Microsoft Azure Fundamentals AZ-900 Practice Exam 2025 – Complete Study Resource

The correct formation of Management Groups and Policies is structured as Management Group > Initiative > Policy. In Azure, a management group is the highest level in the hierarchy and is used to manage access, policies, and compliance for multiple subscriptions. Initiatives (also known as policy sets) group together multiple policies to track compliance and enforce best practices across the resources within the management group. Policies are the individual rules that define what is allowed or denied in your Azure environment, such as enforcing tags on resources or controlling the types of resources that can be deployed.

This hierarchical approach allows for efficient governance and compliance management. Starting with the management group, it establishes a centralized governance layer. Initiatives bundle related policies together for streamlined management and reporting, while the policies themselves enforce specific rules and standards on resources. This sequence enables organizations to maintain a structured approach to compliance and resource management, making it easier to implement and manage policies across multiple subscriptions effectively.