Classification of policies

Classification of policies                                                                                                                   

1.       Top management policies: Top management policies are those derived from top management planning. They include policies concerned with long range product selection, sales forecasting, sizing the enterprise, process selection, machine selection, determining plant needed, and budget.

2.       Upper middle management policies: upper middle management policies are those which are special to a function, such as sales, production, research, finance accounting and are made by the vice president or other executive for these functions. They should be in harmony with the major policies of the enterprise.

3.         Middle management policies: middle management policies are those which grow out of the planning of junior executives, superintendents of departments or division and other in like positions. These men are functional product of the area specialities within the sales, production, research, finance, or accounting sub division of the enterprise.

4.       Foremen policies: Foremen policies are those directly related to the accomplishment of the tasks set for his small sub division or the whole enterprise. They include the policies concerned with the assignment of the jobs to the best suited men, the provision for adequate tools by which to do the job, and so forth.

5.       Operating force policies: Operating force policies are those found in little notebooks in the possession for each worker. These state his rule or code for doing each job that he is called upon to do. From it, the worker knows how long each job should take, what tricks of the trade are required, and what quality features are emphasized. He does not trust of his memory to complete a respective job satisfactory, for he has an established policy to follow for his recurring situation.

6.       Sales promotion: sales policies may be concerned with determining location of the markets, selecting channels of distribution dividing the total market into branch or dealer areas pricing the product determining sales incentives establishing advertising policies setting up sales control policies and establishing sales volume and expense budgets.

7.       Production policies: production policies may be concerned with the making of a production budget selection of junior executives the organization and co-ordination of other activities factory lay out inventory control collective bargaining and labour relations selection of system for quality cost and production control and the like.

8.       Research policies: research policies may be concerned with the selection of projects for investigation the choice of personnel and mechanism for carrying out these activities the determination of research budgets the measurements of results and similar matters.

9.       Financial matters: in the area of finance a number of policies would be required such as:

  1. the method of raising funds and the ratio between the various types of source of funds. How much risk the. Company can undertake? What return does it expect on the funds procured and how much of the control aspect management is willing to give?
  2. policy for the use of the funds and the ratio between different types of assets.
  3. the credit policy and the distribution policy towards customers.
  4. the dividend policy how much dividends are to be declared out of the profit earned.
  5. provision for working capital requirements and other matters of this type.

10 costing policy: it may include the policy for selecting the method of costing the method of allocating apportioning re-apportioning and absorbing overheads etc.

11 accounting policy: this may include the following:

  1. the basis of valuation of stock of finished goods. It is a matter of policy whether the finished goods are valued at total cost or at direct cost or at work cost.
  2. the issue of price of raw materials whether to follow FILOW or LIFO or average cost or any other method of pricing.
  3. depreciation policy I.e. which method of depreciation be followed.
  4. the treatment of deferred revenue expenditure intangible assets fictitious assets and preliminary expenses.
  5. capitalization of expenditure during construction period.
  6. policies for provision of doubtful debts investment losses.

12 marketing policy: here a number of policies in market analysis business law display and salesmanship may be followed.

13 promotion policies: the objectives of the promotion policies may be:

  1.  to utilize fully the managerial resources of the organization.
  2.  to provide a fair opportunity to all for advancement and promotion.
  3.  to base the promotion on an objective assessment of merit and not merely seniority.

13 product policies: these may include the following:

  1. the company will deal in the whole range of engineering products for construction projects.
  2. the products for the company will be meant mainly for government and industrial customers.
  3. the company will purchase as many of the components as possible from small scale industrial units and will concentrate largely on assembling.
  4. the company will try to differentiate its products from those of the rival manufacturing units in terms of shape design and other specifications.
  5. the company will book bulk orders and make its products available according to the specifications provided by the clients.

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