Give the meaning of Policy and Budget as types of plans.
Policy and Budget both are regarded as few of the most important types of plans. Policies are general statements which provide a basis for interpreting the strategy of the firm. They guide the thinking of the firm and channelise the energies towards a particular direction. These policies act as a guide to managerial action and decisions in an implementation of the strategy. In simple words, we can say policies define the broad parameters within which a manager may function. The manager then according to his/her discretion interprets the policy and implements the same.
The second type of plan, that is Budget, is a statement of results expected and is expressed in
numerical terms. This plan quantifies future facts and figures because of which it becomes easier to compare actual figures with the expected figures and subsequently take a corrective action. Budget acts as both control device and planning, but since it involves forecasting, it is treated as one of the types of plans. Example: Cash Budget (a tool for managing cash effectively) helps management by showing estimated cash inflows and cash outflows over a given period of time.