capabilities. This includes assessing the company’s culture, structure, and operational efficiency.
- Strategy Formulation:
- Based on the insights from the environmental and internal analyses, develop a clear and feasible strategy. This may involve setting specific objectives, choosing competitive positioning, and identifying target markets.
- Strategy Implementation:
- Execute the chosen strategy by allocating resources, structuring operations, and setting up mechanisms for monitoring progress. This phase involves the actual execution of the plans.
- Strategy Evaluation and Control:
- Continuously monitor performance against strategic goals, compare actual results with planned outcomes, identify variances, and take corrective actions when necessary.
- Feedback and Adaptation:
- Incorporate feedback from the evaluation and control stage to make any necessary adjustments to the strategy or its implementation. This ensures that the strategy remains relevant and effective.
Levels at Which Strategy Operates:
Strategy operates at three primary levels within an organization:
- Corporate Level:
- At the highest level, corporate strategy focuses on the overall direction and scope of the entire organization. It involves decisions about which businesses to enter, divest, or merge. Corporate strategy defines the portfolio of businesses that the company will engage in.
- Business Level:
- Business-level strategy deals with how a company competes within a specific business or industry. It focuses on gaining a competitive advantage within a particular market segment. This level involves decisions regarding product offerings, target markets, and competitive positioning.
- Functional Level:
- Functional-level strategy pertains to specific functions or departments within an organization, such as marketing, finance, operations, and human resources. It outlines how each function contributes to achieving the broader business and corporate-level objectives.
These three levels of strategy are interconnected and must align with each other to ensure that the organization as a whole is working towards its overall mission and objectives. Each level of strategy plays a crucial role in contributing to the success and competitiveness of the organization.