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CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND TO THE STUDY.

Every business has a set of objectives which it sets out to achieves. These objectives are stated or defined in their policy or mission statements. In order to achieve the set goals, management ensures that all operations, transactions and activities of the business conform with established guides.  The established guide to action is called business guide to action is called business policy. (kindle Berger, 2016)   

Thus, a policy is a guide for making decisions in the enter pries (Ewurum and Unanka, 2015) For efficient performance a standard operational procedure must be followed and this, apparently, defines the boundary within which decision can be made.  If one decision provides help for decision in other situations, it is said to be a policy decision because it set a precedence and provides a guide to future decision making.  Thus, an important  characteristic of a policy is that it provides a guide and a reference point for decision-making by subordinates.  Clear policies encourage the delegation of decision-making authority.

In corporate business a number of important issues require or calls for top management decisions.  These decisions will define the fundamental business policies which arise from the objectives set to be achieved and are related to the functional areas.  These areas are procurement, production, marking, finance, personnel, research and development (Hanson, 2014). Top management (Board of Directors) have to provide guiding principles to actions of lower management in these functional areas.  For instance there should be a guiding principle on how and where raw materials should be procured, what to produce and production technique to be adopted and what marking strategies to adopt (including pricing) in order to be include method of financing as well as research and development.

Management expects believe that organizational performance to a large extant depends on how effective decisions taken on these functional areas are and how judiciously these decisions are implemented as business policies.  performance indications include market share, sales volume, product quality, customer satisfaction, level of profit, growth rate, etc (Aniebona, 2015).

Business policies affect these variables. Apparently, many business organizations have gave under because they did not have action guiding principle.  Decisions and activities of such enterprises were arbitrarily taken and carried out. Today, it has become obvious that business activities have to be conducted within the framework of guiding principles if the organization should perform efficiently and effectively.  It is against this background that this study is set to examine the impact of business policies on organizational performance.           

1.2   STATEMENT OF THE PROBLEM

Many business organizations do not have clearly defined business policies.  In other words, they do not have clearly defined policies regarding procurement, marketing, etc.  Apparently, such business may not achieve their objectives.  Lack of clearly defined and effectively implemented business policies could hamper the performance of the organizations.  This implies that profit maximization and growth will become elusive. Nevertheless, many organizations do not have clearly defined business objectives and have continued to operate under the harsh business environment prevalent in our economy.  This, therefore, calls for an investigation into how business policies affect organizational performance.

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