[ppt]farm management - department of agricultural...
TRANSCRIPT
Farm Management
Chapter 2Management and Decision Making
farm management chapter 2
2
Chapter Outline
• Functions of Management• Strategic Farm Management• Tactical Decision Making• Characteristics of Decisions• The Decision-Making Environment in
Agriculture
farm management chapter 2
3
Chapter Objectives1. To understand the functions of management2. To present the steps in developing a strategic
management plan for a farm or ranch3. 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 making5. To describe some unique characteristics of
the decision-making environment for agriculture
farm management chapter 2
4
Table 2-1Comparison of Low- and High-Profit Farms
in Iowa
Item Highest Third Lowest Third (Average) (Average)
Value of farm production $334,981 $241,861
Net farm income $90,800 $2,358
Return on assets 10.6% -1.6%
Crop acres farmed 729 802
Machinery value $166,212 $196,490
Months of labor utilized 16.6 17.6
Source: 2001 Iowa Farm Costs and Returns
farm management chapter 2
5
Functions of Management
• Planning• Implementation• Control
farm management chapter 2
6
Planning
Planning means choosing a course of action.
To plan, a manager must establish goals, identify resources, and allocate the resources to competing uses.
farm management chapter 2
7
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.
farm management chapter 2
8
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.
farm management chapter 2
9
Figure 2-1Management flow chart based on three
functions of management
farm management chapter 2
10
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
farm management chapter 2
11
Steps in Strategic Management
1. Define the mission of the business2. Formulate the goals for the farm and family3. Assess the resources available to the
business (internal scanning)4. Survey the world surrounding the business
(external scanning)5. Identify and select appropriate strategies6. Implement and refine the selected strategies
farm management chapter 2
12
Table 2-2 Common Values Among Farmers and Ranchers
Do you agree or disagree?
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 off 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.
farm management chapter 2
13
Goals
• Goals should be written• Goals should be specific• Goals should be measurable• Goals should have a timetable
farm management chapter 2
14
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
farm management chapter 2
15
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
farm management chapter 2
16
Surveying the Business Environment
• 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
farm management chapter 2
17
Identifying and Selecting Strategies
Some businesses have more potentialroutes for reaching their goals thanothers because resources are more flexible. As the number of alternative uses for resources increases, so does the complexity of the manager’s decisions.
farm management chapter 2
18
Implementing and Refining
• 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
farm management chapter 2
19
Tactical Decision Making
1. Identify and define the problem or opportunity
2. Identify alternative solutions3. Collect data and information4. Analyze the alternatives and choose one5. Implement the decision6. Monitor and evaluate results7. Accept responsibility for the decision
farm management chapter 2
20
Characteristics of Decisions
• Importance• Frequency • Imminence• Revocability• Number of alternatives
farm management chapter 2
21
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 manager’s decisions
• Small size: Often one person serves as management and labor
• Perfect competition: Producers are price takers
farm management chapter 2
22
SummaryGood 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 thatof most other businesses.