The term policy has more precise definition as compared to strategy. It has been derived from the Greek word ‘politeia’ meaning citizen and Latin word ‘politis’ mean-ing polished, that is, to say clear. According to New Webster Dictionary, policy means

“the art of manner of governing a nation, the line of conduct which rulers of a nation adopt on a particular question specially with regard to foreign countries, the principle on which any measure or course of action is based”.

While these descriptions of policy relate to any field, Weihrich and Koontz define policy in management context as follows:

“Policies are general statements or understandings which guide or channel think-ing in decision making”.

Kotler has defined policy more elaborately as follows:

“Policies define how the company will deal with stakeholders, employees, customers, suppliers, distributors, and other important groups. Policies narrow the range of individual discretion so that employees act consistently on important issues”

We may define the policy as follows:

A policy is the statement or general understanding, which provides guidance in decision making to members of an organization in respect to any course of action.

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