AGRB 428: AGRIBUSINESS STRATEGIC MANAGEMENT
Lecture material for BSc. Agribusiness Mgt IV
Robert Aidoo, Ph.D
Dept. of Agric. Economics, Agribusiness & Extension, KNUST, Kumasi
• Course objective:
– This course aims at providing the student with strategic management
techniques needed to manage agribusinesses.
The strategic Planning process
Strategic management issues in agribusiness
Formulation of agribusiness strategies and solutions to strategic problems
Integration of operations, marketing, finance and human resource
management in agribusiness enterprises
• Basic Text:
• Strategic Management by C.W.L. Hillaw and G.R Jones, Student
Text: An Integrated Approach.
What is strategic management
• What we think, know, or believe in is, in the end, of little consequence. The
only consequence . . .. is what we do…. (Haines, 1995).
• Strategic management as a concept is not new.
– The term was first used in the 1970’s, when some strategic
planners more or less thought up strategic programs and then
tried to sell them to decision makers.
• From the 1990’s coming, the view of strategic
planning and strategic management is much
• Now the definition of strategic planning takes us away from the notion that
strategic planning is a staff job and focuses us more on a process that
requires the senior leaders of an organization to set its strategic direction.
• Strategic planning …..is the process by which the
guiding members of an organization envision its
future and develop the necessary procedures and
(Goodstein, Nolan, and Pfeiffer, 1992).
• The concept of strategic management builds on
this definition of strategic planning,
------ recognizing that although planning is the prelude
of strategic management, it is insufficient if not followed
by the deployment and implementation of the plan and
the evaluation of the plan in action.
• Strategic management is a systems approach to identifying and
making the necessary changes and measuring the organization’s
performance as it moves toward its vision.
• It has been defined as a management system that links strategic
planning and decision making with the day-to-day business of
operational management (Gluck, Kaufman, and Walleck, 1982)
The Strategic Management Process
• The five processes of strategic management are:
– strategic planning
– measurement and evaluation.
Role of senior managers/leaders
• It is the responsibility of senior leadership to strategically manage the
– Strategic management is a continuous process rather than a one-time
– Therefore, the senior leaders must become strategic thinkers and leaders
of the organization and its culture, changing it as necessary.
facilitators, coaches, consultants, and consensus-builders.
Transformational leadership is described by Bernard Bass as, superior leadership
performance that occurs when leaders broaden and elevate the interests of their
employees, when they generate awareness and acceptance of the purposes and mission
of the group, and when they stir their employees to look beyond their own self-interest
for the good of the group.
• Acquiring transformational leadership traits requires hard work and
dedication, willingness to take some risks, and internalizing the organization’s
vision and guiding principles.
Benefits of strategic management?
• When an organization is practicing strategic management, thinking becomes
more visionary, which is characterized by:
– Breakthrough thinking about the future; organizational boundaries are more flexible
– A shift in focus from the inputs that are used to run the business to the outputs and
outcomes the organization desires to achieve
– A focus on optimizing organizational performance and process quality as keys to delivering
quality products and services
– A move toward an organizational culture that adapts easily to change.
• With practice, patience, dedication, and hard work, the organizational learning
that takes place through the application of strategic management will bring the
organization closer to realizing its goals and vision.
• With each update of the strategic plan, senior leaders will become better able to
deploy the plan, implement changes, and measure organizational performance.
What is the first step towards strategic management?
• The first step toward strategic management is to develop a
strategic plan for the organization
What is Strategic Planning?
• Process to establish priorities on what you will accomplish in the
• Forces you to make choices on what you will do and what you will
• Pulls the entire organization together around a single game plan
• Broad outline on where resources will get allocated
departments, organizations and businesses to develop blueprint
for action and change
• The process should be community based, inclusive and
participatory to allow for maximum stakeholder involvement and
Why do Strategic Planning?
• If you fail to plan, then you plan to fail – be
about the future
• Strategic planning improves performance
• Counters excessive inward and short-term thinking
• Solves major issues at a macro level
• Communicates to everyone what is most important
Benefits of Strategic Planning
• Defines mission, vision &
• Provides base to measure
• Establishes realistic
goals, objectives &
• Develops consensus on
• Builds strong teams
• Ensures effective use of
• Solves major problems
A Good Strategic Plan should . . .
