In is impossible to separate policy formulation from planning, since it is, in fact, a very important part of planning. When goals have been established and directions determined, policies that guide the enterprise toward them should be formulated.
Whenever a legislative or controlling body formulates a general statement of philosophy and direction, it is formulating policy.
At lower hierarchical levels, policy statements emerge when decisions are made about priorities in the use of facilities, criteria for salary increments, disciplinary measures for students, limits on faculty loads, requirements for graduation, guidelines for grades, or eligibility rules for athletes.
Most of these are established in advance, and all of them are intended to guide future action. They are, then, an integral part of planning.