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CS Professional · Strategic Management and Corporate Finance · Business Policy and Formulation of Functional Strategy

Sundaram Textiles Ltd's board lays down that every purchase above a stated value must be approved by the purchase committee, and that suppliers be chosen on quality and price. Which feature of business policy is most clearly illustrated?

The example shows that business policy gives a framework guiding managers and ensuring consistency in recurring decisions. A standing rule for purchase approval and supplier choice applies repeatedly, so decisions across the firm follow the same principles, while still leaving room for judgment within limits.

  1. AIt provides a framework that guides managers and promotes consistency in recurring decisionsCorrect
  2. BIt is a one-time plan that lapses after a single decision
  3. CIt replaces the need for any managerial discretion
  4. DIt is concerned only with external stakeholders

Explanation

A standing rule on approvals and supplier selection applies to repeated decisions, giving consistency and a guiding framework. It does not eliminate discretion entirely, nor is it a one-off plan, and it governs internal decisions rather than only external stakeholders.

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