120 Test #2

Front 1

The goal of every agribusiness manager who wants to stay in business must be:

Back 1

How do I enhance by firm’s competitive edge today in this larger, faster moving more competitive market environment?”

Front 2

Strategic Management Flow Chart

Back 2

-Maximize Long Run Stock Price
-Profitability
-Satisfying Customer Needs

Front 3

Company's Financial performance

Back 3

-High profit
-Product value
-Customer service

Front 4

Developing a Sustainable Competitive Advantage From Higher Prices or Lower Costs involves two things.....

Back 4

-Operational Efficiencies (Lowest Cost)

-Strategic Positioning
(Differentiated Products)

Front 5

Generic Building Blocks of competitive advantage

Back 5

-Superior Quality
-Superior Customer Responsiveness
-Superior Innovation
- Superior Efficiency
-competitive advantage

Front 6

Three parts of strategic management

Back 6

-Vision statement
-Strategic plan
-Implementation

Front 7

Vision Statement

Back 7

--Values
-- Mission / Purpose
--Objectives

Front 8

Strategic plan

Back 8

Threats and Opportunities (External)
--Strengths and Weaknesses (Internal

Front 9

As an investor, what do you ask yourself?

Back 9

Do you provide highest return on invested capital?

Front 10

As a customer you ask yourself?

Back 10

Does products offer best value
-Totally & completely fill needs

Front 11

As an employee you ask yourself?

Back 11

-Obtain greatest job satisfaction
-Place where values match own values
-Opportunity to realize full potential
-Make customers’ lives better

Front 12

Porters five forces model

Back 12

-Potential Entrants

Front 13

Context in Which Competitive Strategy is Formulated

Back 13

-External company factors

Front 14

Forecast basics

Back 14

-Forecasts of future levels of major economic variables

-Become valuable to an agribusiness if related

Front 15

Examples of Forecasts of future levels of major economic variables

Back 15

GDP, interest rates, income, consumption rates, and so on are easy to find.

Front 16

Examples of becoming valuable to an agribusiness if related

Back 16

-Firm’s sales
-Profits
-Costs
and so on

Front 17

5 Forecasting Factors

Back 17

1. Accuracy desired
2. Time permitted to develop forecast
3. Complexity of situation
4. Time period projected
5. Amount of resources available (e.g., money, personnel)

Front 18

Two types of forcasting data

Back 18

Cross-sectional data

Time-series data

Front 19

Forecasting procedures

Back 19

-Extrapolation
-Graphical Analysis
-

Front 20

Extrapolation

Back 20

forecasting using idea that whatever happened in past will happen again in future.

Front 21

Graphical Analysis

Back 21

extrapolation is combined with graphical analysis with plotting of data. (See figure 7-1)

Front 22

Inflation adjusting

Back 22

-Deflate or remove effect of inflation from price

-Using index of prices received by farmers, Consumer price index, etc.

Front 23

Adjusting for population

Back 23

-Remove impact of changes in population by measuring sales on a per person (per capita) basis

-Adjusting for population is done by dividing sales by population (Table 7-2

Front 24

Moving Averages

Back 24

-Moving averages help reduce impact of short-run fluctuations in data by plotting average value of several data points rather than a single one

Front 25

Identifying seasonal Averages

Back 25

Seasonal patterns of prices and quantities:

-Lowest price at harvest time
followed by:
-Slow rise each month throughout rest of year
followed by:
-Decline just before next harvest

Front 26

Identifying Cyclical Patterns

Back 26

-Cycles are more prevalent in livestock (hogs & cattle)
-Changes in livestock production
Require longer period of adjustment

Front 27

Combining all adjustments

Back 27

-Combine several of forecasting procedure to make projection

-Reassemble parts in order using price data from
--Most current year
--Trend line
--Seasonal and cyclical pattern information

Front 28

Using forecasts

Back 28

-Understanding assumptions behind forecast
-Update forecasts
-Use alternative outcomes

Front 29

The purpose of budgets

Back 29

-is a blueprint for action for a specific period that is based on sales, cost, and productivity estimates developed in the marketing plan

-shows the financial impact of an efficient and effective execution of the marketing plan

Front 30

The power of written goals

Back 30

-Keeps management’s attention on the achievement of the financial objectives

-Keep people focused

-Increase the chances the financial objectives will be realized

Front 31

Three Types of budgets

Back 31

1. The Operating Budget
2. The cash flow budget
3. The Capital Expenditure budget

Front 32

The Operating Budget

Back 32

--Summarizes the expected sales, production activities, and related costs for the budgetary period

--An estimate of the sales and income plus the fixed and variable expenses the firm must incur in order support the expected sales during a specified time

Front 33

THe Cash Flow Budget

Back 33

--Summarizes the amount and timing of cash that is expected to flow in and out of the business during the budgetary period

--Shows
1) when cash will be available to the business (cash receipts), and
2) when cash payments need to be made by the business (cash disbursements)

Front 34

The Cash Cycle

Back 34

Cash---Accounts Payable---Production--Inventory---Sales---Accouonts Receivable

Front 35

The Capital Expenditure Budget

Back 35

--Shows how the money budgeted for capital expenditures is to be allocated among the competing projects

--Lists major capital expenditures items such as new trucks, computing systems, buildings and so forth along with their estimated cost and expected payment plans

Front 36

Relationship Among the three budgets

Back 36

Sales Estimates
--Cash Flow Budget--Capital Expenditure
--Capital Expenditure budget--Cash flow budget
--Operating Budget--Capital Expenditure Budget

Front 37

benefits of budgeting

Back 37

--Budgets provide a way to measure business performance

--Budgets keep managers focused on the financial implications of their business decisions

--Budgets help managers communicate expectations and quickly spot deviation from expectations

Front 38

Budget Limitations

Back 38

--Budgets are estimates, not sure things

--Execution of a budget is not automatic

--Budgets cannot take the place of good management

--Good budgeting requires time and patience

Front 39

Identifying Critical Tasks

Back 39

-- Must be done well
-----Achieve business purpose and objectives

--Function smoothly and without restriction within organizational structure

Front 40

4 principles of organizational design

Back 40

1. Simple organizational structure

2. Give Critical tasks prominence and allow them to function without restriction

3. Minimum support staff

4.Small working units

Front 41

Way to organize

Back 41

-Business function
-Product
-Geographic area

Front 42

Line Activities

Back 42

Directly affect accomplishment
---Firm’s purpose and objectives (e.g., sales, production)

Front 43

Staff Activities

Back 43

Indirectly support accomplishment
--Firm’s purpose and objectives (e.g., human resource, legal)

Front 44

Centralized decision making system

Back 44

all decision making authority held by few top executives

Front 45

Decentralized decision making system

Back 45

decision-making authority for routine matters delegated to lower level management

Front 46

Decisions made at lowest levels

Back 46

1. Affect firm for short period of time,
2. Involve small amounts of money,
3. Do not affect business’s purpose and objectives

Front 47

Decisions made at highest levels

Back 47

1. Affect firms for long period of time,
2. Involve large amounts of money,
3. Dramatically affect business’s purpose and objectives

Front 48

Autonomous profit centers

Back 48

1. Puts people in charge of own destiny
2. Offers fast performance feedback
3. Keeps work units small enough
---3a.Sense of involvement and achievement
4. Accomplished with minimum number of management levels

Front 49

Best Approach

Back 49

Maximizes long run profits by helping the firm profitably satisfy customers’ needs by giving greatest value


Maximizes stock price because it maximizes long run ROIC