Strategy is now the more common term for what used to be called policy, though there is no consensus on this also. For example, some writers make distinction between the two referring as the general or grand strategy as policy and competitive; strategy as the strategy used in military sense. The situation is, therefore, still confusing. Steiner has observed that for some years and after much travail, the term policy was fairly understood. Then the game theorists began to use the term strategy with result that management literature now is thoroughly confused about its meaning and relationship to policy. However,in this text, two terms have been used with fairly different meaning and based on that, the difference between the two can be identified.

A distinction between policy and strategy is made on the basis that former is a guideline to the thinking and action of those who make decisions while the latter is concerned with the direction in which human and physical resources are deployed in order to maximize the chances of achieving organizational objectives in the face of environmental variables. Ansoff makes difference between policy and strategy by putting that “policy is a contingent decision whereas strategy is a rule for making decision. A contingent event is recognized because it is repetitive but the specific occurrence cannot be specified. For such repetitive events, it is not worthwhile to decide every time what to do when such a contingency arises. It is better to decide in advance what ill be done in such a case.