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

Which statement correctly distinguishes a policy from a strategy?

A policy is a general guide that directs decisions and sets limits within the organisation, while a strategy is a comprehensive plan for achieving objectives in the face of competition. They differ in purpose and scope, and are not identical or tied to one level.

  1. AA policy is a general guide for decision-making and action, while a strategy is a plan to achieve objectives in a competitive environmentCorrect
  2. BA policy is always framed at the lowest level, whereas a strategy is framed only by functional managers
  3. CA policy deals with competitive moves, whereas a strategy deals only with routine procedures
  4. DA policy and a strategy are identical in scope and flexibility

Explanation

Policies are guidelines that channel thinking and set limits for decisions; strategies are comprehensive plans to deal with competition and attain objectives. The other options reverse the levels or confuse policy with procedure, and they are wrong because policies exist at all levels and strategies are mainly top-driven.

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