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A social media policy is an internal document that guides employee interactions on platforms like Facebook, Instagram, and Twitter. These tools present opportunities for firms to engage with customers and shape their brand identity but also pose risks, as inappropriate posts can damage a company's reputation. The video discusses the importance of having a social media policy and outlines its essential components. eFORMS, a comprehensive document database, introduces itself and encourages viewers to watch until the end for a customizable social media policy template. It is noted that the policy will be differentiated from social media strategies.