What do the term ‘economic policies’ really mean? It should be enough for you to know that it is the set of rules, regulations, and standards that are applied to the organization and its operations, to ensure that they are carried out at an optimal level, within the bounds of the possible. This is what people mean when they say, for instance, that a company is ‘well managed’. It means that the organization is in a position to carry out its activities at the optimum level, within the limits of its available resources. People also say that a company is ‘efficiently run’. It means that the level of resources is used to their highest potential. But people have not been able to define the term ‘efficiently’, and have preferred to discuss the level of resources to be applied within the bounds of its available resources.
What really means is that an organization is either being directed to grow in size to meet growing market demand or it is being directed to be lean, to economize resources, and to be rationally organized to meet the challenges of the moment. This is the meaning of the term ‘economic policies’. It is not that the company is being guided to be wasteful and wasteful in business.
The true meaning of the term is one that places the organization at the optimal location within the boundaries of its resources. In fact, this is what management consultants mean by the term ‘economic policies’. They are directing their organizations toward growth in size, toward economies of scale, toward economies of speed, toward cost reduction. These are measures that are applied to a growing market.
A rational organization is one whose performance is driven by the logic of its operations and not by whims or emotions. It is a rational organization whose operations are in harmony with the logic of its operations. These are measures that are applied to a falling market.
So, the next time you hear someone say that a company is ‘efficiently run’, you know what they really mean is that the organization is being guided toward growth in size and away from growth in market value. And if you ask them what their ‘economic policies’ are, they will just say, ‘We are efficient, we are rational, our ‘economic policies are the definition of efficiency.’