Farm Management

1
Farm Management

• Chapter 2
• Management and Decision Making

2
Functions of Management

• Planning
• Implementation
• Control

3
The Business Planning Cycle
Planning Process
Take Action
Integrate Changes
Explain Deviation
Get Results
Measure Record Results
Compare Actual vs. Plan
4
The Business Planning Cycle
Planning Process
Take Action
Integrate Changes
Mission Situation Objectives Goals Strategies
Tactics
Explain Deviation
Get Results
Measure Record Results
Compare Actual vs. Plan
5
Defining Your Mission

• Whats your mission?
• What business are you in?
• What values characterize you and your business?
  (e.g., local foods, work environment,
  environmental concerns, trust, integrity, hard
  work, profit)

6
Situation Analysis

• Industry analysis
• Market analysis
• Competitive analysis
• SWOT analysis

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Situation Analysis

• Industry analysis
• Market analysis
• Competitive analysis
• SWOT analysis

• Who are the industry players?
• Input suppliers
• Growers
• Processors
• Wholesalers
• Retailers
• What are the industry trends?

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Situation Analysis

• Industry analysis
• Market analysis
• Competitive analysis
• SWOT analysis

Who and where are your customers? What do they
need? What is their purchasing behavior? How
can you reach them?
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Situation Analysis

• Industry analysis
• Market analysis
• Competitive analysis
• SWOT analysis

Who are your competitors? What are they
like? What products do they have? How have they
grown?
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Situation Analysis

• Industry analysis
• Market analysis
• Competitive analysis
• SWOT analysis

Strengths and Weaknesses are internal to the
business Opportunities and Threats are external
to the business SWOT should be easy after
performing the other analyses
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Group Activity

• Lets perform an OT analysis
• What opportunities and threats do you see in the
  gift pack making business?

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Where are you in the process?

• You have defined your reason for being in
  business Mission
• You know where youre starting from Situation
  Analysis
• Now, define your destination(s) Objectives
  Goals

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Objectives Goals

• Whats the difference?
• Objectives General statement describing intended
  directions long-term or indefinite
• Goals Specific directions describing measurable
  targets short-term with deadline

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Objectives Goals

• Activity
• Develop one objective for your business
• Define at least one goal to support your objective

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Goals

• Goals should be written
• Goals should be specific
• Goals should be measurable
• Goals should have a timetable

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Possible Goals

• 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

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Strategic Farm Management

• 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

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Strategies Tactics

• Strategies describe the overall plan for
  achieving objectives and goals
• Tactics specifically detail how to implement
  strategies

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Strategies Tactics

• Goals
• To develop 3 different gift basket packages by
  October 15, 2006
• To begin selling by October 15, 2006

• An Example

Objective To expand your product line
Lets focus on Goal 1 What are some possible
strategies?
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Strategies Tactics

• Strategy 1 Do everything yourself
• Make baskets
• Add basket liner
• Add Coffee, macadamia nuts
• Seal the basket

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Strategies Tactics

• Strategy 2 Outsource everything
• Send contractor
• A basket is sent to the customer

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Strategies Tactics

• Strategy 3 Joint venture
• A partner firm provides baskets
• Another provides guava jellies
• Another provides coffee
• You provide everything else

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Strategies Tactics

• Which strategy
• is right?

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Strategies Tactics

• Tactics simply correlate tasks, names, and
  timelines

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Figure 2-1Management flow chart based on three
functions of management
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Control
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.
27
The Planning Cycle Revisited
Planning Process
Take Action
Integrate Changes
Mission Situation Objectives Goals Strategies
Tactics
Explain Deviation
Get Results
Measure Record Results
Compare Actual vs. Plan
28
Business Planning Skills Tools

• Information Gathering
• Record keeping
• Research
• Information Processing
• Enterprise cash flow budgets
• Financial statements and ratios

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Implementation
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.
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Steps in Strategic Management

• Define the mission of the business
• Formulate the goals for the farm and family
• Assess the resources available to the business
  (internal scanning)
• Survey the world surrounding the business
  (external scanning)
• Identify and select appropriate strategies
• Implement and refine the selected strategies

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Assessing Resources

• 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

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Surveying the Business Environment

• Called External scanning
• The major types of crops produced havent changed
  much, but their characteristics are changing
• A change may provide an opportunity or a threat

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Tactical Decision Making

• Identify and define the problem or opportunity
• Identify alternative solutions
• Collect data and information
• Analyze the alternatives and choose one
• Implement the decision
• Monitor and evaluate results
• Accept responsibility for the decision

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Characteristics of Decisions

• Importance
• Frequency
• Imminence
• Revocability
• Number of alternatives

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The Decision-Making Environment

• 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 managers decisions
• Small size Often one person serves as
  management and labor
• Perfect competition Producers are price takers

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Summary
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.