Ag Business Ch 9

What is the matrix approach?

Combination of any of the above mentioned approaches to increase efficiency

Line activities

Directly affect accomplishment •firms purpose and objectives -(e.g. sales, production)

Allow critical tasks to function without restriction

Do not hinder with unnecessary processes/paperwork Ensure continuous function

Keep working units small

Employees should not be able to just blend in and go unnoticed Groups should be large enough to accomplish their tasks, but small enough that each employee is able to contribute

What does the functional approach of organizing work best for?

Large firms with similar production processes

What are the two types of decision making?

centralized and decentralized

Decisions made at lowest levels

-affect firm for short period of time -involve small amounts of money -do not affect business's purpose and objectives

Decisions made at highest levels

-affect firms for long period of time -involve large amounts of money -dramatically affect business's purpose and objectives

What are some attributes to the functional approach?

-avoids duplicate activities -streamline record keeping -gives management greater control -economies of scale by centralizing basic business functions -centralization can reduce flexibility in responding to market conditions -not very suitable for agricultural production

What are the different ways to organize?

-functional approach (business function) -product approach -geographic approach -matrix approach

What are some attributes to the product approach?

-if given a high level of autonomy, each unit can operate as an independent, separate business with a full range of business functions -smaller size and product specific focus allows the firm to quickly adjust to market environment -reduced efficiency and possible duplication of activities -Central management exerts less control over each business unit

Organizing best approach

-maximizes long run profits helping firm completely satisfy customers' needs by giving greatest value -maximizes stock price because it maximizes long run ROIC

What are some attributes to the matrix approach?

-multiple managers may be brought together with higher level management to resolve conflict in organizational goals • Focus of solution should always lead to greatest overall long-term profits

Autonomous profit centers

-puts people in charge of own destiny -offers fast performance feedback -keeps work units small enough •sense of involvement and achievement -accomplished with minimum number of management levels

What are some attributes to the geographic approach?

-puts the manager closest to the market -market flexibility is improved -lose benefits of specialization as each unit must cover all tasks

What are the four principles of organization design

1. Keep the structure simple 2. Allow critical tasks to function without restriction 3. Minimize support staff 4. Keep working units small

What does the product approach of organizing work best for?

Agricultural production because of specialization

centralized decision making

All decision-making authority is held by a small number of top executives who are involved in every decision

decentralized decision making

Decision-making authority is delegated amongst specialized staff, while overall mission is controlled by top executives

What is the functional approach (business function) and how is it broken down?

Departments and units are broken down by basic functions of the business -sales -advertising -production -warehousing -inventory -maintenance -accounting

What is the geographic approach and how is it broken down?

Departments and units are broken down by geographic regions

What is the product approach and how is it broken down?

Departments and units are broken down by products produced or marketed -feed -seed -chemicals -fertilizer

Keep the structure simple

Have only the number and ranks of managers that are essential to the business Fewer people ensures that they know what they are responsible for.

Staff activities

Indirectly support accomplishment •firms purpose and objectives -(e.g. human resource, legal)

Minimize support staff

Staff that do not contribute directly to profitability cause additional process and effort Stick to only what is required Consider hiring out non-essential positions

Critical tasks

activities that must be done well if the business is to achieve its purpose and objectives Function smoothly and without restriction within the organizational structure

ROIC

return on invested capital