• Address critical performance issues
• Create the right balance between what the organization is capable
of doing vs. what the organization would like to do
• Cover a sufficient time period to close the performance gap
• Visionary – convey a desired future end state
• Flexible – allow and accommodate change
operational, tactical, individual
• Where are we now? (Assessment)
• Where do we need to be? (Gap / Future End State)
• How will we close the gap (Strategic Plan)
• How will we monitor our progress
Planning to Plan (Pre-planning)
• Discuss the planning phase of strategic planning by
brainstorming on some pre-requisites needed to
undertake the strategic planning process
• Planning to plan requires:
– Organizational readiness
• Recognition of need to plan
• Readiness to plan
– Organizational commitment
• Board commitment
• Senior managers’ commitment
• Staff commitment
– Organizational Capacity
• Human resources
– Board committees
– Special/Standing committees
• Financial resources
– Determine resources
– Identify budget
– Allocate organizational time
– Determine realistic time lines
Strategic Planning Model
Where we are
• Environmental Scan
Where we want to be
How we will do it
Down to Specifics
How are we doing
• Situation –
Past, Present and
• Significant Issues
• Mission & Vision
• Values / Guiding
• Targets / Standards of
• Review Progress –
• Situational Analysis
• Align / Fit with
• Major Goals
• Initiatives and
• Take Corrective
• SWOT –
es, Opportunities, Thr
• Specific Objectives
• Action Plans
• Feedback upstream –
– External assessment (Environmental Scan)
• gathering of information that concerns the organization’s
– Internal assessment
gathering of information that concerns the organization’s
internal operational issues
• analysis and interpretation of this information
• application of this analyzed information in decision making
– Summarize this analysis/assessment with the SWOT model
Internal Assessment: Organizational
assets, resources, people, culture, system
s, partnerships, suppliers, . . .
Marketplace, competitor’s, social
trends, technology, regulatory
environment, economic cycles .
• Easy to Understand
• Apply at any
• Needs to be
• Be honest about your
What are some internal positive things about your organization?
What does the community see as your strengths?
•Strength’s – Those things that you do well, the high value or
• Strengths can be tangible: Loyal customers, efficient distribution
channels, very high quality products, excellent financial condition
• Strengths can be intangible: Good leadership, strategic
insights, customer intelligence, solid reputation, high skilled
• Often considered “Core Competencies” – Best leverage points for
growth without draining your resources
What are some weaknesses in organization?
• What does the community see as your weaknesses?
•Weaknesses – Those things that prevent you from doing what
you really need to do
• Since weaknesses are internal, they are within your control
workforce, insufficient resources, poor product quality, slow
distribution and delivery channels, outdated technologies, lack of
planning, . . .
What are some opportunities in your community or region?
• What are some emerging trends?
•Opportunities – Potential areas for growth and higher
• External in nature – marketplace, unhappy customers with
competitor’s, better economic conditions, more open trading
policies, . .
• Internal opportunities should be classified as Strength’s
• Timing may be important for capitalizing on opportunities
What are some district, regional or national issues facing the organization?
• What are some technology issues that face the organization?
•Threats – Challenges confronting the organization, external in
• Threats can take a wide range – bad press coverage, shifts in
consumer behavior, substitute products, new regulations, . . .
• May be useful to classify or assign probabilities to threats
• The more accurate you are in identifying threats, the better
position you are for dealing with the “sudden ripples” of change
Why create a baseline?
• Puts everything about the organization into a
single context for comparability and planning
• Descriptive about the company as well as the
• Include information about relationships –
customers, suppliers, partners, . . .
• Preferred format is the Organizational Profile
Major Components of the
Strategic Plan / Down to Action
What we want to be
Why we exist
What we must achieve to be successful
Specific outcomes expressed in
measurable terms (NOT activities)
Planned Actions to
Monitors of success
Desired level of performance
• Captures the essence of why the organization
exists – Who we are, what we do
• Explains the basic needs that you fulfill
• Expresses the core values of the organization
• Should be brief and to the point
• Easy to understand
• If possible, try to convey the unique nature of your
organization and the role it plays that differentiates
it from others
Examples – Good and Bad
To Explore the
Universe and Search
for Life and to
Inspire the Next
Does a good job of expressing the core
values of the organization. Also conveys
unique qualities about the organization.
To Make People Happy
Too vague and and unclear. Need more
descriptive information about what makes
the organization special.
• How the organization wants to be perceived in the
future – what success looks like
• An expression of the desired end state
• Challenges everyone to reach for something
significant – inspires a compelling future
• Provides a long-term focus for the entire
Guiding Principles and Values
• Every organization should be guided by a set of
values and beliefs
• Provides an underlying framework for making
decisions – part of the organization’s culture
• Values are often rooted in ethical themes, such as
honesty, trust, integrity, respect, fairness, . . . .
• Values should be applicable across the entire
• Values may be appropriate for certain best
management practices – best in terms of quality,
exceptional customer service, etc.
Guiding Principles and Values
We obey the law and do not compromise moral or ethical principles – ever!
We expect to be measured by what we do, as well as what we say.
We treat everyone with respect and appreciate individual differences.
We carefully consider the impact of business decisions on our people and we
recognize exceptional contributions.
We are strategically entrepreneurial in the pursuit of excellence, encouraging original thought and its
application, and willing to take risks based on sound business judgment.
We are committed to forging public and private partnerships that combine diverse strengths, skills and
• Describe a future end-state – desired outcome
that is supportive of the mission and vision.
• Shapes the way ahead in actionable terms.
