Question 1:
Business Policy is termed as the compositions that encompass subordinates making decisions in an organization. It mandates the subordinate level in an organization to take charge of decisions that would otherwise be taken by the managerial levels. Business policies created to build in guidelines that govern organization action, the limits of decision making and the acquisition of resources that ensure that the organization meets its goals and objectives. Business policy is a discipline of study that deals with the learning of roles and responsibilities of levels of organization authority and sustainability of an organization (Wheelen, T. L., & Hunger, J. D. 2008).
The features of an effective business policy of an organization should consist of several factors. These include specificity. This means that the policy should be straight to the point and definite. If not specific, it adds up to factors that guarantee company losses and fall. A business policy should be very clear. This entails all the directives are clear for all participants to understand and interpret. A business policy should also be very uniform in that is followed efficiently by the subordinates. The business policy should also be appropriate to the present goals and objectives of the organization. To have a wider scope in the organization goals and objectives, the business policy should be very comprehensive. Business policies are also required to be flexible. As the organization grows, so does its constituents. It is very important that the business policy be changing with the progress of the organization to maximize its efficacy in production (Freeman, R. E. 1984).
Strategy is termed as the way forward of an organization over a long time through merging of resources to adapt to its environment. There are several types of strategies. Corporate strategy is the scope that oversees overall purpose to meet stakeholders’ satisfaction and expectations. It is mostly known as the mission statement in many legal registered companies. Business unit strategy is concerned with the organizations’ competition power in the market. It concerns itself with products produced both in quantity and quality. This indulges in innovation and inventions of opportunities to increase production and consumption. Operational strategy focuses on how resources including manmade, natural and human are integrated into the production. This is where such departments as Human Resource come in to manipulate skill and resources into production (Wheelen, T. L., & Hunger, J. D. 2010).
Strategic management is about making and undertaking strategic decisions in an organization. Strategic management has three components namely, strategic analysis, strategic choice and strategic implementation as shown below.
Strategic analysis comprises of analyzing the strength of an organization’s position and understanding the external factors that directly influence the performance of the organization. This needs tools including the S.W.O.T analysis. Strategic choice involves understanding of the stakeholders’ expectations, identifying choices options and placing measures to be undertaken. In strategic implementation, the options selected are put into action and results whether short term or long term is realized (Wheelen, T. L., & Hunger, J. D. 2006).
There are a lot of differences between policy and strategy. Policy is considered to be the blue print of the organization’s tasks in which in the record, they are routine work that is done. Strategy is defined as the ways to deal with past obstacles that were faced. This means it is majorly concerned with the organization’s decisions to act upon a past event. Policy formulation is regarded as the responsibility of the top level management as strategy is in the responsibility of the middle level management. Policy deals with routine tasks that directly influence the progress of the organization as strategy deals with measures put across at one particular event. Policy is entailed in both plan and action as strategy is more action oriented. A policy is an action that has or has not been done while a strategy is the methodology that is concerned with actions against a particular event to achieve the policy set aside for the strategy (Wheelen, T. L., & Hunger, J. D. 2008).
The importance of the subject matter amplifies the study of functions and responsibilities of senior management. It also seeks to brainstorm the crucial problems that affect success in the organization and the decisions taken to give direction to the organization’s future. This also defines the relationship with all the stakeholders and the outside environment. There are four platforms that this subject matter tends to be beneficial. In learning about policy, it integrates knowledge and experience to give out real life managerial obstacles hence enhancing its practicability. This discipline also creates understanding of how policies are formulated according to the goals and objectives of the organization. The subject matter also ensures one gets to know their organization better and indulge into its culture with a positive outlook. The final platform involves personal development whereby one develops a unique reason on management thus tapping new ideas into the organization and also increasing skill level (Wheelen, T. L., & Hunger, J. D. 1998).
