(a) Policy: Policies are the general statements which guide thinking and action organisation. A policy serves as a guide to decision makers to channelizes the energy in a proper direction. It provides direction to deal with a particular situation. Such a policy is the general response to a particular problem or situation. Policies guide the managerial action and decisions in the implementation of strategy. For example, sales policy, recruitment policy etc.
(b) Strategy: A strategy provides the broad contours of in organisation's business. It is a unified comprehensive integrated long term plan that relates the strategic advantages of the firm to the challenges of the environment. It is designed to ensure that the basic objective are achieved through proper execution. Thus a strategy includes three dimensions:
(a) Determining long-term objectives.
(b) Adopting a particular course of action
(c) Allocating resources necessary to achieve the objectives.