Chapter 2: Managing the Agribusiness

Managers Task Managers must efficiently combine human, financial, and physical assets to maximize long run profits by satisfying the firms customers demands 88% of all business failures are due to poor management

Managers must be: Technologically knowledgeable about products and services Effective communicators Able to motivate people Proficient in management technical skills such as accounting, finance, and forecasting

Definition of Management The art and science of successfully pursuing desired results with the resources available to the organization

Key Tasks of Agribusiness Managers I. Planning II. Organizing III. Directing IV. Controlling

Figure 2-1 The Wheel of Management

Planning Forward thinking about the courses of action based on the full understanding of all factors involved and directed at specific objectives.

The Planning Process Gather facts and information Analyze Forecast changes Set performance objectives (goals) Develop alternatives Evaluate results

Types of Planning Strategic planning (long-term) Mission statement Key markets (who we serve) Contribution (what we do) Distinction (how we do it differently) Tactical planning (short-term) Contingency planning Best case / Worst case

Table 2-4 Levels and Nature of Planning in the Agribusiness Firm Strategic level Tactical levelDay-to-day level Top management Middle management Line employees Very flexible Long-term Written analyses Complex, detailed Broad Somewhat flexible Intermediate-term Written reports Less detail, outlined General Inflexible Immediate Unwritten Simple Very specific

Figure 2-2 Levels of Planning and Goals for Seed Company Level 1: Corporate Strategy Formulated by CEO and executive team Level 2: Line of Business Strategy Formulated by business division heads Level 3: Functional Area Strategy Formulated by functional heads/department heads Level 4: Operating Level Strategy Formulated by heads of operating units/production facilities Corporate Objective Generate $5 million in profit Soybean Division Objective Sell 200,000 units $20/unit, hold production cost to $15/unit Soybean Division Sales Department Sell 200,000 units of $20/unit Sales Territory 1 Sell 500 units of $18/unit Levels of Planning Goals for Seed Company

Tasks in Organizing Set up the organizational structure Determine the jobs to be done Define lines of authority/ responsibility Establish relationships within the organization

Organizational Chart Division of labor Chain of command Bureaucracy

Figure 2-3 Organizational Chart for Carlson Seed Company

Directing Selecting, allocating and training personnel Staffing positions Assigning duties and responsibilities Establishing results to be achieved Creating desire for success Seeing the job is done and done properly

Management vs. Leadership Management involves performing management tasks and functions Leadership involves influencing the attitudes and behavior of followers and motivates them to do their best work

Shaping the Work Climate Set a good example Conscientiously seek participation Be goals- and results-centered Give credit and blame as needed Be fair, consistent and honest Inspire confidence and lend encouragement

Policies, Procedures and Practices Policies General guidelines for decision- making that guide the thinking process, set boundaries Procedures Step-by-step guide to implement a policy Practices What is actually done in the firm

Controlling Monitoring and evaluation of activities Performance is measured and compared with standards set Includes an information system monitoring plans and processes