Different Kinds of Business Policies

Business policies may be of the following types:

1.       External Policies:

Policies framed to give effect to the decisions of the Government, judiciary, trade associations and such other external forces are what are called external policies. For example, under the Income-Tax Act, every employer is bound to deduct tax from the salary payable to the employees every month. Similarly, the Government requires certain number of jobs to be reserved for the backward sections of the society. To give effect to such orders, policies may be formulated at the enterprise level.

2.       Internal Policies:

Policies formulated to give effect to certain decisions taken by the owners of a business establishment are what are called internal policies. For example, it may be the policy of a certain private sector organization to appoint certain categories of workers purely on contract basis. Similarly, a business organization may adopt a policy to produce only for the foreign market.

3.       Appealed Policies:

Such policies are formulated to give effect to the suggestions of the staff of an organization. For example, the employees may make an appeal to the top management to give employment to an eligible member of an employee’s family after the latter’s retirement. If such a proposal is acceptable to the management, the same may be announced as a policy.

4.       Explicit Policies:

Those policies of an organization that are stated outwardly are called explicit policies. Such policies form part of the organization manual. Most of the policies of an organization are explicit in nature. The sales policy, credit policy, etc., may be cited as examples.

5.       Implicit Policies:

These policies are not stated outwardly. For Example, every organization follows certain policy for the recruitment of employees. Such a policy is not usually stated explicitly. Even the existing employees may not be aware of it.