Nature of Successful Agribusiness

Today the business has become very competitive and complex. This is mainly due to changing taste and fashion of the consumers on the one hand, and introduction of substitute and cheaper and better competitive goods, on the other. The old dictum “produce and sells has changed overtime into “produce only what customers want”. The important requisites for success in a modern business are :

Objective

• Clean objectives :The objectives set forth should be realistic and clearly defined. Then, all the business efforts should be geared to achieve the set objectives. In a way, objectives are destination points for an agribusiness.
• Planning : In simple words, planning is a pre-determined line of action. Planning is a proposal based on part experience and present trends for future actions. In other words, it is an analysis of a problem and finding out the solutions to solve them with reference to the objective of the farm.

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  Planning

  Sound organization : An organization is the art or science of building up systematical whole by a number of but related parts. Just as human frame is build up by various parts like heart, lever, brain, legs etc. similarly, organization of business is a harmonies combination of men, machine material, money management etc. so that all these could work jointly as one unit, i.e. “business” “the agribusiness”. Organization is, thus such a systematic combination of various related parts for achieving a defined objective in an effective manner.
• Research : As indicated earlier, today the agricultural production philosophy “produce what the consumer want”. “Consumers” behaviour is influenced by variety of factors like cultural, social, personal and psychological factors. The business needs to know and appreciate these factors and then function accordingly. The knowledge of these factors is acquired through market research. Research is a systematic search for new knowledge. Market research enable a business in finding out new methods of production, improving the quality of product and developing new products as per the changing tastes and wants if the consumers.
• Finance : Finance is said to be the life-blood of business enterprise. It brings together the land, labour, machine and raw materials into production. Agribusiness should estimate its financial requirements adequately so that it may keep the business wheel on moving. Therefore, proper arrangements should be made for securing the required finance for the enterprise.
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  Proper plant location, layout and size : The success of agribusiness depends to a great extent on the location. Where it is set up. Location of the business should be convenient from various points of view such as availability of required infrastructure facilities, availability of inputs like raw materials, skill labour, nearer to the market etc. Hence the business men must take sufficient care in the initial stages to selected suitable location for his business.The sine of the business is also important because the requirement for infrastructural facilities and inputs varies as per the size of the business. The requirement for raw materials, for example, will be less in a smaller sized firm than a larger size firm.
  

  

  Efficient Management
  

• Efficient management : One of the reasons for failure of business often attributed to as their poor management or efficient management. The one man, i.e. the proprietor may not be equally good in all areas of the business. Efficient businessman can make proper use of available resources for achieving the objectives set for the business.

• Harmonious relations with the workers : 

  

  Relationship

  In an agribusiness organization, the farmer operator occupies a distinct place because he/she is the main living factor among all factors of production. In fact, it is the human factor who makes the use of other non-human factors like land, machine, money etc. Therefore, for successful operation of business, there should be cordial and harmonious relations 

Scope and Importance of Agribusiness

Scope of Agribusiness

The agriculture industry is so diverse, yet so interdependent, it is particularly difficult to describe. It comprises large corporate houses/units and small single proprietorships. It includes the manufacturing, distribution, storage, wholesaling, retailing and marketing of varied products, commodities and services. Despite its functional diversity, the agribusiness industry comprises only five basic organizational forms of business: (1) Individual proprietorships, (2) Partnerships, (3) Joint Stock Companies (capitalistic form), (4) Co-operatives and (5) Public/State Enterprises

Importace of Agribusiness

Agriculture has now blossomed into mature industry which includes, i) Input supply system, ii) Agricultural production system and iii) Output marketing system. Indian farmers in particular are not only serving the domestic market but have their access to the international market. All the agribusiness enterprises in India have good economic potential due to relatively favorable agro climatic conditions. The agribusiness, mainly aims to capture market and maximize profit through value addition in fruits & vegetables, milk and honey. Therefore, the recently drafted National Agricultural Policy (NAP) has accorded priority for promoting agribusiness activities at different levels for capturing growth in agriculture.

Scope of Agribusiness :

It was already indicated that agribusiness is a complex, system of input sector, production sector, processing manufacturing sector and transport and marketing sector. Therefore, it is directly related to industry, commence and trade, Industry is concerned with the production of commodities and materials while commerce and trade are concerned with their distribution.

Industry :

Industry refers to the processes of extraction and production of goods meant for final consumption or use buy individual or buy another industry for its production. Thus goods used by the final or ultimate consumers are called “consumer goods” such as edible oils, fruit jams, papaya, pickles etc.

