3. Chapter Outline
3
Functions of Management
Strategic Farm Management
Tactical Decision Making
Characteristics of Decisions
The Decision-Making Environment in
Agriculture
4. Chapter Objectives
4
1. To understand the functions of management
2. To present the steps in developing a strategic
management plan for a farm or ranch
3. To identify common goals of farm and ranch
managers, and to explain the steps in the
decision-making process
4. To explain the steps in decision making
5. To describe some unique characteristics of
the decision-making environment for
agriculture
6. Planning
6
Planning means choosing a course of
action.
To plan, a manager must establish
goals, identify resources, and allocate
the resources to competing uses.
7. Implementation
7
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.
8. Control
8
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.
11. Farm Management
11
farm management, making and implementing of
the decisions involved in organizing and operating a
farm for maximum production and profit
12. 12
Farm management draws on agricultural economics
for information on:
prices,
markets
agricultural policy
and economic institutions such as leasing and credit.
13. 13
It also draws on plant and animal sciences for
information on soils, seed, and fertilizer, on control
of weeds, insects, and disease, and on rations and
breeding; on agricultural engineering for
information on farm buildings, machinery,
irrigation, crop drying, drainage, and erosion control
systems; and on psychology and sociology for
information on human behavior.
14. Strategic Farm Management
14
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
16. Steps in Strategic Management
16
1. Define the mission of the business
2. Formulate the goals for the farm and
family
3. Assess the resources available to the
business (internal scanning)
4. Survey the world surrounding the
business (external scanning)
5. Identify and select appropriate strategies
6. Implement and refine the selected
strategies
17. Do you agree or disagree?
17
1. A farm is a good place to raise a family.
2. A farm or ranch should be run as a business.
3. It is acceptable for farmers to borrow money.
4. A farmer should have at least two weeks of vacation.
5. It is better to be self-employed than to work for someone else.
6. It is acceptable for a farmer to also work of the farm.
7. It is more enjoyable to work alone than with other people.
8. Farmers should strive to conserve soil and keep water and air
resources clean.
9. A family farm should be passed on to the next generation.
10. All family members should be involved in the operation.
19. Goals
19
Goals should be written
Goals should be specific
Goals should be measurable
Goals should have a timetable
20. Possible Goals
20
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
21. Assessing Resources
21
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
22. Surveying the Business Environment
22
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
23. Identifying and Selecting Strategies
23
Some businesses have more potential
routes for reaching their goals than
others because resources are more
flexible. As the number of alternative uses
for resources increases, so does the
complexity of the manager’s decisions.
24. Implementing and Refining
24
Manager must formulate action steps to
implement the plan
Manager must decide which information to
collect to evaluate the success or failure of
the plan
Strategic management is an ongoing activity
25. Tactical Decision Making
25
1. Identify and define the problem or
opportunity
2. Identify alternative solutions
3. Collect data and information
4. Analyze the alternatives and choose one
5. Implement the decision
6. Monitor and evaluate results
7. Accept responsibility for the decision
27. The Decision-Making Environment
27
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
28. Summary
28
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.