Business Policy as a Field of Study | Management Optional Notes for UPSC PDF Download

Introduction

Traditionally, business policy has been linked to business school courses, grounded in management practices and evolving through different stages before shaping into today's strategic management. The field of business policy as a subject in management studies originated in 1911 at Harvard Business School, developing from the experiences of corporate enterprises and the historical outcomes of business endeavors. It represents the result of senior management decisions shaping the future of ongoing enterprises (Appa Rao, 2009). 

The primary aim of management courses was to enhance overall management capabilities, and expert studies made business education and the business policy course mandatory for all business schools in the USA. Subsequently, Business Policy became a crucial course in management degree/diploma programs in numerous countries, including India. 

However, there has been a shift in focus in the Business Policy course since the 1980s, with a modern emphasis on Strategic Management. The term business policy now encompasses an organization's processes and procedures, spanning from human resources policies to the company's marketing plans, expansion strategies, and development initiatives. Business policy is closely tied to strategic management, as the policies essentially translate into the strategies put into action.

Understanding Business Policy in India

1. Educational Growth: Formal education in India began in the 1950s, receiving a significant boost in the 1960s with the establishment of prestigious institutions like the Indian Institute of Management (IIM) and the Administrative Staff College of India. These institutions modeled their curriculum and teaching methods after the Harvard model.

2. Rapid Expansion: With the establishment of numerous management institutes across the country, India witnessed unprecedented growth in the field of management education.

3. Regulation: To oversee technical and management education in India, the All India Council for Technical Education was set up in 1990. It made business policy and strategic management compulsory courses in management studies.

Theoretical Framework of Business Policy

1. Definitions: Business policy has been defined in various ways. It's seen as the strategic thinking of company management to achieve objectives in prevailing economic and social conditions.

2. Decision-Making: At its core, business policy involves decisions about the future of an enterprise, made by senior management after assessing organizational strengths, weaknesses, and the external environment.

3. Comprehensive Definition: According to Christensen and others, business policy encompasses the responsibilities of senior management, critical problems affecting enterprise success, and decisions shaping the organization's direction and future.

Nature of Business Policy

1. Strategic Decisions: Business policy involves decisions about the future direction of the enterprise, its market position, resource allocation, and long-term objectives.

2. Long-Term Planning: It establishes long-term objectives guiding the enterprise's future, its size, market position, and resource allocation.

3. Environmental Considerations: Business policy takes into account the dynamic nature of the business environment, potential opportunities, threats, and risks associated with new projects or market entries.

Attributes of business policy

1. Origin: The concept of strategic management, introduced by Peter Drucker in the mid-20th century, emphasizes that organizations can better achieve their goals by implementing clear business beliefs.

2. Integration: Strategic management integrates various aspects of business learning into one subject suitable for application in the modern business environment.

3. Educational Objectives: Business policy courses aim to integrate knowledge from functional areas like production, finance, marketing, and HR, develop analytical skills through case studies and research, and foster positive attitudes and ethical values in decision-making.

4. Top Management Focus: Emphasizes senior management functions like setting objectives, creating action plans, guiding enterprise activities, ensuring control, and balancing internal and external concerns.

5. Big Picture Perspective: Views key issues from a broad perspective, considering the overall impact of decisions on the entire organization.

6. Integration of Functional Areas: Demonstrates how different functional areas in a business are interconnected, making it a capstone course.

7. Resource Emphasis: Mainly concerned with efficiently mobilizing various resources to achieve enterprise goals, especially in competitive and challenging circumstances.

8. External Awareness: Highlights the impact of the environment on the organization and stresses the need for senior management to respond effectively. Adaptability to change is crucial for organizational effectiveness.

9. Universal Applicability: Applicable to all types of organizations, emphasizing its versatility.

10. Enhancement of Analytical Skills: Involves active student participation through case discussions, presentations, and reports, enhancing analytical and decision-making skills.

Importance of Business Policy Course

• Integrative in nature, helping learners see the organization as a whole.
• Enables the application of knowledge from introductory and specialized functional courses.
• Critical for adding value to resources, ensuring cohesion, and sustaining competitive advantage in a dynamic environment.
• Assists managers in taking a system view of business, understanding how various sub-systems impact the organization as a whole.
• Enhances understanding of the linkages between different functional specialties for objective decision-making.

In summary, business policies are guidelines crafted by an organization to govern its actions, outlining the constraints for decision-making. These policies also involve obtaining the necessary resources to achieve organizational goals. The study of business policy focuses on the roles and responsibilities of senior-level management, addressing crucial issues influencing organizational success and long-term decisions. It holds significance as a key component of management education and executive development programs, particularly for middle-level managers aspiring to advance to senior roles. Acting as a foundational framework, business policy aids in comprehending strategic decision-making during the middle management phase. Moreover, the study of business policy proves beneficial for personal development.