Policies
A policy is a broad guideline for decision making that links the formulation of a strategy with its implementation. Companies use policies to make sure that employees throughout the firm make decisions and take actions that support the corporation’s mission, objectives, and strate- gies. For example, when Cisco decided on a strategy of growth through acquisitions, it estab- lished a policy to consider only companies with no more than 75 employees, 75% of whom were engineers.67 Consider the following company policies: 3M: 3M says researchers should spend 15% of their time working on something other than their primary project. (This supports 3M’s strong product development strategy.) Intel: Intel cannibalizes its own product line (undercuts the sales of its current products) with better products before a competitor does so. (This supports Intel’s objective of mar- ket leadership.) General Electric: GE must be number one or two wherever it competes. (This supports GE’s objective to be number one in market capitalization.) Southwest Airlines: Southwest offers no meals or reserved seating on airplanes. (This supports Southwest’s competitive strategy of having the lowest costs in the industry.) Exxon: Exxon pursues only projects that will be profitable even when the price of oil drops to a low level. (This supports Exxon’s profitability objective.)
Policies such as these provide clear guidance to managers throughout the organization. (Strategy formulation is discussed in greater detail in Chapters 6, 7, and 8.)
STRATEGY IMPLEMENTATION
Strategy implementation is a process by which strategies and policies are put into action through the development of programs, budgets, and procedures. This process might involve changes within the overall culture, structure, and/or management system of the entire organi- zation. Except when such drastic corporatewide