Role of Business Policy and Strategic Management in Organisational Growth

For businesses, sticking to a plan that works and reaches the business goals is crucial. You need a clear plan (strategic management) and guidelines for navigating (business policies) to achieve these goals. Strategic management designs the course and identifies the direction and resources needed. On the other hand, business policies act as the rules, ensuring everyone uses resources efficiently to reach the goal. Together, they guide your business towards success. In this blog, we will discuss business policy and strategic management and explore why they are crucial for the successful operation of any business.

What is Business Policy?

Business Policy refers to the set of rules and guidelines that an organisation follows to make effective decisions. It helps create a framework that helps employees understand their roles and responsibilities. These policies cover a number of domains, from administration to marketing and tech. Business policies can help improve decision-making, increase transparency, and ensure that all actions align with the organisation’s goals. 

These policies guide the decisions, actions, and behaviours of the employees and are aligned with its mission, values, and strategic objectives. Failure to adhere to these policies can lead to inefficiency, conflict, and even legal issues, highlighting their importance and impact on the organisation.

A business policy covers various aspects that impact the operation and culture of an organisation, including:

• Conduct at work: Establishes the behavioural guidelines expected of employees in the work environment, promoting professionalism and mutual respect.
• Use of company resources: Defines how business resources, such as equipment, tools and time, should be used to ensure efficient management and conservation.
• Conflict Management: Provides procedures to resolve disputes and disagreements between employees or departments fairly and constructively.
• Information Privacy and Security: Establishes measures to protect the confidentiality and integrity of company and employee information, thereby reducing the risks of data breaches and security vulnerabilities.

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Advantages of Having a Clearly Defined Business Policy

Here are some of the reasons why having a business policy in place is crucial - 

• Helps to unite the company internally.
• Facilitates the adaptation of new workers.
• Makes the company more transparent and homogeneous since employees will know what behaviour and attitudes are expected of them.
• Strengthens the corporate image externally.

How To Create an Effective Business Policy?

Creating an effective company policy requires a careful and well-planned process that includes the following steps:

Needs and Objectives Analysis: A thorough assessment of the organisation's needs and objectives identifies areas requiring clear policies.

Interdepartmental Collaboration: Collaboration between different areas of the company, such as HR, Legal and Operations, is promoted to ensure a comprehensive perspective and a coherent approach to policy development.

Review of Applicable Legislation: Labor laws and other relevant regulations are reviewed to ensure policies align with legal and ethical requirements.

Clear and Concise Writing: Policies should be written clearly and simply, avoiding technical jargon and ensuring all employees understand them.

Communication and Training: Once developed, policies are effectively communicated through various means, such as training sessions, employee handbooks, and team meetings, ensuring their understanding and compliance.

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What is Strategic Management?

Strategic management refers to all decisions made by a company's management that have a medium—and long-term impact and are mainly aimed at defining the company's strategy and guaranteeing its development and sustainability. 

Strategic management thus allows the efforts of different workers to be coordinated around a project. The main actions of strategic management are planning and organisation, defining the hiring and retention policy for teams, and deploying and monitoring the strategic plan.

Importance of Strategic Management

Strategic management is essential in business because it allows a company to analyse areas for operational improvement. In many cases, they may follow an analytical process, which identifies potential threats and opportunities, or follow general guidelines. 

Depending on the organisational structure, a company may follow a prescriptive or descriptive approach to strategic management. In an authoritarian model, strategies for development and execution are described. Instead, a descriptive approach describes how a company can develop these strategies.

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Stages of Strategic Management Process

The five stages of the process are goal or objective setting, analysis, strategy formation, strategy implementation, and strategy monitoring.

1. Define the goals.  The vision must be established, the mission designed, the short and long-term objectives determined, and the strategy formulated to share it among all company members.
2. Perform an organisational analysis.  In this phase, the relevant information and data are collected, and strategies are considered to carry out an analysis and obtain the inputs for the plan.
3. Formulate strategies.  The information obtained from the analysis determines the resources needed to achieve the defined goals. The problems are prioritised, and strategies are proposed.
4. Implement the strategy. The strategic management process is implemented to develop structures and systems detailing the responsibilities of all collaborators.
5. Manage, evaluate and control.  A strategic evaluation is carried out, and the necessary control is exercised to measure performance, review internal and external issues, and apply corrective actions.

Examples of strategic management

These are some examples of brands that have done correct strategic management:

Apple

To become one of the most valuable brands in the world, Apple stuck to its strategy of challenging the status quo. The "Think Different" campaign illustrates the company's power to create revolutionary products and conquer new global markets. Even after this success, Apple has not stopped innovating and remains convinced of the need to create new solutions and technologies.

Airbnb

Thanks to a bold strategy, Airbnb has gone from being a startup to one of the greatest powers in the world's tourism market. The company used the growth hacking technique to reach a market value of $1 billion, betting on generating trust as the basis for the success of the shared hosting service. Additionally, it invested in a solid digital presence and a narrative strategy to communicate its differences.

How Do Business Policy and Strategic Management Affect Organisational Culture?

Business policy and strategic management have a serious impact on organisational culture. Here's how:

Clarity of Purpose: Businesses can use strategic management to set clear goals for their employees. This clarity helps employees understand their objectives and work more diligently towards achieving them. Similarly, a well-defined business policy ensures that everyone is aligned to meet the common business goals, thereby fostering a well-functioning organisation.

Communication and Transparency: Strategic management involves communicating the organisation's vision, mission, and strategic initiatives. Transparent communication about decisions, strategies, and performance metrics promotes trust and openness within the organisation. 

Adaptability and Innovation: Innovation is the key to success for any business, and strategic management just does that. It encourages experimentation, promotes risk-taking and learning from failure, and creates an environment where employees feel empowered to think and contribute new ideas.

Resource Allocation and Prioritization: Strategic management enables business leaders to allocate resources effectively to meet business objectives. On the other hand, business policies guide decisions on resource allocation, ensuring that resources are directed towards activities that align with the organisation's goals. This prioritisation of resources helps create a culture of accountability and efficiency, where employees understand the importance of their contributions to the organisation's overall success.

Leadership and Role Modeling: Great leaders lead by example. When they follow the company's values and goals, it creates a positive work environment. They set rules that promote fairness and respect for everyone. This makes employees feel good and want to do their best, thus helping the company achieve its goals.