Introduction to Agribusiness

Strategic Planning

Detailing the specifics of a chosen strategy over a specified period of time, usually five years.

The "Anti" Non customers

Non-customers who know the benefits of purchasing from your industry but intentionally choose not to purchase products from it.

Barriers to Exit

The things that make it difficult for competitors in an industry to leave said industry.

PQIC

Using an agribusiness's production process, output quality, innovativeness, and customer focus to benchmark a firm's level of competitive advantage it holds.

The Four Actions Framework

A framework that focuses on creating a blue ocean strategy through challenging assumptions made in an industry and the pursuit of differentiation through jumping past competition with one or multiple components of the framework (eliminate, raise, reduce, and create).

External Market Influences

A form of external analysis, analyzing the economic, social, competitive, technological, and global factors that affect a business or industry.

The "Mystery" Non-customer

Non-customers who are in markets distant from yours, and do not necessarily know who they are.

Customer Acquisition Costs (CAC)

How much money a firm has to spend to get a customer to make their first purchase.

Strategy

A forward-thinking and highly intentional process of analysis and planning that deals with complex decisions, including factors that involve others' actions playing a role in the success of the strategy.

Capital Requirements

The resources needed to start a business within a particular industry.

MACC

A framework that focuses on a firm's ability to maintain, capitalize on, and create competitive advantages.

Resources

The tangible and intangible assets of a firm. In other words, everything a firm possesses or manages.

Resource Immobility

How costly it would be for a firm to acquire or develop the same resources as another.

Exposure Minimization

Minimizing weaknesses and threats at the same time so that you prevent a weakness from making a business susceptible to a threat.

The Agribusiness Decision-Making Model

A framework for decision-making that focuses on creating a holistic understanding of a problem, identifying decision-making criteria, collecting relevant information, evaluating the information, brainstorming solutions, picking a direction, and finalizing/implementing the decision.

Value Innovation

Involves creating large jumps in value for consumers through creating new demand and simultaneously increasing value and decreasing the overall costs for consumers.

Long Pestel

A PESTEL analysis that examines each of the six factors individually through a lens of local, national, and global considerations.

Resource Heterogeneity

Different firms have different resources.

Disrupter

A firm that has successfully executed a blue ocean strategy and, in doing so, has changed the way an industry looks and operates (or created a new industry entirely).

SWOT analysis

An analysis that looks at the Strengths, Weaknesses, Opportunities, and Threats for a business or organization.

VIRO Framework

Analyzing a firm's resources and capabilities based on value, rarity, imitability, and organization.

BLUE ocean

A strategy that focuses on competing in an industry based on the unknown market space and making competition irrelevant.

Strategic Agility

A firm's adaptability when exposed to a changing landscape allows it to maintain focus on its foundational priorities.

RED ocean

A strategy that focuses on competing in an industry based on everything that is already known and visible.

Causal Ambiguity

Describes a lack of clarity between how a firm uses resources and the competitive advantage it holds.

Porter's Five Forces

An analysis framework that examines five external forces that affect an industry and the businesses inside of that industry. Those five forces are:

1. The threat of new businesses entering the market

2. The threat of substitutes (new products) entering the market.

3. The changing bargaining power of suppliers.

4. The changing bargaining power of buyers.

5. The level of rivalry among existing firms in the industry.

SMART Goals/ Objectives

A system of setting goal/objectives based on five distinct criteria. The goals/objectives must be smart, measurable, achievable, relevant, and time-bound.

Dynamic Capabilities

A framework that describes a firm's capabilities to create adaptability for its internal resources as a means of responding to external factors present in the market.

Barrier to Entry

The things that make it difficult for new competitors to enter a market.

PESTEL analysis

A form of analysis that examines the Political, Economic, Sociocultural, Technological, Environmental, and Legal factors affecting a business or industry. Also called a STEEP analysis.

Capabilities

A subset of resources that describes the activities and abilities of a firm.

Hedonic Pricing

Estimating the value of a good/service through the analysis of external factors that affect it.

Strategic Positioning

Individuals company's unique identities and differentiators that are used to beat fellow competitors. An industry's strategic positioning is the aggregate of these unique identities and differentiators.

Switching Costs

Psychological barriers that prevent customers from transitioning to buying a product from a different company than what they are accustomed to.