2. How the subject matter affects modern day business management.
Successful businesses incorporate a lot of business structures to ensure its prosperity. Management and business policies and strategy are not to be left out. Therefore it is inevitable that business policies and their strategy have great influence on the management of businesses in the modern day world (KOZAMI, 2005).
For organizations to make money managers have to excellently do their work. The businesses device means and methods that ensure provision of services which the consumers have to pay for, thus providing money. Provision of money runs the business. This is because almost all businesses worldwide are money oriented and to be specific profit oriented. Modern day management has evolved in a major and finer way making the world a market place that is globally hypercompetitive. Modern day business management evolved and initiated in the late 1800s after the civil war. The major economies in the world surprisingly made the large corporation simultaneously. The countries include Japan, United States and United Kingdom. France, which is also a major super power, did not embrace this developed and held onto family business longer. Due to the scarcity of large companies there were a few numbers of managers who were natural leaders (KOZAMI, 2005). As the industrial world grew and became big, there came a need for more managers and this transformed business management into something that could be studied and read.
The middle management being handed the mandate and powers to formulate strategies that help the businesses in by solving problems encountered daily, help them to feel important to the company. This was not the case previously in the management of business. With them feeling needed and important in the company, there is creation of motivation which will help in making management easy and goal achievement progression made faster. Merging of workers in formulation of the strategies helps in communication improvement. With them being at terms and communicating easily it unlocks a lot of barriers and handles along the way.
It is thus evident that policies and strategies formulated help deeply in the management of the modern day businesses. For each department to function properly there has to be an action plan formulated. Each department thus knows what it has to deal with and the how to do it. After formulation of these strategies and policies they are bound to be scrutinized by the staff and management and thus can be changed to suit the company (SOUNDERPANDIAN, 2007). Democracy is preached in these organizations, although not carefully handling issues well can lead to people losing their jobs.
Modern day management as we have initially observed is hectic and requires a lot of natural leadership to ensure positive and quality running of the businesses. Contingency plans formulation are not an option in business management. Environmental changes do occur often and when least expected and thus formulation of these plans is mandatory.
When running a project, its progress is closely monitored and scrutinized by the top management. It is also their job to create environment that is appeasing to everybody and one that promotes team spirit. This way goal meeting and job execution is smooth. The goals and mission of each project are analyzed and well scrutinized with aim of checking their weaknesses and strengths and their practicality (SOUNDERPANDIAN, 2007)
Question 3:
Organizations can apply the subject matter to have positive results. This can be in form of, higher employment levels. In recessions especially in the modern day, retrenchment and layoffs have been the order of the day. Many organizations tend to reduce their human capital based on their workforce. Lack of employment therefore, reduces consumer demand for products as they try to cut down costs. Through policy and strategic management, organizations are at good position to take into considerations some measures to ensure maintaining of personnel and production. In doing so, consumers can get money to buy products thus putting the market at equilibrium halting the downward spiral. During the 2008- 2009 recession, economic instability made financial institutions tighten on lending. Small businesses fell as the big ones saw their losses doubling each month. Through policy and strategic modules, the management can take the initiative to initiate income generating activities to supplement organization income and also increase employment (Legge, K. 2005).
Giving mandate to the subordinate staff in the organization to act upon decisions gives them better sense of judgment. This gives them managerial skills that they would otherwise not have been taught in education levels. It also acts as a platform for hiring potential managers rather than out sourcing. This also gives the subordinates predictability skills that help them make better judgment and undertake critical actions that save the organization’s future. Policy and strategy management gives subordinates tools of management. Through policy, they know what and how they are supposed to act upon an event and in strategic management they are able to derive mechanisms of action and evaluation in the long run (Legge, K. 2005).
Through policy and strategic management, the subordinates are able to keep up with the forefront of business world in relation to internalization of business, deregulation, mergers, acquisitions, international joint ventures among other mechanisms of business evolution. With the rise of ecommerce, the subordinates are at a level of achieving technological transfer. This is in the case of subordinates learning through technology, how to make choices in the absence of the management (Ciulla, J. B., Martin, C. W., & Solomon, R. C. 2007).
