In business parlance, the terms strategy refers to is a unique plan designed with the aim of achieving a competitive position in the market and also to reach the organisational goals and objectives. In short, it is an interpretative plan, that guides the enterprise in realizing its goal. On the other hand, policy refers to a set of rules made by the organisation for rational decision making.
Policy lays down the course of action, which is opted to guide the organization’s current and future decisions. Many people have confusion regarding the two terms, but they are not alike. Here, one should know that policies are subordinate to strategy. Here, in this article, we made an attempt to point out the significant differences between Strategy and Policy. Have a look at it.
Content: Strategy Vs Policy
|Basis for Comparison||Strategy||Policy|
|Meaning||Strategy is a comprehensive plan, made to accomplish the organizational goals.||Policy is the guiding principle, that helps the organization to take logical decisions.|
|What is it?||Action plan||Action principle|
|Nature||Flexible||Fixed, but they allow exceptional situations|
|Related to||Organizational moves and decisions for the situations which have not been encountered previously.||Organizational rules for the activities which are repetitive in nature.|
|Orientation||Action||Thought and Decision|
|Formulation||Top Level Management and Middle Level Management||Top Level Management|
|Describes||Methodology used to achieve the target.||What should be done and what should not be done.|
Definition of Strategy
The strategy is a game plan, chosen to achieve the organisational objectives, gain customer’s trust, attain competitive advantage and to acquire a market position. It is a combination of well-thought intent and actions which lead to the organisation towards its desired position or destination. It is a unified and integrated plan made to achieve the basic objectives of the enterprise like:
- Handling events and problems
- Taking advantage of opportunities
- Full resource utilisation
- Coping with threats
The strategy is a combination of flexibly designed corporate moves, through which an organisation can compete with its rivals successfully. The following are the features of the Strategy:
- It should be formulated from top-level management. However, sub-strategies can be made by middle-level management.
- It should have a long-range perspective.
- It should be dynamic in nature.
- The main purpose is to overcome from uncertain situations.
- It should be made in such a way, to make the best possible use of scarce resources.
Definition of Policy
The policy is also regarded as a mini-mission statement, is a set of principles and rules which direct the decisions of the organisation. Policies are framed by the top-level management of the organisation to serve as a guideline for operational decision making. It is helpful in highlighting the rules, value and beliefs of the organisation. In addition to this, it acts as a basis for guiding the actions.
Policies are designed, by taking the opinion and general view of a number of people in the organisation regarding any situation. They are made from experience and basic understanding. In this way, the people who come under the range of such policy will completely agree upon its implementation.
Policies help the management of an organisation to determine what is to be done, in a particular situation. These have to be consistently applied over a long period to avoid discrepancies and overlapping.
Key Differences Between Strategy and Policy
The following are the major differences between strategy and policy
- The strategy is the best plan opted from a number of plans, in order to achieve the organisational goals and objectives. The policy is a set of common rules and regulations, which forms as a base to take the day to day decisions.
- The strategy is a plan of action while the policy is a principle of action.
- Strategies can be modified as per the situation, so they are dynamic in nature. Conversely, Policies are uniform in nature. However, relaxations can be made for unexpected situations.
- Strategies are associated with the organizational moves and decisions for the situations and conditions which are not encountered or experienced earlier. On the contrary. Policies define the rules for routine activities, which are repetitive in nature.
- Strategies are concentrated toward actions, whereas Policies are decision-oriented.
- The top management always frames strategies, but sub-strategies are formulated at the middle level. In contrast to Policy, they are, in general, made by the top management.
- Strategies deal with external environmental factors. On the other hand, Policies are made for the internal environment of business.
- Strategies often contain methodologies used to achieve the set target. In contrast, Policies determine what is to be done and what should not be done in specific circumstances.
The difference between Strategy and Policy is, a little complicated because Policies come under the Strategies. Apart from that, the policies are made to support strategies in several ways like accomplishing organisational goals and securing an advantageous position in the market. Both of them are made by the top management as well as made after a deep analysis.
Lindiwe Nzimande says
Thanks, Now I really, as a novice in this area, understand more.
thanks for the explanation…
Thanks, for the article
Surbhi S says
To all the readers,
Thank you very much for liking the contents, your views are valuable to us.
Keep Sharing 🙂 😀
Nisar Ali says
thanks for differentiating the two mixing word. Can you further explain the it by giving recent examples please.
Dr. M Eisa Nang says
Thanks for the comprehensive description on these two words, I got more, I appreciate.
Daovanh Sirivong says
Thank you, more understand now
Mam your answer was really good… I want another differentiation on Policy vs Rule
Grant D. says
This has been cited by the united states airforce, congratulations.
Very well explained. Kindly provide your official blogs links on these kinda topics
Highly appreciated for your sharing.
Eman Abdu says
Thank you for making things clear and easy to understand. Keep up the good work.
Mohammad Rashid Arif says
Thanks for your sharing.
Kathryn Marchebois says
Thank you for really clarifying things for me.
Silla Kapsata says
Thanks a lot. This is very clear and understandable!
thank you for your sharing
Kingsley joshua says
Thank you so much,now i understand the two words
Kingsley joshua says
Thank you so much