The exercise of formulating the policy guidelines by way of systematic analysis of the environment in which the bank operated, its competition, endusers, operations and past performance is described in the case. It was now possible to formulate the expected performance of the various operating units for the next year after taking the internal and external environmental factors into consideration. However, while preparing the policy guidelines, the question arose as to whether it would not be better if the top management spent more time on the various strategies to be adopted rather than on the expected business levels for the year. The question, whether quantification of business levels were not likely to be treated as dictated targets by the circles in the present system was also raised.