Role of strategies and policies
Strategies and policies are important in all types of organizations - business or non business, public sector or private sector, small or large, in developed countries or underdeveloped countries. The systems approach of management suggests interaction of an organization with its environment on continuous basis. This interaction can better be maintained through formulation of suitable strategies and policies. In fact, the function of the formulation of strategies and policies has become so important that it is equated with total top management function because which is primarily responsible for organizational adaptation to the needs of environment. Careful strategies and policies play a significant role in the success of an organization. If we look at the Indian industrial scene over the last generation or so, we find that great names like martin Bum, Jessop's, Andrews have touched the rock bottom, while total unknowns few years ago like Reliance, Larsen and Toubro, etc. have touched gigantic heights. Similarly, the companies like Hindustan Lever, ITC limited, TISCO, TELCO, have maintained their high profile. There are numerous such examples of good companies in the Indian scene as well as the world over which have been successful because they have adopted suitable strategies and policies. This happens because the strategies and policies contribute in several ways in managing an organization; the more important of them are as follows:
Framework for planning: strategies and policies provide the framework for the plans by challenging operating decisions and often preceding them. If strategies and policies are developed carefully and understood properly by managers, they will be more consistent framework for planning. If this consistency exists and applied, there would be deployment of organizational resources in those areas where they find better use. Strategies define the business area both in the terms of customers and geographical areas served. Better the definition of these areas better will be the deployment of resources. For example, it will allocate more resources to research and development activities which are reflected in budget preparation.
Clarify in direction of activities: strategies and policies focus on direction of activities by specifying what activities are to be undertaken for achieving organizational objectives. They make the organizational objectives more clear and specific. For example a business organization may define objective as profit earning or a non-business organization may define its objective as social objective. But these definitions are too board and even vague for putting them into operation. They are better spelled by strategies which focus on operational objectives and make them more practical. For example strategies will provide how profit objective can be sharply defined in terms of how much profit is to be earned and what resources will be required for that when objectives are spelled out in these terms they provide clear direction to persons in the organization responsible for implementing various courses of action. Most people perform better if they know clearly what they are expected to do and where their organization is going.