- - AGRICULTURAL CORE CURRICULUM - - (CLF1000) Advanced Core Cluster: AGRICULTURAL BUSINESS MANAGEMENT (CLF1250) Unit Title: MANAGEMENT FUNCTIONS _____________________________________________________________________________ CLF1251 What is Agribusiness Time Years Management? 3 Hours 3 / 4 _____________________________________________________________________________ Topic Objectives: Upon completion of this lesson, the student will be able to: Learning Outcome #: (C-1) - Describe what is meant by agribusiness management. Special Materials and Equipment: References: Downey, W. David, & Erickson, Steven P. (1987). AGRIBUSINESS MANAGEMENT (2nd ed.). New York: McGraw-Hill. Downey, W. David (1982). AGRIBUSINESS MANAGEMENT INSTRUCTOR MANUAL. New York: McGraw-Hill. Erickson, Steven P. (1981). AGRIBUSINESS MANAGEMENT STUDY GUIDE. New York: McGraw-Hill. Resources: USDA. (1974, August). "Employment in Agricultural and Agribusiness Occupations," ERS 570. Evaluation: Unit Exam TOPIC PRESENTATION: WHAT IS AGRIBUSINESS MANAGEMENT? A. Agribusiness includes all those business and management activities performed by firms that provide inputs to the farm sector, produce farm products, and/or process, transport, finance, handle, or market farm products. B. In a 1974 survey of agribusiness-related occupations, the USDA defined very specifically what types of employment agribusiness encompasses. The following is a breakdown of the types of activities that were then considered to be used in agribusiness: 1. Agricultural production and propagation of animals, animal products, plants, plant products, forests, and forest products. 2. The providing of services associated with agricultural production and the manufacture and distribution of supplies used in agricultural production. 3. The design, installation, repair, operation, and servicing of machinery, equipment, and power sources, and the construction of structures used in agricultural production. 4. Any activities related to the inspection, processing, and marketing of agricultural products and primary by-products. 5. Any aspects of greenhouse, nursery, landscaping, and other ornamental horticultural operations. 6. The conservation, propagation, improvement, and utilization of renewable natural resources. 7. The multiple uses of forest lands and resources. C. The current definition of agribusiness involves a broader view that encompasses the total food production and distribution system; this includes three major sectors: 1. Input Sector - Farm Service and Supply a. Includes feed, seed, fertilizer, chemicals, petroleum, farm machinery and equipment, livestock feeder stock, financing, consulting services, water, and other input service/supplies for production of goods and services in the agricultural industries. 2. Farm Production Sector a. This is the hub of agribusiness which connects the input and product sectors. b. The health of the farm production sector has a vital and direct impact on the financial well-being of both the input and output sectors of agribusiness. 3. Product Sector - Processing and Marketing a. This is the largest of the three sectors. b. The product sector transforms the raw farm output into a final consumer product at the retail level. c. Over 600,000 establishments are involved in food processing and distribution. These firms employ over 9 million workers. d. Some examples of businesses in the product sector are food processors, meat packers, bottlers, canners, packing houses, wineries, brewers, transportation companies (truck, railroad, air), brokers, wholesalers, retailers, advertisers, and merchandisers, among others. ______________________________________________________________________ ACTIVITY: 1. Prepare a list of all the agribusinesses in the immediate area. (The yellow pages of the phone book could provide a source of firm names to start this list.) The list should include fertilizer firms and supermarkets and might be expanded to include a local box factory or printing company (labels for wine bottles). 2. Choose two food products and follow them through the agribusiness system. Estimate how many different agribusiness firms add value to each product, beginning with the farmer and ending with the consumer. Use a flow chart to diagram the flow of product through the system. ______________________________________________________________________ D. Importance of Good Management 1. Management a. 88% of all business failures can be traced to poor management. b. Management deals with the effective use of a firm's resources. c. No single, specific, successful management pattern can be defined. d. General management skills and principles can be learned, but they must be modified to deal with the specific problem at hand. e. Although management may have various definitions, it is important to note that it deals with people and resources. E. Distinctive Features of Agribusiness Management 1. There are several factors that differentiate agribusiness management from non-agribusiness