Strategy versus Policy

Strategies define the overall character, mission and direction of an enterprise. The focus on an organization’s long term relationship with its external environment specifies what an organization will be doing in future, reflecting the kind of enterprise the managers envision. Strategies are formulated and implemented with a view to achieve specific goals. An appropriate strategy will give managers an advantage over their opponents or competitors it will enable them to marshal their resources so that they will be more effectively utilized. In other words, the basic purposes of a strategy are to deploy human as well as physical resources in order to maximize the chances of achieving a selected objective in the face of difficulties. It is an important offensive device in the hands of aspiring Davids to combat corporate Goliaths.

A policy, on the other hand tells people what they should and should not do in order to contribute to the achievement of corporate goals. It says something about how goals will be attained. It is a helpful guide that makes the strategy of the business explicit and provides direction to subordinates.

Strategy versus Policy


1) Deals with strategic decisions that decide the long term health of an enterprise. It is a comprehensive plan of action designed to meet certain specific goals.
2) It is a means of putting a policy into effect within certain time limits.
3) Deals with those decisions which have not been encountered before in quite the same form, for which no predetermined and explicit set or ordered responses exist in the organization and which are important in terms of the resources committed or the precedent set
4) Deals with crucial decisions whose implementation requires constant attention of top management.


1) It offers guidelines for managers to take appropriate decisions.
2) It is a general course of action with no defined time limits.
3) It is a guide to action in areas of repetitive activity.
4) Once policy decisions are formulated these can be delegated and implemented by others independently.

Strategic management


Till 1930s most firms were happy focusing attention on their day to day short term activities. In an environment characterized by very little competition, a functional orientation supported by budgeting ad control systems guided the fortunes of firms. The adhoc policy making yielded ground to planned policy formulations and by 1940 the emphasis shifted to the integrations of functional areas in the context of environmental demands. The period between 1960s and 1980s was characterized by rapid environmental changes and increased complexity of business functions necessitating long range planning and comprehensive business policies aimed at placing a firm in an advantageous relationship to its environment. During the 1980s and early 1990s interest in the role of strategy in building competitive advantage resulted in a shift of interest towards the internal aspects of the firm (Hofer et al) Strategic management is currently the core of business policy discipline everywhere .Grant has summarized these developments thus:

Strategic management is the process by which organizations try to determine what needs to be done to achieve corporate objectives and more importantly how these objectives are to be met. Ideally it is a process by which senior management examines the organization and the environment in which it operates and attempts to establish an appropriate and optimal fit between them to ensure the organization’s success. Strategic planning is usually done over three to five years time horizons by senior management or when some important event impacts the organization such as a merger or acquisition or its environment.

Definitions of Strategic
1) It is a continuous process of effectively relating the organization’s objectives and resources to the opportunities in the environment
2) It is a process of formulating, implementing and evaluating cross functional decisions that enable an organization to achieve its objectives.
3) It is a stream of decisions and actions which lead to the development of an effective strategy or strategies to help achieve corporate objectives.
4) It is the set of decisions and actions resulting in formulation and implementing of strategies designed to achieve the objectives of an organization.

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