Strategies and policies as applicable to organization


For years the military used the word “strategies’’ to mean grand plans made in the light of what it is believed an adversary might or might not do. While the term “strategies� still usually has a competitive implication, managers increasingly use it to reflect broad areas of an enterprise operation.

Three definitions are indicative of the most common usages of the term strategies:

1. General programs of action and deployment of resources to attain comprehensive objectives.

2. The program of objectives of an organization and their changes, resources used to attain these objectives, and policies governing the acquisition, use, and disposition of these resources; and

3. The determination of the basic long-term objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals.

Thus, a company has to decide what kind of business it is going to be in. Is it transportation or a railroad company? Is it a container or a paper box manufacturer? The firm also has to decide on its growth goal and its desired profitability. A strategy might include such major policies as marketing directly rather than through distributors, or concentrating on proprietary products, or having a full time of autos, as General Motors decided to have many years ago.

The purpose of strategies, then, is to determine and communicate through a system of major objectives and policies, a picture of the kind of enterprise that is envisioned. Strategies do not attempt to outline exactly how the enterprise is to accomplish its objectives, since this is the task of countless major and minor supporting programs. But they furnish a framework for guiding thinking and action. Their usefulness in practice and their importance in guiding planning do, however, justify the separation of strategies as a type of plan for the purpose of analysis.

Policies define an area within which a decision is to be made and ensure that the decision will be consistent with, and contribute to, an objective. Policies help decide issues before they become problem, make it unnecessary to analyze the same situation every time it comes up, and unify other plans, thus permitting managers to delegate authority and still maintain control over what their subordinates do. For example, a certain railroad has the policy of the acquired industrial land to replace all company acreage sold along its right of way.

This policy permits the manager of the land department to develop acquisitions plans, without continually referring to top management and at the same time, it furnishes a standard of control.

Policies ordinarily exist on all levels of the organization, ranging from major company policies through major department policies to minor policies applicable to the smallest segment of the organization. They may be related to functions such as sales and finance or merely to a project such as the design of a new product to meet a specified competition.

Policy is a means of encouraging discretion and initiative, but within limits. The amount of freedom will naturally depend upon the policy and in turn will reflect position and authority in the organization. The president of the company with a policy of aggressive price competitive has a broad area of discretion and initiative in which to interpret and apply this policy. The district sales manager who reports to the regional sales manager abides by the same basic policy, but the interpretations made by the president, the vice-president for sales, and the regional sales manager become derivative policies that might narrow the district manager’s scope to the point of being, for example, only wide enough to approve a special sale price not exceeding a 10% reduction to meet competition.

Making policies consistent and integrated enough to realized enterprise objectives is difficult for many reasons.

First, policies are too seldom defined in writing and their exact interpretations are too little known.

Second, the very delegation of authority that policies are intended to implement leads, through its decentralizing influence, to widespread participation in policymaking and interpretation, with almost certain variations among individuals.

Third, it is not always easy to control policy because actual policy may be difficult to ascertain and intended policy may not always be clear.