Let’s Grasp The Process Of Policy Formulation In Business

“It is imperative that sound policies ought to be framed; otherwise any business cannot function with smoothness. Anarchy and tyranny may result in a business that is not erected on the foundation of sound policies.”

Policy formulation is an important aspect of planning in business. It is imperative that sound policies ought to be framed; otherwise any business cannot function with smoothness. Anarchy and tyranny may result in a business that is not erected on the foundation of sound policies. A well thought exercise is essential for the formulation of policies.

This process involves a number of steps.

First of all comes the definition of policy area- the area for which a policy is to be framed. The objectives and needs of the organization should be kept in mind while specifying policy area. The policy area should never ignore market expectations and various key areas that are vital to the company.

Then comes the need to identify the policy alternatives. The alternatives should be decided on the bases of an analysis of external and internal environment. The internal environment will tell about the strength and weaknesses of organization. The external atmosphere prevalent at the existing time determines the opportunities available for the business as well as makes known the level and severity of competition.

All the alternatives should be properly examined and the best possible alternative should be agreed upon. It should be made a point that there is a consensus as regards this alternative because this consensus is of utmost necessity for the business as a whole. The factors like cost, benefits, resources, market strategy, etc. all should be assessed.

After a proper evaluation, most appropriate alternative should be selected. The selection of a policy is the long-term commitment. Policy should be implemented on trial basis. No carelessness should be shown as regards the assessment of the achievement of the agreed upon objectives and aims.

There may be suggestions during the test run; these should be used to modify the policy. If the policy is finally all right, it should be implemented. The policy should be explained to those who are to implement it.

There should be a proper discussion about the implication and impact of various clauses or provisions of the policies. Proper communication of the rationale and objectives of the policy helps immensely it in its execution.

Author - DeeKay

Tags - Finance, Economy

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