Through Porters five forces model, the nature of competition is affected by the following forces; threat of new potential entrance in the economy, threat of substitute products and services, bargaining power of suppliers, bargaining power of buyers and rivalry among existing competition. This is shown as below.
Risk of entry of new entity
complimentary
bargaining power of suppliers
bargaining power of buyers
In strategic management, these five forces are very crucial to the survival of an organization. The potential of these forces differ from economic activities and also companies. Risk of entry refers to the firms which have not yet ventured into the market but have the capacity to. This makes competition to the existing organization steeper. Fortunately, the barriers of entry hinder some of the potential entities to venture. Some of the barriers include economies of scale, government regulations, and strong capital base among others. Rivalry among current competitors results into more production and better costs and quality to consumers. However, to rival against companies, factors have to be considered. They include amount of fixed costs, growth rate of an organization and presence of global consumers. Bargaining power of buyers refers to the customers who distribute to final consumers and their ability to bargain down prices from the company. These are the wholesalers to the retailers. Strong bargainers can attract more and sell more than those without bargaining power. They fulfill the final consumer and leave them yearning for more (Bureau for Economic Research. 2009).
Bargaining power of the supplier refers to the organizations that provide input into the firm. This is their ability to increase their product prices in which an organization uses as raw materials and resources. If their ability to increase prices is great, then they are considered as threats to the organization because they increase budgetary input. The threat of substitute products refers to the ability of them satisfying the consumer. This poses as a threat since they compel firms to reduce prices of what their products resulting to low income. They are posed as threats in the long run. Complementary products are the products that go hand in hand with the organization products. It is very crucial that an organization come up with a product that is easily integrated with other complimentary product to satisfy consumers. The harder to find complimentary products results in consumers avoiding the products. Better yet, an organization can opt to produce finished products that do not need complimentary products at all. This will ensure customers prefer to use them as they cut down costs and saves time therefore, becoming market oriented (Glueck, William F., and Lawrence R. Jauch. 1984).
The intensity with which managers are able to act on a strategic plan is affected by several factors which include managerial expertise. These are the interpersonal skills that a manager should have to make the right decisions such as expertise, beliefs, and performance relationships. Environmental include the external factors that ensure that the manager perform at optimum best. They are geographical changes, complexity of organization and others. Organizational factors such as size of organization also affect the manager’s ability to formulate policy and strategic mechanisms to sustain the organization (Wheelen, Thomas L., and J. David Hunger. 2012).
Managers’ ability to make independent decisions gives an organization amore venue to respond to changing market conditions conducive in dynamic and complex organizations. Learning from autonomous actions of managers trigger new experiences and insights which inspire business initiatives. Strategic opportunities are learnt through decentralized strategic actions taken by the mangers. Through conventional strategic management paradigm, rational processes of strategic planning can be formulated, implemented and measured. Autonomous actions therefore determine on the extent in which middle class managers are authorized to make decisions that have strategically oriented processes. This has however be depicted by the organizational policy to decentralize power from the top level managerial positions (Legge, K. 2005).
Business policy and strategic management can be modules of measuring levels of performance and success of an organization. Economic indicators are part of the strategic actions placed on an organization success or failure. If the organization continues to increase its assets, then it means that its policy continue to be complex and its strategic management more advanced. Organizational innovation is the difference of initial ideology and the extent to which it has grown. A growing organization has its policies and strategic management evolve with experience and advancement of external factors. Centralized strategic planning systems are initiated to merge functional activities and actions taken by the organization to ensure corporate adaptation. This entails building a number of steps in the strategy management paradigm such as goal creation, environmental analysis, strategic formulation, implementation and control. Top level management is given the mandate to set goals that will see it being run in a hierarchical process where managers develop goals and strategic plans, then issued to middle managers who set functional goals and strategies and eventually the subordinates who do the actual implementation (Legge, K. 2005).
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