Agribusiness Management Exam 1

directing function is

about the effective leadership of people -human resource leadership and management -personal selling -developing a workable approach to agribusiness management

marginal utility is

additional utility a consumer gains from consuming 1 more unit of a good or service

commodity processors are

agribusiness firms that buy agricultural commodities such as raw milk, wheat and live cattle from farms and ranches for processing

input suppliers are

agribusiness firms that prepare and sell things like feed, seed, fertilizer, and credit to farmers and ranchers

producers are

agribusiness firms that purchase items from input suppliers and produce agricultural commodities such as wheat, corn, raw milk, cattle

food manufactures are

agribusiness firms that purchase the processors' products to manufacture prepared food products such as a bakery

food retailers are

agribusiness firms that sell agricultural commodities, food stores and restaurants fall into this category

food distributors are

agribusiness firms that transport agricultural commodities as well as processed and manufactured food products between different parts of the agri-food system

planning function includes

all activities that determine the future of a business -marketing -strategic management -forecasting -budgeting

definition of marketing

all the business activities that satisfy consumers' needs by coordinating the flow of goods and services from the producers to consumers

organizing function covers

all the issues surrounding how to set up a business -organizational scheme -legal structure

cross sectional data are

collected from different groups or locations at the same time

time series data are

collected from one or more groups or locations over time

cross price elasticity classifying the quantity

complement < 0 substitute > 0

third level of the hierarchy

convenience

the percent of income spent on food in the US has _______ since the year 1929

decreased

effectiveness is

do the right things - do it the way the customers want it done or they will not buy from your firm

efficiency is

doing things well, at the lowest cost

the recipe for long-run business success

efficiency + effectiveness + economic well being

price elasticity classifying the quantity

elastic is > 1 inelastic is < 1

economic well-being is

enhane the economic well-being of all its stakeholders - customers, employees, and investors - in order to achieve long-run success

the importance of identifying cyclical patterns

similar patterns in prices and quantities can extend beyond one year

sixth level of the hierarchy

status/social causes

SWOT stands for

strengths weakness opportunities threats

mission statement is

the firm's purpose and objective

extrapolation uses

the idea that whatever happened in the past will again in the future

sales forecast is

the level of sales a single firm can expect to receive form a target market

market share is

the percentage of total sales from the market achieved by a single firm

strategic management is

the process by which managers choose a set of strategies that will allow their firm to be the first choice of their customers and their employees so they can achieve the superior financial performance

market potential is

the total level of sales possible in a target market for all firms

mission of marketing

to bridge the gap between the conflicting needs of producers and consumers by competing the production process

the goal of every manager is

to maximize the long-run profits of the firm by profitably, satisfying customers' needs

utility is

total satisfaction received

is it true that strategic planning is an ongoing process and must be continuously updated because of constant change?

true

strategic management is

understanding how to strengthen the firm's competitive edge over the long run

vision statement is

what the firm aspires to bterm-66e

the best measure of long-run efficiency and effectiveness is

return on invested capital (ROIC)

elastic effect on total revenue

price rise = total revenue down price decline = total revenue up

unitary effect on total revenue

price rise = total revenue unchanged price decline = total revenue unchanged

inelastic effect on total revenue

price rise = total revenue up price decline = total revenue down

time separation is

product is not available when it is desired -storage, financing, risk-taking

value separation is

product is not in the form consumers desire -processing, financing

space separation is

product is not where consumers need it -transportation, financing

four utilities of marketing

-form utility -time utility -possession utility -place utility

six steps in business decision making

-identify the problem -determine alternative course of action -analyze the alternatives -select the best alternative -implement the decision -follow up

Component industries of the agri-food system:

-input suppliers -producers -commodity processors -food manufactures -food distributers -food retailers

two sources of sustainable competitive advantage

-lowest cost provider -differentiated product

estimating market potential

-macroeconomic approach -population approach -consumption approach

the external environment

-market opportunities (will raise ROIC) -market threats (will lower ROIC)

two economic principles that drive consumer behavior:

-maximization of satisfaction (utility) -diminishing marginal utility

barriers to consumer satisfaction

-ownership separation -time separation -space separation -value separation -information separation

four functions of management:

-planning function -organizing function -controlling function -directing function

factors affecting consumer demand

-price of the product -seasonality -price of competitors' products -price of complement goods -income -population -taste and preferences

four P's of marketing mix

-product -place -price -promotion

types of planning

-strategic planning - long term plans -tactical planning - short term plans -contingency planning

four elements of sustainable competitive advantage

-superior efficiency -superior quality -superior innovation -superior customer responsiveness

three parts of strategic management

-the business vision plan statement -the strategic plan -the implementation of the strategic plan

the internal environment

-the firm's strengths (will raise ROIC) -the firm's weaknesses (will lower ROIC)

fourth level of the hierarchy

promote health

porter's five force model

-the threat of new business entering your market -the threat of new products entering your market -the growing bargaining power of suppliers -the growing bargaining power of buyers -the level of rivalry among existing firms in the industry

successful use of forecasts

-understand the assumptions behind the forecast -frequently updated the forecast -use alternative outcomes

prerequisites to an efficient economic system

-a free market economy -prices reflect the full value of resources -a high degree of interaction between consumers and producers

Selection of forecasting procedure depends on relative importance factors

-accuracy desire -time permitted to develop the forecast -complexity of the situation -time period to be forecasted -level of resources available

due to the agricultural revolution and industrial revolution, two new sectors/industries of agricultural emerged:

-agricultural input supply sectors -commodity processing/food manufacturing sector

According to Jean Kinsey, people buy food for a hierarchy of reasons:

-because of the affluence and success of the US agri-food system, increasing number of consumers are basing their food-buying decisions on the items at the top of Kinsey's hierarchy -agribusiness firms throughout the agri-food system must pay attention to this if they wish to be successful in the future

nine marketing functions

-buying -selling -storage -transportation -processing -grade and standards -financing -risk-taking -market information

two ways to look at data

-cross sectional data -time series data

criteria used to evaluate performance:

-efficiency -fairness

controlling function concerns

giving management feedback on the firm's progress toward the goals set in planning -evaluating the production process -measuring the firms financial performance -evaluating capital expenditures

second level of the hierarchy

good taste and variety

values statement is

how you will conduct your business and threat customers

ownership separation is

inability to transfer ownership -buying and selling

income elasticity classifying the quantity

inferior < 0 normal > 0

information separation is

lack of information about the product -grade and standards, market information

fifth level of the hierarchy

live well

deflated price or real price formula

nominal price / (price index x 100)

first level of the hierarchy

nutritious, safe and affordable

marketing approach focuses

on profitability satisfying consumer needs

mass marketing operates

on the idea that all the consumers have the same needs

target marketing operates

on the idea that consumers have different needs