Chapter 2:

Managing the Agribusiness

Dr. Hammad Badar (Assistant

Professor IBMS)
 OBJECTIVES
• 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
this idea is used by agribusiness managers
DEFINITION OF MANAGEMENT

The art and science of

successfully pursuing
desired results with the
resources available
to the organization

Dr. Hammad Badar (Assistant Professor IBMS)

 MANAGER
The person who provides the organization with
leadership and who acts as a catalyst for change

 Responsible for the management of organization

 Accept responsibility of change
 Provide leadership
 Make things happen

Dr. Hammad Badar (Assistant

Professor IBMS)
 Agribusiness Managers

 Managers must efficiently combine human, financial,

and physical assets to maximize
long run profits by satisfying the firm’s
customers’ demands

 Majority of business failures are due to poor

management

Dr. Hammad Badar (Assistant Professor IBMS)

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

In Addition
 Strong understanding of biological and institutional factors related to
agribusiness
 Able to respond to changes in marketing conditions, weather
conditions, government policies and technology

Managers must be able to mix each of these skills and perspectives in

the right proportion to deliver the greatest long run net benefits for the
firm
Dr. Hammad Badar (Assistant Professor IBMS)
Four Key Tasks of Agribusiness Managers

1. Planning
2. Organizing
3. Directing
4. Controlling

Dr. Hammad Badar (Assistant Professor IBMS)

The Wheel of Management
Motivation

Planning
Controlling Communication Directing

Organizing

Dr. Hammad Badar (Assistant Professor IBMS)

 WHEAL OF MANAGEMENT
• The four tasks of management are the spokes that
connect the manager with the goals, objectives, and
results desired by the organization.
• Motivation
• Torque, or speed, or effectiveness, with which the tasks are
accomplished.
• Provides the motion by which the wheel either moves forward
or reverses, but it is not another task.
• Strong motivation results in speedy, efficient, successful and
forward-moving management.
• Communication
• The axle on which the entire wheel of management turns
• not another task, but without effective and timely
communication, the wheel of management soon begins to
wobble and squeak.
 Planning
Forward thinking about the
courses of action based on
the full understanding of all
factors involved and directed
at specific goals and
performance objectives.

Dr. Hammad Badar (Assistant Professor IBMS)

• Forward Thinking
– Looking ahead
– This is not a forecast but an action-oriented statement —
thinking about the future.
– To look forward, it is vital to be well aware of the events of
world and key trends.
• Courses of action,
• Developing Alternatives or methods of accomplishing
specific goals and objectives, based on a full
understanding of all factors involved.
– Here is where the facts and consequences of the various factors
affecting the alternative courses of action are weighed.
• Directed at specific goals and objectives
– Focusing on some end-point, some target.
The Planning Process
 Gather facts and information
 Analyze
 Forecast changes
 Set performance objectives (goals)
 Develop alternatives
 Evaluate results

Dr. Hammad Badar (Assistant Professor IBMS)

 Gathering facts and information
• Its place as a first step is easily justified, since adequate
information must be available to formulate or synthesize a
problem or opportunity.
• Fact gathering is subdivided into two parts:
– Gathering sufficient information to identify the need for a plan in the
first place
– Systematic gathering of specific facts needed to make the plan
work once it has been developed.
• Two challenges can limit fact gathering.
– First, some managers tend to skip or minimize this step because of
the difficulty of gathering data.
– Second, a manager should not become so engrossed in fact gathering
that inaction results.
 Step 2: Analyze the facts
• The groundwork for developing a sound plan is
provided during the process of analyzing facts .
• This process answers such questions as “Where are
we?” and “How did we get here?”
• It helps pinpoint existing problems and opportunities,
and provides the framework upon which to base
successful decisions.
• An analysis of facts will prevent mistakes and allow
for the most efficient use of the organization’s
resources.
 Step 3: Forecast Change

• The ability to determine what the future holds may be

the highest form of management skill.
– As managers ascend the organizational ladder, the demands
on their abilities in this area steadily increase.
• Forecasting becomes more difficult as the situation
becomes broader, more complex, or for a longer time
horizon.
• Forecasting is interrelated with the other five steps and
it is a logical extension of analysis into a future time
setting.
– Some say, “No one can predict the future in our business.”
 Step 3: Forecast Change cont…