management: a. There is tremendous variety in the types, sizes, and numbers of businesses involved. b. The entire system revolves around the production sector. c. The unique nature of the product and competition within the industry. d. The majority of agribusinesses are family-owned and these families usually have a traditional philosophy of life. e. Agribusiness has to deal with numerous problems and uncertainties caused by the vagaries of nature. __________________________________________________________________ ACTIVITY: 1. Invite a local agribusiness manger to class to discuss his or her day-to-day activities as a manager. __________________________________________________________________ F. Elements of Good Management 1. One definition of management is "the art of successfully pursuing desired results with the resources available to the organization." Thus, management is: a. People-oriented b. An art, not a science c. The ability to establish and meet prescribed goals d. Working with available resources, stressing efficiency G. Concepts in Management 1. Some describe management as a division of areas of responsibility, for example, finance, marketing, production, personnel. 2. Others view it as coordinating a series of resource inputs, for example, money, markets, material, machinery, methods, manpower (the Six M concept). 3. Yet another concept of management divides it into the following approaches or processes: a. Industrial Engineering Approach - scientifically analyzing work processes and striving for increased productivity 1) Frederick Taylor, often known as the "Father of Scientific Management," was a major proponent of this management concept. 2) Job description, time-and-motion studies (Frank & Lillian Gilbreth), and production standards form the basis of this school of management. 3) This school of management asserts that if these relationships and tasks are carefully designed, productivity is the natural result; the use of power and organizational authority will result in maximum effectiveness. b. Organizational Approach - studying the ways in which power and authority may be distributed in order to increase productivity. 1. This management approach focuses on such areas as specialization, division of labor, ways in which power and authority are distributed throughout the organization, staff relationships, span of control (how many employees can be controlled by one supervisor), and span of attention (how many different operations can be controlled by one manager). This school of management asserts that if the tasks are carefully designed, productivity is the natural result. c. Behavioral Approach - stresses managing human resources in order to better the working environment both for the employer and employee viewpoints which, in turn, increases overall productivity. 1) This concept urges the manager to enlarge and enrich jobs to give individual workers more responsibility and authority and to provide a working environment in which employees can satisfy their own needs to be recognized, accepted, and fulfilled. Douglas McGregor, Abraham Maslow, and Frederick Herzberg were leaders in developing this approach to management. 2) Maslow's Need Hierarchy - One of the most useful and widely used models for human needs was developed by Abraham Maslow. Maslow's need hierarchy is based on the idea that different kinds of needs have different levels of importance to individuals, depending on the individual's current level of satisfaction. Needs basic to human survival take priority over other needs, but only until survival has been assured. After that point, other needs form the basis for the individual's behavior: Survival - The most basic human concern is for physical survival i.e., such things as food, water, warmth, shelter. Safety - Once immediate survival has been assured, humans are concerned about the security of their future physical survival. Today, this may take the form of income guarantees, insurance, retirement, etc. Belongingness - After safety is assured, people become concerned with their social acceptance and belonging. Ego status - With a comfortable degree of social acceptance, most individuals become concerned with status in their group. Group respect and the need to feel important depend heavily on the responses of other group members. Self-actualization - The highest level of need, the feeling of self-worth, may be achieved through creative activities such as art, music, helping others in community activities, or building a business. 3) Another popular concept views management as a series of functions. a) This school of thought generally describes management as PODCC, that is, planning, organizing, directing, coordinating, and controlling. Two other functions should be added--communicating and motivating--since these functions underlie the success or failure of the first five functions. b) Under this approach, the best of all schools of management philosophy can be combined. 12/12/91 BF/sg #%&C