Read following passage and answer the question.

Star Ltd has recently entered the segment of manufacturing Electronic vehicles (EV) in India. It has set up a target volume of sales as 20% of total EV market. It has formulated a comprehensive plan taking into consideration the increasing levels of environment pollution and the new legal policies related to it. The company has set up broad parameters within which a manager may function. Apart from this, the company has prepared detailed statements about the EV project which outlines the other types of plans along with the human and physical resources required. The Finance Manager of the company has also prepared a plan which quantifies future facts and figure.

...............refers to the broad parameters within which a manager may function.

Policy

The correct answer is option 2 i.e. policy.

Policies define the broad parameters within which a manager may function. The manager may use his/her discretion to interpret and apply a policy. For example, the decisions taken under a Purchase Policy would be in the nature of manufacturing or buying decisions. Should a company make or buy its requirements of packages, transport services, printing of stationery, water and power supply and other items? How should vendors be selected for procuring supplies? How many suppliers should a company make purchases from? What is the criteria for choosing suppliers. All these queries would be addressed by the Purchase Policy.