• While no one can be expected to predict accurately

all future developments, this is hardly a good reason
for not attempting to anticipate what the future might
entail.
– Many failures that occur in forecasting result from sloppy,
ambiguous, and generalized thinking. Other failures arise
from a poor job of collecting facts.
• Forecasting change is not a guessing game; it is part
of a disciplined approach to planning.
Step 4: Set goals/performance objectives
• Goals are the specific quantitative or qualitative aims of the
company or business group that provide direction and
standards one can use to measure performance.
• Top management, boards of directors, and/or chief executives
often develop these goals to help bring focus and specificity
to the organization’s mission.
• The mission statement is the target toward which goals are
aimed.
• In turn, goals are the targets toward which performance
objectives are aimed.
 Step 4: Set goals/performance objectives
Well-stated goals should:
1. Provide guides for the performance objectives and results of
each unit or person
2. Allow appraisal of the results contributed by each unit or person
3. Contribute to successful overall organizational performance
Performance objectives are then set for specific units and/or
individuals.
• They provide the performance targets at the unit and/or
individual levels that are needed to accomplish the broader,
longer-range strategic goals.
• Performance objectives are usually set for shorter time periods
than strategic goals and usually are defined by measurable
results.
– Note that all these processes are going on continuously during the planning
process.
– Performance objectives cannot be set in a vacuum, but must be attainable.
Therefore, performance objectives must be a consequence of the gathering
and analyzing of relevant information and facts.
 Step 5: Develop Alternatives
• After the performance objectives have been set, agribusiness
managers must explore different ways of getting wherever they
want to go by developing alternative courses of action.
• Here again the relationship between performance objectives
and results can be seen.
– The results achieved depend upon the alternative activities selected to
meet the objectives.
– Alternatives must be weighed, evaluated, and tested in the light of the
agribusiness’ resources. Imagination is crucial since new ways and/or
new paths may be the key to success.
• It is important in this step to be creative, yet practical, in
generating alternatives. The conditions surrounding each
decision must be carefully considered.
 Step 6: Evaluate Results
• Management specialists have found monitoring progress to be
a high priority in planning.
– Carefully reviewing, assessing, or evaluating results shows whether
the plan is on course and allows both the analysis of new
information and the discovery of new opportunities.
• Evaluation must be incorporated into the planning process,
since a plan is only good so long as the situation remains
unchanged.
– An evaluation also reveals whether results met performance
objectives or where the results fell short or overshot objectives.
• Evaluation also points out weaknesses in plans and programs
so that those portions that are ineffective can be changed.
– In a fast-changing world, continuous evaluation is essential to
planning success.
– Evaluation also triggers the next round of planning.
Types of Planning
• Strategic planning (long-term)
–Mission statement
• Key markets (who we serve)
• Contribution (what we do)
• Distinction (how we do it differently)
• Some examples Nestle, McDonalds, FFC
• Tactical planning (short-term)
• Contingency planning
• Best case / Worst case

Dr. Hammad Badar (Assistant Professor IBMS)

 Table 2-4 Levels and Nature of Planning in
the Agribusiness Firm

Strategic Tactical level Day-to-day

level level
Top Middle Line
management management employees
Very flexible Somewhat flexible Inflexible
Long-term Intermediate-term Immediate
Written analyses Written reports Unwritten
Complex, detailed Less detail, outlined Simple
Broad General Very specific

Dr. Hammad Badar (Assistant Professor IBMS)

 Organizing
 The management task of organizing provides the
framework or structure to operate in
 Systematic classification and grouping of human other
resources in a manner consistent with the firm’s goals
 Organizing process is important at each level of
management
 Helps management establish accountability for the
results achieved
 Avoid confusion as to who is responsible
 Details the nature and degree of authority given to
each person as the activities of the firm are
accomplished
 Managers must develop an effective organizational
structure for the goals set during the planning process
Dr. Hammad Badar (Assistant Professor IBMS)
 Tasks in Organizing
 Set up the organizational structure

 Determine the jobs to be done

 Define lines of authority and responsibility

 Establish relationships within the organization

Dr. Hammad Badar (Assistant Professor IBMS)

