AGEC 340 Exam 1-Springfield

The Strategic Plan

Strategic Plan = SWOT Analysis The Internal Environment 1. The firm's strengths • Things that can increase ROIC and profits 2. The firm's weaknesses • Things that can reduce ROlC and profits The External Environment 1. Market opportunities • Things that can increase ROIC and profits 2. Market threats (will lower ROIC) • Things that can reduce ROlC and profits

The Four Utilities of Marketing

1. Form Utility-comes from processing the product into a form more desirable to consumers. Place Utility-involves transporting the product to a location desired by consumers. Time Utility-results from storing the product until the consumer needs it Possession Utility-facilitates the process of gaining ownership of the product so buyers can use it fully. 2. The function of marketing in our economic system makes sure that consumers get the products they desire. This means: • insuring that the right product (form utility) • is available at the right place (place utility) • at the right price (possession utility) • at the right time (time utility) to fully satisfy the consumer.

Five Barriers to Consumer Satisfaction

1. Inability to transfer ownership (ownership separation) 2. Product is not available when it is desired (time separation) 3. Product is not where consumers need it (space separation) 4. Product is not in the form consumers desire (value separation) 5. Lack of information about the product (information separation) Marketing finds ways to overcome these separations.

Evolution of the Marketing System

1. Specialization and trade 2. Central markets 3. Money 4. Middlemen

Marketing - Highest Priority in the Planning Process

1. The marketing plan is a complete assessment of consumer • Identifies, analyzes, and understands the consumer need • Dictates how the rest of the firm will be organized Finance tells the firm whether "it" can be done profitably Production tells the firm whether "it" can be done technically Personnel tells the firm whether the right people can be found to accomplish "it" • Decisions about what "it" is and how "it" should be done are made in the marketing plan 2. After establishing the firm's purpose and objective, the marketing plan becomes the starting point for the rest of the business plan The major parts of the marketing plan include: 1. Analysis of the current market situation 2. Analysis of opportunities and issues 3. Marketing strategy 4. Implementation program 5. Financial analysis 6. Controls

Combining Science, Technology, and Business Management. Today's agri‐food system is the result of:

1. The transformation of science into technology, and 2. The application of effective business management

The three Parts of The Business Vision

1. Vision Statement What the firm aspires to be 2. Values Statement How you will conduct your business and treat customers 3. Mission Statement Defines the firm's purpose (what the firm is going to do) and objective (how the firm is going to fill its purpose better, faster, and quicker than its competitors do so it can gain a competitive advantage)

The Role of Marketing in the Economy

Increases the level of consumer satisfaction in the economy.

Long-Run Business Success Equation

Long‐Run Business = Efficiency + Effectiveness + Economic Well‐Being Success

Estimating Market Potential ‐ Terminology

Market Potential = the total level of sales possible in a target market for all firms Sales Forecast = the level of sales a firm can expect to receive from a target market Market Share is the percentage of total sales from the target market achieved by a firm Market Share = sales forecast divided by market potential

Three Parts of a Strategic Plan

• Business vision statement • The strategic plan • Implementation of the strategic plan

How Strategic Management Fits In

• Return on invested capital (ROIC) — best measure of long‐run efficiency and effectiveness • Two sources of sustainable competitive advantage —Lowest cost provider —Differentiated product Must do both to survive today

What does the following statement mean to you?

*"Agribusiness management is about the integration of science and business management."

Important Quote

*Only by satisfying a customer need does a business earn its right to make a profit

The Current Market Situation - Macroeconomic Environment

A discussion of the macroeconomic environment includes factors such as • Demographics • The economic climate • Technology • The political situation • Legal issues • Social issues • Cultural issues

The Marketing Plan - Purpose Statement

Can be stated without a great deal of consumer input • Can be based on an analyst's assessment of perceived consumers wants • If the assessment stops here, it will fail. • Success depends on the right mix of product, price, place, and promotion. Consumer preferences and needs must be thoroughly researched to clearly identify • The firm's purpose and objectives based on precise needs the company will service • How these needs will be filled.

Structure of the Business Plan

Composed of separate sub‐plans that deal with • Organizational structure • Personnel • Production • Finances • Marketing

The Nine Marketing Functions

The Buying Function and The Selling Function • overcome the separation of ownership by transferring legal title of the product from the seller to the buyer The Storage Function • overcomes the separation of time by maintaining the product in good condition between production and final sale. The Transportation Function • overcomes the separation of space by moving the product from where it is produced to where consumers desire it. The Processing Function • overcomes value separation by transforming a commodity into a form that has greater value to the consumer. The Facilitating Functions • make the system work more efficiently The Grades and Standards Function •overcomes information separation by providing a classification system that requires adherence to specific descriptions of commodities and products.

The Business Vision

The firm must answer these questions: Who are your customers? What unmet need will you meet?

Mass Marketing ‐ example

The same product is offered to all customers at the same price and at the same types of locations using the same promotion materials nationwide Example: • A firm sells hamburgers and identifies that most people like a well‐ done burger with ketchup • Therefore, the firm sells only well‐done burgers with ketchup since that will satisfy most people

The Business Plan

The success of a business is directly attributed to • Good planning • Communication • Execution 1. The first step to success is a good business plan 2. The business plan explains how the business plans to achieve success 3. Firm's Purpose: What the firm is going to do 4. Firm's Objective: How it is going to achieve its purpose