In today’s unpredictable business climate, survival and growth are no longer guaranteed by capital strength or market dominance alone. They depend heavily on the clarity, quality, and implementation of a company’s policies and strategies. Yet many businesses operate without a well-defined direction or purpose. The absence of a guiding framework often results in financial losses, declining profitability, poor earnings, and weakened returns on capital employed (ROCE) or returns on shareholders’ capital (ROSC). A clear and actionable policy, backed by a dynamic strategy, is no longer a luxury; it is a necessity for businesses to thrive in turbulent times.
“A comprehensive policy captures the full scope of an organisation’s needs while maintaining clarity and avoiding ambiguity.”
Business policy serves as the compass of an organisation. It establishes boundaries within which lower-level managers can make decisions without needing constant approval from senior executives. By doing so, policies empower operational teams to act decisively and consistently, while ensuring alignment with the organisation’s overall vision and goals. Without this structure, businesses often find themselves in a reactive posture, constantly firefighting instead of executing well-planned initiatives that secure long-term stability.
Understanding business policy
Business policy refers to carefully crafted guidelines that govern an organisation’s operations and decision-making processes. These policies ensure predictability, streamline actions, and provide a framework within which all levels of management can function effectively.
An effective policy is characterised by several core attributes. It must be stable, offering consistent direction, yet flexible enough to adapt to evolving circumstances. It should be specific, simple, and easy for all stakeholders to understand. A comprehensive policy captures the full scope of an organisation’s needs while maintaining clarity and avoiding ambiguity. Above all, it must be appropriate, reliable, and aligned with the entity’s objectives. These attributes transform policy from a bureaucratic document into a practical tool for growth and resilience.
Policy and strategy: A symbiotic relationship
While policy provides the “what” and “why” of business actions, strategy delivers the “how”. Both are interdependent. Policies create the foundation for day-to-day decision-making, while strategies chart the course for achieving long-term objectives.
Policy is thought-driven, focusing on defining principles of action, while strategy is action-orientated, emphasising execution and adaptability. Policies are typically uniform, designed to govern internal operations, while strategies are dynamic, evolving in response to external market forces. Policies act as a blueprint for routine operations, whereas strategies tackle novel challenges and complex decisions.
In practice, strategic managers, such as directors and CEOs, are responsible for setting policies, while tactical and operational managers develop and execute strategies to achieve these policies’ objectives. This division of labour ensures organisational coherence, allowing companies to respond effectively to changing environments while maintaining internal stability.
Layers of strategy: From vision to execution
To understand a strategy’s impact on growth and sustainability, it is useful to examine its layers:
Corporate strategy: Defined by senior executives, this sets the overall vision for the organisation. It identifies the industries or markets in which the company will compete and articulates long-term aspirations.
Business strategy: Crafted by general managers, this focuses on achieving competitive success in a specific line of business. It bridges corporate goals with market realities.
Functional strategy: Developed at the departmental level, this outlines actions within specific functions, such as finance, marketing, or operations, to support business strategies.
Operational strategy: This level focuses on the execution of tasks at individual plants, distribution centres, or geographic units. It ensures that every operational unit contributes to the larger strategic goals.
Together, these layers create a cascading system of strategy formulation and implementation, ensuring alignment across every level of the organisation.
Driving growth and sustainability
Well-formulated policies and strategies are catalysts for business transformation. They establish effective communication channels, enhance production and service delivery, and create a culture of accountability. By defining clear expectations and empowering employees, policies reduce decision-making bottlenecks, while strategies offer the agility to respond to market shifts.
Moreover, businesses that prioritise strategic planning are better positioned to manage risks and seize emerging opportunities. A strong policy framework ensures consistency and compliance, while strategy encourages innovation and competitiveness. The synergy of both elements is critical to building resilience in a world where economic shocks, regulatory changes, and technological disruptions are constant threats.
Businesses without a coherent policy and strategy often find themselves vulnerable, unable to adapt, compete, or grow sustainably. Conversely, organisations that integrate these two elements enjoy improved profitability, stronger stakeholder confidence, and the ability to achieve long-term success.
Conclusion
In an era where uncertainty is the only certainty, businesses must treat policy and strategy as central pillars, not afterthoughts. Policy provides a roadmap, offering structure and stability. Strategy breathes life into that roadmap, ensuring adaptability and relevance. Together, they serve as twin drivers of growth, competitiveness, and sustainability.
For Nigerian businesses in particular, where economic instability and regulatory unpredictability are frequent challenges, adopting a robust policy and strategy framework is not optional; it is the only viable path forward. Organisations that fail to embrace this reality risk stagnation, while those that commit to deliberate planning and execution will secure their place in an increasingly competitive global economy.
Dr Kingsley Ndubueze Ayozie, FCTI, FCA, is a public affairs analyst and chartered accountant based in Lagos.