Levels of Planning and Goals for Seed Company
Levels of Planning
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
Dr. Hammad Badar (Assistant Professor IBMS)
Goals for Seed Company
Corporate Objective
Generate $5 million in profit
Soybean Division Objective
Sell 200,000 units soybeans @ $20/unit,
hold production cost to $15/unit
Soybean Division Sales Department
Sell 200,000 units of soybeans @ $20/unit
Sales Territory 1
Sell 500 units of soybeans @ $18/unit
 Organizational Structure
 The framework of a company
 Different jobs are connected to different parts of
the whole framework
 Formal framework by which jobs are grouped,
coordinated and further defined
 Working knowledge of the organizational
structure is essential to put plans in action
 Exists in all businesses
 One-person business has organizational structure
with one person wearing many hats
 Helps clarify who has authority for specific
decisions
 For new employees, point to potential career
path
Dr. Hammad Badar (Assistant Professor IBMS)
Organizational Chart for Carlson Seed Company
Carlson Seed Company
Macomb, Illinois

President
John Carlson

Vice President Research Vice President Sales/Marketing Vice President Production

Michael Carlson Juanita Lopez Paul Carlson

Plant Breeding Manager Biotechnology Research Manager Sales/Marketing Manager Business Manager Field Production Manager Operations/Facilities Manager

Dr. Hammad Badar (Assistant Professor IBMS)

Organizational Chart

Shows the organizational structure of a company

• Division of labor
• The manner in which jobs are broken into components and
then are assigned to members or groups
• Chain of command
• Authority-responsibility relationship or links between
managers and those they supervise
• Bureaucracy
• A highly specialized structure in which work is divided
into specific categories and carried out by special
departments

Dr. Hammad Badar (Assistant Professor IBMS)

Directing
Guiding the efforts of others toward achieving a
common goal
 Selecting, allocating and training personnel

 Staffing positions

 Assigning duties and responsibilities

 Establishing the results to be achieved

 Creating the desire for success

 Seeing the job is done and done properly

Dr. Hammad Badar (Assistant Professor IBMS)

Directing involves
• Leading
• Supervising
• Motivating
• Delegating
• Evaluating

• Management involves performing management tasks and

functions
• Leadership involves influencing the attitudes and behavior
of followers and motivates them to do their best work

Dr. Hammad Badar (Assistant Professor IBMS)

Shaping the Work Climate

Creating a work climate for success helps a manager improve

employee efforts to the point where employees approach
their potential. Principles used to create the right work
climate include:
– 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

Dr. Hammad Badar (Assistant Professor IBMS)

Shaping the Work Climate

Free flow of communication:

One key to a productive work climate is the free flow of
communication.
• Communications flow downward (from management to
subordinates)
• Upward (from subordinates to managers)
• At the same level
Feedback:
Successful communications require feedback. The manager provide
the opportunity for feedback through a carefully designed
communications process involving:
• committees, meetings, memos, emails, text messages, and
individual contacts.

Dr. Hammad Badar (Assistant

Professor IBMS)
Policies, Procedures and Practices

• Policies
‒ Guide the thinking process during planning and decision-making
‒ Sets boundaries within which an employee can exert individual
creativity.
• Procedures
‒ Step-by-step guide to implement a policy for a specific activity
• Practices
‒ What is actually done in the firm
‒ Managers have to be sure that policies make sense, are relevant,
and are enforced, in order for them to become widespread
practices

Dr. Hammad Badar (Assistant Professor IBMS)

Controlling

Controlling task monitors performance and makes

adjustments to stay on purpose
• Monitoring and evaluation of
activities
• Performance is measured and
compared with standards set

Dr. Hammad Badar (Assistant Professor IBMS)

Controlling

• Controlling compensates for

The misjudgments
The unexpected change
The impact of change

• If the need for control information is not real

frustration
disrespect
inaccuracy

Dr. Hammad Badar (Assistant

Professor IBMS)
Controlling

• Important purposes of control is to evaluate the progress

being made toward organizational goals
example:
The budget or forecast comparison
• Is one over or under the budget?
• Are forecasts of sales and expenses in line with predictions?

Dr. Hammad Badar (Assistant

Professor IBMS)