Logic Models

Show a detailed description of tangible actions, goals, objectives, and measurements, aimed at meeting an outcome. It is a series of "if-then" relationships that, if implemented as intended, lead to the desired outcomes.

Leadership

Authority created through relationships built on trust, resulting in individuals choosing to follow an individual when they have the option not to.

Profit

revenue - cost

The Goal of an Agribusiness Manager

To maximize organizational outcomes, given both short run and long run implications, while operating within any given constraints.

Organizational Efficiency

Maximizing organizational outcomes through the combination of improving the quality of outputs and lowering the costs of inputs.

Feedback Loops

Processes designed so that decision-makers can receive information, use the information to make minor changes or major overhauls, and monitor progress through the system set in place (by again receiving more information through the same channels.)

Marketing Management

The discipline of management that focuses on revenue generation through understanding customer needs/desires and effective positioning of the business.

Thinking in Silos

Acting like one action within an organization does not affect other disciplines of the organization. Treating disciplines of management as if they operate entirely independent of each other, with no interactive effects. A bad thing to do.

Strategic Management

The act of creating and utilizing competitive advantages, through the design task of management.

Positive-Sum Game

A situation where each party has the chance to end up better off than whatever their current state of the world is.

Expertise Power

Authority that comes from the knowledge an individual possesses.

Supply Chain Management

The discipline of management that focuses on processes used in the production of goods and services and the transportation of goods and services. This definition is similar to controlling, but it is a descriptor of job functions rather than being an action verb. Additionally, logistics is a focal point here.

Michalowicz's Business Hierarchy of Needs

A system of prioritizing organizational improvements through various levels of need.

Arranging

Setting up a business to succeed in the short-term, with current skill sets (of employees) in mind, as well as the future, with potential skill sets/ advantages as a consideration. Placing pieces of the "business puzzle" in their proper places.

Position Power

Authority created through a title held within an organization.

Productive Efficiency

Reducing or eliminating waste, assuming that processes remain constant.

Fixed Costs

Costs that do not change regardless of how much is produced.

Utility

An economic term for satisfaction.

Compensation

What an employee receives as a result of their efforts and general employment within an organization. This included but is not limited to monetary compensation.

Operations Management

Management of the processes used on the production of goods and services.

Variable costs

Costs that change as the level of production changes.

Human Capital Managment

The discipline of management that focuses on meeting the needs of an organization through improving, adding, replacing, and retaining human capital.

Management

The art of decision-making, relative to the discipline(s) of business involved in a manager's job description, is through the scientific application of relevant business processes. Alternative definition- The art of designing, arranging, aligning, and guiding through the oversight of marketing, finances, supply chain considerations, and human capital.

Organizational Effectiveness

Maximizing organizational outcomes through creating customer value.

Zero-Sum Game

A situation where there is one winner and one loser. In order for one party to gain more, the other party has to suffer a loss.

Business Plans

Documents that define an organization's purpose as a means to inform the organization's objectives and strategic vision for short-term and long-term decisions

Guiding

The implementation of planning, organizing, and controlling using human resources and organizational assets.

Technical Efficiency

Increasing output per unit of input through improving organizational processes.

Negative-Sum Games

A situation where multiple parties suffer a loss.

Revenue

Price * Quantity

Variable Costs

Costs that change as the level of production changes.

Logistics Management

A component of supply chain management focusing on the transportation of goods and services.

Aligning

The act of refining processes, as needed, based on organizational outcome achieved (including outcomes not achieved as a component). Utilizing a feedback loop to create more desirable outcomes through flexibility in processes. This term is similar to Supply Chain Management, but this definition is an action verb.

Financial Management

The discipline of management that focuses on overall profitability, inclusive of both revenues and costs, through data analysis and decision-making on an organization's assets, liabilities, and investments.

Incentive Compatibility

Creating outcomes, with more than one party involved, where competing interests are present, results in ideal outcomes for both parties.

Strategic Management

The act of creating and utilizing competitive advantages, through the design task of management.

Designing

The task of management that focuses on creating the best outcomes possible for a business, giving special attention to possible future business conditions, in order to become as profitable as possible. (also referred to as planning in many texts-but this text takes the definition a couple of steps farther by "designing outcomes").