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Chapter Two: Managing the Agribusiness - Coggle Diagram
Chapter Two: Managing the Agribusiness
Objectrives
Define management and explain the role of a manager
Understand the decision-making environment for agribusiness managers
Describe the tasks of planning, organizing, directing, and controlling in agribusiness management
Understand the steps in the planning process
Define leadership and compare it to management
Explain the differences among policies, procedures, and practices
Describe management by exception and understand how it is used by agribusiness managers
Introduction
Success or failure in agribusiness can be influenced by:
External factors like global market demand or fuel price spikes
Chance events, such as unexpected opportunities or competitor errors
These external factors are beyond the firm’s direct control
the firm’s internal decisions also play a crucial role in performance
Key managerial decisions include:
How investment funds are allocated
Who is hired
What products are developed or introduced
Where plants or facilities are constructed
Which partnerships or deals are pursued
Effective management helps the firm:
Capitalize on opportunities
Prepare for and respond to challenges
There is no single, universal recipe for successful management—each situation is different.
Management skills and principles can be learned, but must be adapted to fit unique contexts.
Most people are not born managers; management is a learned skill.
Business education has evolved to help people understand why some firms succeed and others fail.
Effective agribusiness managers are guided by sound management principles.
The chapter aims to explore
The key tasks of a manager
A foundation for understanding agribusiness management
Firm performance is strongly influenced by how well managers use organizational resources.
Managers are responsible for:
Utilizing resources to achieve the firm’s objectives
Responding to market opportunities and managing risks
Driving performance through strategic resource allocation
Today’s agribusiness managers are diverse individuals in terms of age, gender, background, and geography.
Each manager operates in a unique context influenced by:
Industry
Commodity
Location
Employees
Competitors
Because of this diversity, effective management requires situational adaptation.
Today’s agribusiness managers
Management is both an art and a science
Art: Motivating, communicating, leading people
Science: Applying technical knowledge, using data and tools
Core Goal of Management
Efficiently combine human, financial, and physical assets
Maximize long-run profits by satisfying customer demand
Key Skills Required for Managers
Technical knowledge of the product or function
Strong communication skills
Ability to motivate and lead teams
Proficiency in management skills:
Accounting
Finance
Forecasting
Operations
Special Demands on Agribusiness Managers
Deep understanding of biological and institutional factors
Must manage:
Weather uncertainty
Perishability of agricultural products
Government policies and regulations
Technological change in agriculture
Adaptability is Key
Must respond quickly to changing market conditions
Balance all factors to deliver long-term net benefits
Success = Right Mix of Skills + Right Timing + Right Decisions
Defining management in agribusiness
Successful managers see themselves as managers and leaders
They are ready and willing to take on responsibility
They act as catalysts for change and action
View authority as a challenge, not a burden
Quote by Nicholas Murray Butler:
“There are three kinds of people: the few who make things happen, the many who watch things happen, and the majority who have no idea what has happened.”
Definition of Management
The art and science of successfully pursuing desired results with the resources available to the organization
the eight points that distinguish the agribusiness management environment:
Food as a product
Biological nature of production agriculture
Seasonal nature of business
Uncertainty of the weather
Types of fi rms
Variety of market conditions
Rural ties
Government involvement
The four key tasks of agribusiness managers
Planning
forward thinking about courses of action based on a full under
standing of all factors involved and directed at specifi c goals and performance objectives.
Types of Planning in Agribusiness
Strategic Planning
Tactical Planning
Contingency Planning
Levels of Planning
Strategic (Top Management)
Tactical (Middle Management)
Operational (Line Employees)
The Six Steps of the Planning Process
Gather Facts and Information
Analyze the Facts
Forecast Future Developments
Set Goals and Performance Objectives
Develop Alternative Courses of Action
Evaluate Progress and Readjust Plans
Organizing
Organizing provides the structure for people to work effectively toward company goals.
A well-designed organizational structure ensures:
Clear accountability
o Defined authority and responsibility
o Reduced confusion and ―buck passing‖
o Efficient teamwork and cooperation
Key Elements of the Organizing Task
Setting up the organizational structure
Determining the jobs to be done
Defining lines of authority and responsibility
Establishing internal relationships within the firm
Organizational structure is the formal framework that defines:
How jobs are grouped and coordinated
o Communication and cooperation across departments
o Authority, responsibility, and reporting lines
Organizational Charts Show
Division of labor
Chain of command
Organizational design
Directing
is the process of guiding and coordinating efforts toward a shared goal.
Key Activities in Directing
Selecting, allocating, and training personnel
Staffing positions
Assigning duties and responsibilities
Setting expected results
Creating motivation and desire for success
Ensuring tasks are completed properly
Core Aspects of Directing
Involves leading, supervising, motivating, delegating, and evaluating team
members
Transforms plans and structures into coordinated action and performance
Builds a work environment focused on:
Interest in the job
o Energetic execution
o Creative thinking
o Teamwork
Leadership skills of the manager are crucial for successful direction
Policies, Procedures, and Practices
Policies : Serve as guidelines for planning and decision-making
Procedures : Step-by-step instructions for carrying out policies
Practices : Represent what is actually done in day-to-day operations
Controlling
Controlling is the process of monitoring, measuring, and evaluating performance.
Purpose of Control:
Ensures plans are on track
Identifies deviations or problems early
Triggers corrective actions if goals are not being met
Compensates for human error, external disruptions (e.g., weather, market shifts), and misjudgments
Key Features of an Effective Control System:
Includes an information system that tracks performance
Provides timely and meaningful data
Periodically reviewed for relevance and value
Should avoid irrelevant or outdated information to prevent:
Wasted time
o Employee frustration
o Poor decision-making
Management by Exception
Focuses management attention only on areas where performance deviates
from the plan.
Managers ignore areas performing as expected and concentrate on problems needing
corrective action
Key Features & Benefits:
Saves time by focusing on problem areas only
Provides a clear overview through graphs rather than raw data
Simple to prepare and easy to understand
Helps interpret complex interrelated factors