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Farm Management PowerPoint PPT Presentation


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Farm Management. Chapter 2 Management and Decision Making. Functions of Management. Planning Implementation Control. The Business Planning Cycle. Planning Process. Integrate Changes. Take Action. Explain Deviation. Get Results. Compare Actual vs. Plan. Measure & Record Results.

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Farm Management

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Farm management l.jpg

Farm Management

Chapter 2

Management and Decision Making


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Functions of Management

  • Planning

  • Implementation

  • Control


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The Business Planning Cycle

Planning Process

Integrate Changes

Take Action

Explain Deviation

Get Results

Compare Actual vs. Plan

Measure & Record Results


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The Business Planning Cycle

Planning Process

Integrate Changes

Take Action

Mission

Situation

Objectives & Goals

Strategies & Tactics

Explain Deviation

Get Results

Compare Actual vs. Plan

Measure & Record Results


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Defining Your Mission

What’s your mission?

  • What business are you in?

  • What values characterize you and your business? (e.g., local foods, work environment, environmental concerns, trust, integrity, hard work, profit)


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Situation Analysis

  • Industry analysis

  • Market analysis

  • Competitive analysis

  • SWOT analysis


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Situation Analysis

  • Industry analysis

  • Market analysis

  • Competitive analysis

  • SWOT analysis

  • Who are the industry players?

  • Input suppliers

  • Growers

  • Processors

  • Wholesalers

  • Retailers

  • What are the industry trends?


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Situation Analysis

  • Industry analysis

  • Market analysis

  • Competitive analysis

  • SWOT analysis

Who and where are your customers?

What do they need?

What is their purchasing behavior?

How can you reach them?


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Situation Analysis

  • Industry analysis

  • Market analysis

  • Competitive analysis

  • SWOT analysis

Who are your competitors?

What are they like?

What products do they have?

How have they grown?


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Situation Analysis

  • Industry analysis

  • Market analysis

  • Competitive analysis

  • SWOT analysis

Strengths and Weaknesses are internal to the business

Opportunities and Threats are external to the business

SWOT should be easy after performing the other analyses


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Group Activity

Let’s perform an OT analysis

What opportunities and threats do you see in the gift pack making business?


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Where are you in the process?

You have defined your reason for being in business – Mission…

You know where you’re starting from – Situation Analysis…

Now, define your destination(s) – Objectives & Goals


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Objectives & Goals

What’s the difference?

Objectives: General statement describing intended directions; long-term or indefinite

Goals: Specific directions describing measurable targets; short-term with deadline


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Objectives & Goals

Activity

  • Develop one objective for your business

  • Define at least one goal to support your objective


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Goals

  • Goals should be written

  • Goals should be specific

  • Goals should be measurable

  • Goals should have a timetable


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Possible Goals

  • Survive, stay in business

  • Maximize profits

  • Maintain or increase standard of living

  • Increase equity

  • Maintain stable income

  • Pass farm to next generation

  • Increase free time

  • Increase farm size (“growth”)

  • Maintain or improve environmental quality


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Strategic Farm Management

  • Strategic management consists of charting the overall long-term course of the business

  • Tactical management consists of taking short-run actions that keep the business moving along that course until the destination is reached


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Strategies & Tactics

Strategies describe the overall plan for achieving objectives and goals

Tactics specifically detail how to implement strategies


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Strategies & Tactics

  • Goals

  • To develop 3 different gift basket packages by October 15, 2006

  • To begin selling by October 15, 2006

An Example…

Objective

To expand your product line

Let’s focus on Goal 1

What are some possible strategies?


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Strategies & Tactics

Strategy 1: Do everything yourself

  • Make baskets

  • Add basket liner

  • Add Coffee, macadamia nuts…

  • Seal the basket


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Strategies & Tactics

Strategy 2: Outsource everything

  • Send contractor

  • A basket is sent to the customer


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Strategies & Tactics

Strategy 3: Joint venture

  • A partner firm provides baskets

  • Another provides guava jellies

  • Another provides coffee

  • You provide everything else


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Strategies & Tactics

Which strategy

is right?


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Strategies & Tactics

Tactics simply correlate tasks, names, and timelines


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Figure 2-1Management flow chart based on three functions of management


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Control

Control is the “feedback” function.

To control, the manager must monitor results, record information, compare results to a standard, and take corrective action as needed.


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The Planning Cycle Revisited

Planning Process

Integrate Changes

Take Action

Mission

Situation

Objectives & Goals

Strategies & Tactics

Explain Deviation

Get Results

Compare Actual vs. Plan

Measure & Record Results


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Business Planning Skills & Tools

  • Information Gathering

    • Record keeping

    • Research

  • Information Processing

    • Enterprise & cash flow budgets

    • Financial statements and ratios


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Implementation

Once a plan is developed, it must be implemented, or set in motion.

To implement, the manager must acquire the resources needed for the plan and oversee the process. Coordinating, staffing, purchasing, and supervising fit under this function.


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Steps in Strategic Management

  • Define the mission of the business

  • Formulate the goals for the farm and family

  • Assess the resources available to the business (internal scanning)

  • Survey the world surrounding the business (external scanning)

  • Identify and select appropriate strategies

  • Implement and refine the selected strategies


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Assessing Resources

  • Physical resources: land, buildings, fences, breeding livestock, machinery and equipment, established perennial crops

  • Human resources: skills of the operator and other employees, likes and dislikes of individuals

  • Financial resources: cash, other capital and available credit


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Surveying the Business Environment

  • Called “External scanning”

  • The major types of crops produced haven’t changed much, but their characteristics are changing

  • A change may provide an opportunity or a threat


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Tactical Decision Making

  • Identify and define the problem or opportunity

  • Identify alternative solutions

  • Collect data and information

  • Analyze the alternatives and choose one

  • Implement the decision

  • Monitor and evaluate results

  • Accept responsibility for the decision


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Characteristics of Decisions

  • Importance

  • Frequency

  • Imminence

  • Revocability

  • Number of alternatives


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The Decision-Making Environment

  • Fixed supply of land: Land base is essentially fixed, making decisions about land use, sale, or acquisition critical

  • Biological processes and weather: Laws of nature place limits on manager’s decisions

  • Small size: Often one person serves as management and labor

  • Perfect competition: Producers are price takers


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Summary

Good management means the difference between earning a profit or suffering a loss. The overall direction is defined through strategic planning. The strategic plan is carried out via a number of tactical decisions. Agricultural managers operate

in an environment that differs from that

of most other businesses.


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