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

Which statement best describes how a company's business policy differs from a strategy?

Business policy is a general guide that directs decision-making within set limits, whereas strategy is a broader plan designed to achieve objectives amid competition. Policies guide recurring decisions; strategy responds to environmental change. The other statements wrongly restrict scope or authorship.

  1. APolicy is a general guide for decision-making within set limits, while strategy is a plan to achieve objectives in a competitive environmentCorrect
  2. BPolicy is prepared only by operational staff, while strategy is prepared only by shareholders
  3. CPolicy deals only with financial matters, while strategy deals only with marketing
  4. DPolicy changes every day, while strategy is never changed

Explanation

Policy provides a general guideline that channels managerial thinking and decisions within defined limits, usually repetitive in nature. Strategy is a comprehensive plan to meet competitive challenges and attain objectives. The other options invent artificial restrictions on who frames them or what they cover.

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