• Best applied where there are clear choices about
• Puts strategic focus into the organization – specific
ownership of the goal should be assigned to
someone within the organization.
• Cascade from the top of the Strategic Plan –
Mission, Vision, Guiding Principles.
• Look at your strategic analysis – SWOT, Past
Performance, Gaps . .
• Limit to a critical few – such as five to eight goals.
• Broad participation in the development of goals:
Consensus from above – buy-in at the execution
• Should drive higher levels of performance and
close a critical performance gap.
Examples of Goals
Reorganize the entire organization for better responsiveness to customers
We will partner with other businesses, industry leaders, and government agencies in order to better
meet the needs of stakeholders across the entire value chain.
Manage our resources with fiscal responsibility and efficiency through a single comprehensive process
that is aligned to our strategic plan.
Improve the quality and accuracy of service support information provided to our internal customers.
Establish a means by which our decision making process is market and customer focus.
Maintain and enhance the physical conditions of our public facilities.
• Relevant - directly supports the goal
• Compels the organization into action
• Specific enough so we can quantify and measure the
• Simple and easy to understand
• Realistic and attainable
• Convey responsibility and ownership
• Acceptable to those who must execute
• May need several objectives to meet a goal
Goals vs. Objectives
Very short and general
statement, few words
Very specific statement, more
Broad in scope
Narrow in scope
Directly relates to the Mission Indirectly relates to the Mission
Covers long time period
(such as 10 years)
Covers short time period (such 1
year budget cycle)
Examples of Objectives
Develop a customer intelligence database system to capture and analyze patterns in purchasing
behavior across our product line.
Launch at least two new products to meet the needs of our customers.
Centralize the procurement process for improvement and efficiency in procurement.
To train at least 10 staff in customer relations/customer care over the next three years.
Establish at least one distribution center in each of the ten regions in Ghana over the next two years.
To procure at least two rice milling equipment with de-stoners over the next two years to improve the
quality of our milled rice
Monitor and address employee morale issues through an annual employee satisfaction survey.
To increase workers salaries by at least 10% per annum to reduce the current high attrition rate .
To establish a subsidiary to produce our own feed internally in the next one year.
• The Action Plan identifies the specific steps that will be taken to
achieve the strategic objectives
Who, What, How, Where, and When questions related to the
project or initiative that drives strategic execution
• Action Plans are geared toward operations, procedures, and
• Each Initiative/objective has a supporting Action Plan(s) attached
• They describe who does what, when it will be completed, and
how the organization knows when steps are completed
• Action Plans require monitoring of progress on Objectives
Note the following about Action Plans
Assign responsibility for the successful completion of the Action Plan. Who is
responsible? What are the roles and responsibilities?
Detail all required steps to achieve the Initiative that the Action Plan is supporting.
Where will the actions be taken?
Establish a time frame for the completion of each step. When will we need to take these
Establish the resources required to complete the steps. How much will it take to execute
Monitor progress against milestones and measurements
Provide a brief status report on each step, whether completed or not. What
communication process will we follow? How well are we doing in executing our action
Correct and revise action plans per comparison of actual results against original action
If you have several action plans, you may have to prioritize.
• Measure your milestones – short-term outcomes at
the Action Item level.
• Measure the outcomes of your objectives.
• Try to keep your measures one per objective.
Examples of Measurements/milestones
• Average time to initiate customer contact =>
shorter time should lead to better customer
• Average response time to incident => below
average response times should lead to increased
effectiveness in dealing with incident
• Facilities that meet A1 quality rating => should
lead to improved operational readiness for
meeting customer needs
• Overall customer satisfaction rating => how well
you are doing looking back
• For each measurement, you should have at least
• Targets should stretch the organization to higher
levels of performance
• Incremental improvements over current
performance can be used to establish your
• Targets put focus on your strategy
• When you reach your targets, you have
successfully executed your strategy
Examples of Targets
Average Time to Process
New Employee Setups in DB
Personnel Fully Trained in
65% by 2rd
75% by 4th
90% by 4th
Open Positions Filled after 30 75 positions 100
day promotion period
% Reduction in Orders Filled
Sanity Check . . .
Make sure everything is linked and connected for a tight end-to-end model for
driving strategic execution.
MEASURE / TARGET
Identify issues per a
company wide survey
Link Budgets to Strategic Plan
• The world’s best Strategic Plan will fail if it is not
adequately resourced through the budgeting
• Strategic Plans cannot succeed without
people, time, money, and other key resources
• Aligning resources validates that initiatives and
action plans comprising the strategic plan
support the strategic objectives
Every Action Plan should identify the following:
• The people resources needed to succeed
• The time resources needed to succeed
• The money resources needed to succeed
• The physical resources (facilities, technology, etc.) needed to succeed
Resource information is gathered by Objective Owners which is provided to the
Budget Coordinators for each Business Unit.
Budgets for different Business Units are consolidated to create the Operating