Types of industries :

According to nature, the industries are broadly classified into following types.

• Extractive industries : These industries are concerned with the extraction ;and utilization of natural resources. Example – fishing, fruit gathering, agro-based industries, forestation.
• Genetic Industries : These industries include breeding of plants, seeds, cattle breeding farm, fish hatcheries, poultry farms. Of course, factors like nature, climate and environment play a dominant role in these industries, yet human skill involved in their production cannot be ignored. For example intensive agriculture is possible with greater amount of capital and larger number of workers.
• Manufacturing Industries : These industries are engaged in the conversion of raw material or semi finished goods produced in the extractive industries. Some prominent examples are – cotton textile industry, spinning and weaving mills etc. Manufacturing industries can further be classified into five types : (i) Analytical industry (ii) Processing industry (iii) Synthetic industry, (iv) Service industry (v) Assembly industry. 

Objectives of Agribusiness

• Market standing : Position compared with competitors
• Growth and development : How much and how fast should growth be
• Profitability : What kinds and amounts of profit are feasible
• Employees relations and performance : What rewards and shares of income should go to employees and what is expected from them
• Investor relation and returns : What portion of earning should go to investors
• Public responsibility and relationships : What kind of business the company does in view of the citizen/public want to be
• Physical resources : What plant equipment, tools etc. are needed
• Products and innovation : What emphasis will be placed on new products and research

Managerial Economics and Commerce

Managerial Economics

Managerial economics is the applied part of microeconomics that focuses on the topics that are of greatest interest and importance to managers like the demand, production, cost, pricing, market structure, and government regulation. Management as a wheel with the manager as a hub.

Manager

Manager is that person who carries the orders of management, provides the organization with leadership and who acts as a catalyst for change. Good managers are most effective in an environment that permits creative change.

Characteristics of Good Manager

• Knowledge
• Decision making power
• Self – reliance
• Self-assertion
• Regard for other and social sensitivity
• Emotional stability

Characteristics of a Good Management Policy

• Objectivity: Should be related to the objective of the firm
• Easily understandable: Should be stated in understandable words
• Yardsticks for action: Must provide yard stick for future actions
• Changeability: It should be reasonable and capable of being accomplished.

Commerce

Commerce is the another major component of agribusiness. It includes all those activities which are necessary to bring goods and services from the place of their production to the place of their consumption. Thus, sit includes the buying and selling of goods and service and all those activities which facilitate trade such as storing, grading, packaging, financing, insurance and transportation. In simple words, commerce includes trade and aid to trade. The principal function of trade (commerce) are to remove the hindrance of person, place, time exchange, knowledge etc. and ensure a free and smooth flow of goods from the producers to the consumers.

Trade in fact is a branch of commerce itself. In a way, it is the final state of business activity involving sale and purchase of commodities or goods. It does not include and to trade like transportation, insurance, banking, finance etc. On the basis of its coverage and volume, trade is normally classified into the following types :

On the basis of volume :

(i) Wholesale trade

(ii) Retail trade

 On the basis of coverage :

(i) Regional trade

(ii) National trade 

Management – Nature, Types, Tasks and Responsibilities

To modern view, management covers wide range of business related activities. It is considered as a process, an activity, a discipline and effort to coordinate control and direct individual and group effort towards attaining the cherished goal of the business. Management may also play the role as science, as an art, as a profession and as a social process.

As a participant in any management programme, one may either be a practicing manager or aspiring to be one. Responsibility and performance are really the key words in defining a manager’s role. Performance implies action, and action necessitates taking specific steps and doing the following tasks to produce desired results.

1. Providing purposeful direction to the firm.

2. Managing survival and growth.

3. Maintaining farm’s efficiency.

4. Meeting the challenge of increasing competition.

5. Managing for innovation

6. Coping with growing technological sophistication.

7. Maintaining relation with various society segments etc.

An agribusiness is a social institution. Its very existence is dependent upon its harmonious relationship with various segments of the society. This harmonies relationship originates from the farm’s positive responsiveness to the various segments and is closely associated with the tasks a manager is expected to perform. The process of evolving this mutual relationship between agribusiness farms and various interest groups begins by acknowledging the existence of the responsibilities of manager. These responsibilities are towards consumers, suppliers, distributors, workers, financiers, government and the society.

