Chapter 2

1. Chapter 2 The Agribusiness Manager

2. 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.

3. 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

4. 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

5. 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.

6. Identifying the Problem Following Up Determining Alternative Courses of Action Implementing the Decision Analyzing the Alternatives Selecting the Best Alternatives The Six Steps in Decision Making

7. The Four Functions of Management Planning Dynamic Continuous Process Directing Organizing Controlling

8. 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 • Define the firm’s purpose • State the firm’s objective

9. 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

10. ORGANIZING Proprietorship, Partnership, Corporation, and Cooperative Legal Forms of Organization Sole Proprietorship Owned and operated by one person Simple to organize and shut down Has few legal restrictions Owner is free to make all decisions Profit is taxed only once (in USA) Unlimited responsibility for debts Difficult to raise capital for growth of business Duration of business is limited to the life of proprietor

11. ORGANIZING Proprietorship, Partnership, Corporation, and Cooperative Legal Forms of Organization Partnership Association of two or more partners Has relatively few legal restrictions Permits the pooling the managerial skills and judgements Divided decision making and authority might cause problems Partners have unlimited liability for debts In a limited partnership, there must be at least one general partner Limited partners are limited only to the extent of their investment Most common form of business organization

12. ORGANIZING Proprietorship, Partnership, Corporation, and Cooperative Legal Forms of Organization Corporations Legal entities owned by shareholders Shareholder has no liability beyond loss of the value of stock Have perpetual life as long as submitting necessary reports Raising money for growth is easy Easiness in transfer of ownership and change management More difficult and expensive to organize Subject to many rules and regulations More taxing is applied Most large organizations are corporations

13. ORGANIZING Proprietorship, Partnership, Corporation, and Cooperative Legal Forms of Organization Cooperatives Special type of organization owned by users or customers Earnings are usually distributed tax free Board members managing cooperative are elected by all members

14. 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

15. 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

16. Discussion Questions • Why is business management referred to as a profession rather than a discipline? What is the difference between a discipline and a profession? • 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. • What is the difference between business management and leadership? • Describe the decision-making process.

17. Discussion Questions • List the four functions of management and describe how they interact to permit a firm to succeed. • Agribusiness management is described as a dynamic, continuous process. Do you agree or disagree? Explain your answer. • What is the difference between efficiency and effectiveness?