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

Which of the following is a recognised distinction between business policy and day-to-day procedures or rules?

Policies are general guides for decision-making that leave managers some room for judgement, whereas rules and procedures are specific directions prescribing exact actions with little or no discretion. This is why policies guide thinking, while procedures regulate the detailed steps of performing a task.

  1. APolicies prescribe the exact sequence of steps for a task, whereas procedures give general direction
  2. BPolicies are guides to thinking and leave room for discretion, whereas rules and procedures leave little or no discretionCorrect
  3. CPolicies never change, whereas procedures change every year
  4. DPolicies apply only to finance, whereas procedures apply to all functions

Explanation

Policies are general guides that allow managers some discretion in interpretation, while rules and procedures are specific and rigid, leaving little discretion. Option A reverses the roles. Policies can be revised and apply to all functions, so C and D are incorrect.

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