CHAPTER 2
ANSWERS
TO END OF CHAPTER QUESTIONS
1. What is your own definition of
management? Of a farm manager?
There is no single answer to either part
of this question. It should be used to
get students to put their individual thoughts into words and get them to think
about the concept of management.
However, it may be important to stress that any definition of these
terms needs to mention decision making.
2.
Do farm and ranch managers need different skills than managers of
other businesses? If so, which
skills are different? Which are the same?
This is another general discussion
question, but the ability to recognize, analyze and solve a problem through
good decision-making is important for managers of any type of business. Therefore, all managers need a knowledge of
and ability to apply basic economic and financial concepts. Managers of businesses with employees may
need more personnel management skills than a farm operator with no employees. However, the greatest differences are
probably in technical knowledge and skills rather than management skills. To make good decisions, a manager must have
at least some basic technical knowledge related to the specific type of
business being managed.
3.
How do strategic management and tactical management differ?
Strategic management defines the overall
course of the business while tactical management keeps the business on that
course from day-to-day.
4.
Would you classify the following decisions as strategic or tactical?
a. deciding if a field is too wet to till
b. deciding whether to specialize in beef or
dairy production
c. deciding whether to take a partner into
the business
d. deciding to sell barley today or wait
until later
a.
tactical
b. strategic
c.
strategic
d.
tactical
5.
Why are goals important? List
some examples of long-term goals for a farm or ranch business. Make them specific and measurable, and
include a time line.
Goals provide a focus and direction for
the entire management process. How can a
decision be made without having a goal?
Without a goal, how does a manager determine if one alternative solution
is better than another? The probable
outcomes from alternative solutions must be measured against some
standard. Goals also provide a standard
against which future results can be measured.
Long-term goals might be to increase
profit by 15% per year, to purchase a farm within five years, to increase the
size of the cow herd by 50% in three years and to avoid losing net worth. A number of other long-term goals are listed
in the "Formulating the goals of the business” section of this chapter.
6.
What are some common goals of farm and ranch families that might be
in conflict with each other?
Many people have multiple goals rather
than a single, dominant goal. This sets
up a situation where goals may be in conflict.
For example, maximizing profit may conflict with minimizing risk,
spending more for family living expenses,
buying new machinery, or increasing farm size. Encourage students to come up with other
examples.
7.
What are your personal goals for the next week? For next year? For the next 5 years?
Encourage students to think about their
own personal goals, to write them down and refer to them from time to
time. This exercise also can be used to
demonstrate that goals will likely be different depending on the time horizon
being used, and that both short- and long-term goals are needed. However, point out that short- and long-term
goals may also be in conflict and these conflicts should be noted and resolved. For example, taking an expensive vacation
this year conflicts with saving money to purchase a home or to begin farming.
8.
What internal characteristics of the farm should a manager consider
when developing a strategic plan?
Physical resources: land, buildings, livestock, equipment, and
established crops
Human resources: number and availability of workers, special
skills and interests
Financial resources: owner equity, cash flow requirements, credit
worthiness
9.
Identify several trends in technology or consumer tastes that a farm
manager should consider when developing a strategic plan.
Examples of new technology include
genetically modified crops, cloning of animals, pesticide–coated seeds,
treatment of livestock wastes.
Examples of changes in consumer tastes
include desire for leaner meat, higher protein grains, seedless fruits, fresh
fruits and vegetables that keep longer, and so forth.
10.
List the steps in the decision-making process. Which steps are part of the planning function
of management? Implementation? Control?
Identify and define the problem (planning)
Identify alternative solutions (planning)
Collect data and information (planning)
Analyze the alternatives and choose
one (planning)
Implement the decision (implementation)
Monitor and evaluate the results (control)
Accept the responsibility for the
decision (doesn't fit any of the
functions directly but more nearly control than any other)
11.
What characteristics of a decision affect how much time and effort a
manager devotes to making it?
Importance, frequency, imminence,
revocability, and number of alternatives.
12.
What are some characteristics of agriculture that make managing a
farm or ranch different from managing other businesses?
Dependence on biological processes, a
fixed supply of farmland, small size of most farms and ranches, the existence
of perfect competition in most of production agriculture, and others.
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