Question:
Explain the following types of plans :
(i) Policy
(ii) Procedure
Explain the following types of plans :
(i) Policy
(ii) Procedure
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A policy is a general statement that guides managers in decisions within set limits. A procedure is a fixed, step-by-step sequence for doing a routine task.
Updated On: Oct 26, 2026
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Solution and Explanation
Step 1: Understanding the question:
We have to explain two types of plans: policy and procedure.
Both guide the daily working of managers, but they differ in the way they guide.
Step 2: Policy - meaning:
A policy is a general statement that guides the thinking of managers and channels their energy in a particular direction.
It is made by top management within the objectives of the firm.
It tells managers what the limits of their action are, but leaves them free to use their judgment inside those limits.
Step 3: Policy - features and example:
A policy helps in taking quick and consistent decisions on repeated problems.
It is flexible, because the manager can interpret it as per the situation.
For example, a policy of recruiting new employees only from within the company, or a policy of giving credit to regular customers only.
Step 4: Procedure - meaning:
A procedure is a set of routine steps arranged in time order for doing a particular work.
It states the exact sequence in which an activity must be performed.
It is framed to carry out the policy in a systematic manner.
Step 5: Procedure - features and example:
A procedure leaves very little room for personal judgment, because every step is fixed.
It brings uniformity and saves time in repeated tasks.
For example, the steps for getting a loan approved: application, verification of documents, sanction and payment.
Final Answer:
A policy is a general guide to thinking and decision-making, whereas a procedure is the fixed step-by-step method of doing a routine task.
We have to explain two types of plans: policy and procedure.
Both guide the daily working of managers, but they differ in the way they guide.
Step 2: Policy - meaning:
A policy is a general statement that guides the thinking of managers and channels their energy in a particular direction.
It is made by top management within the objectives of the firm.
It tells managers what the limits of their action are, but leaves them free to use their judgment inside those limits.
Step 3: Policy - features and example:
A policy helps in taking quick and consistent decisions on repeated problems.
It is flexible, because the manager can interpret it as per the situation.
For example, a policy of recruiting new employees only from within the company, or a policy of giving credit to regular customers only.
Step 4: Procedure - meaning:
A procedure is a set of routine steps arranged in time order for doing a particular work.
It states the exact sequence in which an activity must be performed.
It is framed to carry out the policy in a systematic manner.
Step 5: Procedure - features and example:
A procedure leaves very little room for personal judgment, because every step is fixed.
It brings uniformity and saves time in repeated tasks.
For example, the steps for getting a loan approved: application, verification of documents, sanction and payment.
Final Answer:
A policy is a general guide to thinking and decision-making, whereas a procedure is the fixed step-by-step method of doing a routine task.
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