• Define management and explain the role of a manager
• Understand the decision-making environment for agribusiness managers
• Describe the tasks of planning, organizing, directing, and controlling in agribusiness management
• Understand the steps in the planning process
• Define leadership and compare it to management
• Explain the differences among policies, procedures, and practices
• Describe management by exception, and understand how this idea is used by agribusiness managers
Success or failure? Stellar performer or also-ran? For an agribusiness firm, success or failure is sometimes driven by the broader marketplace—a boom in export demand, a rapid price hike for fuel. Other times winning and losing comes down to chance—a lucky break in the market, a competitor’s mistake. The broader marketplace and chance are clearly beyond the agribusiness firm’s direct control. Although these external factors are certainly important, the agribusiness firm also has influence on whether performance is stellar or mediocre. Decisions made by the firm’s managers—the allocation of investment funds, the people hired, the products introduced, the plants constructed, the deals entered, and many more—all determine whether the firm will be able to capitalize on a favorable market or how well prepared the firm is for challenges.
While any firm will take a favorable trend or a lucky break, relying on factors outside the firm to determine performance simply leaves too much to chance. So we will assert that firm performance hinges largely on how effectively a manager uses the organization’s resources. Managers are hired to utilize firm resources in the best possible manner to achieve the performance objectives of the firm’s owners. They use resources to capitalize on market trends and to manage downside risk. Managers deploy resources to take advantage of fortunate circumstances or to minimize the fallout from unlucky ones. Managers drive performance in agribusiness firms.
Who are these managers leading today’s agribusinesses? They are all unique individuals who vary in age, gender, background, education, ethnicity, geographic location, and so on. Each faces a different management situation—unique because of their industry, commodity, location, employees, competitors, etc. Given that people and situations differ, a specific recipe for what it takes to be a successful manager is challenging to define. While there are certain management skills and principles that can be learned, these skills must be adapted by each individual to fit the unique situation being faced.
Given this responsibility, how do agribusiness managers actually accomplish their task? Perhaps a few individuals are “born managers,” but managing is not innate to most people. For most of us, managing is a learned skill, and this book is about helping you move down the path toward being an effective manager. Business education has come of age, and the reasons why some organizations succeed while others fail are understood. Today’s successful agribusiness managers are guided by a set of principles that constitute sound management. In this chapter, we will take a closer look at this business of management. We will explore the key tasks of any manager to provide a foundation for our further exploration of agribusiness management.
Management is both an art and a science. Managers must efficiently combine available human, financial, and physical assets to maximize the long-run profits of an operation by profitably satisfying its customer’s demands. Management requires individuals to be technically knowledgeable about the organization’s product and/or function. They must be good and effective communicators. The ability to motivate people is also essential. They must be proficient in the technical skills of management such as accounting, finance, forecasting, and so on.
In addition to a strong background in management, agribusiness managers need a strong understanding of the biological and institutional factors surrounding the production of food and fiber. In other words, not only must they excel at the normal concerns of business management, agribusiness managers must also factor in the uncertainty of the weather, the perishable nature of many of agriculture’s products, government policies, and the rapidly changing technology employed in agriculture. They must possess the ability to quickly adapt to changes in market conditions that result from changes in the uncertain factors of weather, product perishability, government policies, technology, etc. Managers must be able to mix each of these skills and perspectives in the right proportion to deliver the greatest long-run net benefit for the firm.
Successful managers feel like managers, see themselves as managers, and are both ready and willing to play the managerial role. When successful managers look in the mirror, they see a leader, a person who is willing to accept the responsibility for change and become the catalyst for action. The success-minded manager is comfortable with this managerial role, and accepts responsibility and authority as a challenge rather than a curse. Nicholas Murray Butler, the longtime president of Columbia University, once placed managers in three classes: “the few who make things happen, the many who watch things happen, and the majority who have no idea what has happened!” (Butler, 1932).
We define management in this text as the art and science of successfully pursuing desired results with the resources available to the organization. Several key words in this definition are italicized to stress the elements of successful management.
Art and science are the first two key words, and as mentioned above, management is both an art and a science. Because management deals largely with people, management principles must be viewed as imperfect, at best. Yet many management principles and tools can help us make better decisions in an imperfect world. Everyone cannot become the top manager for a firm, but everyone can use management principles to foster continual growth and progress toward their personal managerial potential. The second key word is successful. Whatever else good management is, it must be successful in meeting desired and predetermined goals or results. Managers must know where they are headed in order to achieve such success.
Finally, consider the resources available. Each organization possesses or has at its command a variety of resources—financial, human, facilities, equipment, patents,