Chapter 2

The Agribusiness Manager

The Practice of Mnagement

The common business management principle that unifies everything a manager does is the desire to maximize the long-term profits of the firm by profitably satisfying customers’ needs.

The Agribusiness Manager

To be successful managers must be: Technically knowledgeable about the

firm’s products and services A good communicator to everyone,

especially those who work for the firm Able to motivate people effectively Proficient in the technical skills of business

management such as inventory management, accounting, and forecasting

Be able to mix each of these skills in just the right proportion in each market situation to gain the greatest benefit to the firm

Management Vs. Leadership

Effective Manger is to accomplish tasks through people.

Management can effectively and efficiently mange the technical process

Effective leaders who communicate and motivate people

Agribusiness Management Confront extra burdens of uncertain

weather, disease, changing technology, changing government policies, fluctuations in foreign currency exchange rates, and perishable nature of their products.

The Six Steps in Decision Making

Identifying the Problem

Selecting the Best Alternatives

Analyzing the Alternatives

Following UpDetermining Alternative

Courses of Action

Implementingthe Decision

The Four Functions of Management

PlanningPlanning

OrganizingOrganizing

ControllingControlling

DirectingDirecting DynamicDynamicContinuousContinuous

ProcessProcess

DynamicDynamicContinuousContinuous

ProcessProcess

Planning Functions

The objective of planning: Put the firm in the best possible position relative to future business conditions and customer demands

Planning begins with the organization developing its marketing plan

1. Define the firm’s purpose

2. State the firm’s objective

The Organizing Function

Development of an organizational scheme that can accomplish the firm’s purpose and objective efficiently and effectively

The selection of a legal structure

Sole Proprietorship

Partnership

Cooperative

Corporation

ORGANIZING

Legal Forms of Organization

Sole ProprietorshipOwned and operated by one personSimple to organize and shut downHas few legal restrictionsOwner is free to make all decisionsProfit is taxed only once (in USA)Unlimited responsibility for debtsDifficult to raise capital for growth of businessDuration of business is limited to the life of proprietor

Proprietorship, Partnership, Corporation, and Cooperative

ORGANIZING

Legal Forms of Organization

PartnershipAssociation of two or more

partnersHas relatively few legal

restrictionsPermits the pooling the

managerial skills and judgementsDivided decision making and

authority might cause problemsPartners have unlimited liability

for debtsIn a limited partnership, there

must be at least one general partnerLimited partners are limited only

to the extent of their investment

Most common form of business organization

Proprietorship, Partnership, Corporation, and Cooperative

ORGANIZING

Legal Forms of Organization

CorporationsLegal entities owned by shareholders Shareholder has no liability beyond

loss of the value of stockHave perpetual life as long as

submitting necessary reportsRaising money for growth is easyEasiness in transfer of ownership and

change managementMore difficult and expensive to

organize Subject to many rules and regulationsMore taxing is applied

Most large organizations are corporations

Proprietorship, Partnership, Corporation, and Cooperative

ORGANIZING

Legal Forms of Organization

CooperativesSpecial type of organization

owned by users or customersEarnings are usually

distributed tax freeBoard members managing

cooperative are elected by all members

Proprietorship, Partnership, Corporation, and Cooperative

The Controlling Function

Concerned with giving management feedback on the firm’s progress toward the goals set in planning

Include measures of an individual’s progress as well as the progress of entire departments and business

Production rates per hour, cost per unit, or annual dollar sales will determine the success or failure of the business

The Directing Function

Implementation of the other three management functions (planning, organizing, and controlling)

Successful directing relies strongly on good leadership skills to accomplish its mission

The success of the directing function depends on the managers’ ability to motivate their employees

Discussion Questions

1. Why is business management referred to as a profession rather than a discipline? What is the difference between a discipline and a profession?

2. Business managers practice management just as a physician practices medicine or a lawyer practices law. Do you agree or disagree with this statement? Explain your answer.

3. What is the difference between business management and leadership?

4. Describe the decision-making process.

Discussion Questions

5. List the four functions of management and describe how they interact to permit a firm to succeed.

6. Agribusiness management is described as a dynamic, continuous process. Do you agree or disagree? Explain your answer.

7. What is the difference between efficiency and effectiveness?