Nature of Management

It is regarded as science and having tools and techniques which are scientific. It is also taken as profession which is based on proven, systematic body of knowledge and thus requires intellectual training. It should maintain experimental attitude towards information and thus requires a search for new ideas. Moreover, the nature of management is:

1. Multidisciplinary

2. Dynamic nature of principles

3. Relatives and not absolute principles

4. Science or art -- both

5. Management as profession
6. Universality of management

Characteristics of Agribusiness

Due to some distinctive features, agribusiness differs from some other kinds of businesses.

• Diverse nature of business: There exist various kinds of business in the agribusiness sector i.e. of basic producers, wholesalers, brokers or CAs, processors, packagers, storage firms, transporters, financial institutions, retailers, food chains ,etc.
• Existence around production areas: Agribusiness is established around several millions producers/ farmers that produce hundreds of different food and fibre products.
• Dealing with farmers/ producers: Most agribusinesses deal with farmers both directly and indirectly. No other industry is set up principally around the basic producer of the raw product.
• Variety and size of agribusiness organization: There is infinite variety in the size of agribusiness from one person and one family to giants/huge/tall organization. Most agribusiness tends to be small when compared to other businesses and industrial segments.
• Scale and type of competition: Agribusinesses are small and compete in a relatively free market (Perfect Competition) where there are many sellers and buyers as well. The size of agribusiness does not allow monopoly. Product differentiation is also difficult.
• Conservativeness of agribusiness: The workers (labourers) and producers have traditional philosophical touch, so they make agribusiness more of conservative type.
• Decision making: Agricultural operation decisions are taken by families i.e. husbands and wives are often heavily involved in decision- makings.
• Community oriented business: The agribusinesses tend to be community oriented in small towns and rural areas.
• Seasonality: The agribusinesses are highly seasonal in nature due to planting and harvesting seasons and interdependence of specific enterprise.
• Vagaries of nature: Agribusiness deals with vagaries of nature viz; drought, flood, insects, diseases etc. and everyone from producer, banker and manufactures is concerned with the weather.
• Govt. programmes and policy: Govt. programmes and policies have direct impact on agribusiness. Many agricultural products are directly influenced by govt. programmes and regulations.

Types of Agri-business Management/Specialization Areas of Agribusiness Management

I Basic areas

1. Production and operations management

2. Financial management & planning

3. Marketing and selling management

4. Personnel or human management

II Other areas

5. Material management

6. Purchase management

7. Wholesale & retail management

8. Office management

9. Farm management

10. Export and import management. 

Concept of Management

Importance of Management

In order to give sophisticated life to people and a wide choice of consumption goods the good management improves the standard of living. Management carries ethical (rules of conduct) and moral behavior. Management was important in old societies also. However, the emergence of large sized organization and the changing nature of society and its constituents have made managing the things an uphill task. Even classical management experts have recognized it long back. For example : Urwick stated that “ No ideology, no ism or political theory can win grater output with less efforts from a given complex of human and material resources, only sound management. And it is on such grater output that a higher standard of life, more leisure, and more amenities for all must necessarily be found”.

The Concept of Management

MANAGMEENT

Management has been dissected and described in many ways. Some describe management as a division of areas of responsibility such as production, marketing, finance and personnel (staff employed in institute). Others view management as coordinating and effectively utilizing available resources such as:

 i) Material ii) Machinery iii) Manpower iv) Money v) Methods, and vi) Markets.

This approach often called the Six M concept. So Management is the process of achieving desired results with the use of available resources by performing the basic elements or functions of management as follow:

ORGANIZATION

1. Planning

2. Organizing

3. Directing

4. Coordinating

5. Controlling

6. Communicating

7. Motivating

On the whole management is seen as the body of knowledge.

Other Functions of Management

DECISION

• Decision making: It is the process by which a course of action is consciously chosen from the available alternatives for the purpose of achieving the desired results.
• Staffing: It is the process by which the managers select, train, promote and retire subordinates.

Objectives of Management

The primary objective of management is to run the enterprise smoothly and to maximize profit.

STAFF

1. Proper utilization of resources

2. Improving performance

3. Mobilising best talent

4. Planning for future

5. Development of resources

6. To incorporate innovations

7. To integrate various interest groups

8. Stability in the society. New inventions replace old ones

9. Technology, social process and structure are fast changing, so these changes need to be incorporated

10. Various interest groups (shareholders, employees, government compete with each for larger share in output. So these need to be integrated)