1.

Business Policy and Strategic Management in Perspective

A policy is defined as a definite course of action, whereas a strategy is an educated
method or a series of maneuvers dedicated to a specific result. Policies tend to be a
requirement dictated by a higher order, while strategies may be used in an attempt to
follow a policy. The term policy should not be considered as synonymous to the term
strategy.
The difference between policy and strategy can be summarized as follows: First,
policy is a blueprint of the organizational activities which are repetitive/routine in nature
while strategy is concerned with those organizational decisions which have not been
dealt/faced before in same form. Second, policy formulation is responsibility of top level
management while strategy formulation is basically done by middle level management.
Third, policy deals with routine/daily activities essential for effective and efficient running
of an organization while strategy deals with strategic decisions. Fourth, Policy is
concerned with both thought and action while strategy is concerned mostly with action.
Fifth, policy is what is, or what is not done. While a strategy is the methodology used to
achieve a target as prescribed by a policy. Lastly, a strategy is a plan to do things a
certain way to achieve a desired outcome while a policy is a rule designed to ensure
consistency in governance and to avoid undesirable outcomes. In general, policies and
strategies do have different purposes. A strategy is essentially a guide, or road map, for
how the company will operate. Setting a strategy at the top allows each department or
business unit leader to set lower-level goals and strategies that align. Policies provide a
framework for employees to make decisions in certain situations that lead to consistent
activities.

2. Management Tools Used in Decision Making

2.1.

The Balanced

Scorecard (BSC)

is

strategy performance

management tool - a semi-standard structured report, supported by design methods

and automation tools that can be used by managers to keep track of the execution of
activities by the staff within their control and to monitor the consequences arising from
these actions.
Balanced scorecard is an example of a closed-loop controller or cybernetic
control applied to the management of the implementation of a strategy. Closed-loop or
cybernetic control is where actual performance is measured, the measured value is
compared to a reference value and based on the difference between the two corrective
interventions are made as required. Such control requires three things to be effective:
First, it is a choice of data to measure, second, the setting of a reference value for the
data, and third, the ability to make a corrective intervention.
Within the strategy management context, all three of these characteristic closedloop control elements need to be derived from the organizations strategy and also need
to reflect the ability of the observer to both monitor performance and subsequently
intervene - both of which may be constrained. Initially, Balanced Scorecard emerged as
a performance management system, over a period of time it has come to be known as a
strategy management system, with its ultimate aim being the achievement of long term
financial performance. Balanced scorecard is seen as a strategic management system
enabling business leaders to meet the challenge of strategy execution. Two of the ideas
that underpin modern balanced scorecard designs concern facilitating the creation of

such a control - through making it easier to select which data to observe, and ensuring
that the choice of data is consistent with the ability of the observer to intervene.

2.2. Results-based management (RBM) is a life-cycle approach to

management

that

integrates

strategy,

people,

resources,

processes,

and

measurements to improve decision making, transparency, and accountability. The

approach focuses on achieving outcomes, implementing performance measurement,
learning, and adapting, as well as reporting performance. Result Based Management
is used in defining realistic expected results based on appropriate analysis; clearly
identifying program beneficiaries and designing programs to meet their needs;
monitoring progress toward results and resources consumed with the use of
appropriate indicators; identifying and managing risk while bearing in mind the
expected results and necessary resources; increasing knowledge by learning lessons
and integrating them into decisions ; and reporting on the results achieved and
resources involved.
Modern management requires that we look beyond activities and outputs to focus
on actual results: the changes created, and contributed to, by our programming. By
establishing clearly defined expected results, collecting information to assess progress
toward them on a regular basis, and taking timely corrective action, practitioners can
manage their projects or investments in order to maximize achievement of development
results: a sustained improvement in the lives of people in developing countries.

2.3.

There are endless ways to exercise Management By Objectives. One

must simply find specific goals to aim for in an organization or business. Many
noteworthy companies have used MBO. Companies that use MBO often report greater
sales rates and productiveness within the organization. Objectives can be set in all
domains of activities, such as production, marketing, services, sales, R&D, human
resources, finance, and information systems. Some objectives are collective, and some
can be goals for each individual worker. Both make the task at hand seem attainable
and enable the workers to visualize what needs to be done and how.
In the MBO paradigm, managers determine the mission and the strategic
goals of the enterprise. The goals set by top-level managers are based on an analysis
of what can and should be accomplished by the organization within a specific period of
time. The functions of these managers can be centralized by appointing a project
manager who can monitor and control activities of the various departments. ] If this
cannot be done or is not desirable, each manager's contributions to the organizational
goal should be clearly spelled out. Objectives need quantifying and monitoring.
Reliable management information systems are needed to establish relevant objectives
and monitor their "reach ratio" in an objective way. Pay incentives (bonuses) are often
linked to results in reaching the objectives.
3. Organizations VMGO and Environment