ABM-5221 Agri-business management notes IGKV

1. Transformation of agriculture into agri business, various stakeholders and components of agri business systems.
2. Importance of agri business in the Indian economy and new agricultural policy.
3. Distinctive features of agri business management: importance and needs of agro based industries
4. Classification of industries and types of agro based industries, institutional arrangement, procedures to set up agro based industries.
5. Constantine establishing agro based industries
6. Agri value chain: understanding primary and support activities and their linkages
7. Business environment:PEST and SWOT analysis
8. Management functions: roles and activities
9. Organisation culture: planning meaning definition, types of plans
10. Purpose aur mission, goals are objectives, strategies, policies procedures, rules, programs and budget, components of business plan.
11. Steps in planning and implementation
12. Organisation staffing, directing and motivation, ordering, leading, supervision, communications, control
13. Capital management and financial management of agri business
14. Financial statements and there importance
15. Marketing management: segmentation, targeting and positioning
16. Marketing mix and marketing, strategies consumer behaviour analysis
17. Product life cycle, sales and distribution management
18. Pricing policy,various pricing methods
19. Project management definition,project cycle, identification,formulation, appraisal implementation, monitoring and evaluation
20. Project appraisal and evaluation techniques

1. INDIRAGANDHIKRISHIVISHWAVIDYALAYA
AGRIBUSINESSMANAGEMENT
ABM-5221
AgriMemoQuest

2. "Yourtimeislimited,
By
HisDivineGrace
Foundersof"AgriMemoQuest"
[RP.T.NARETI,P.SETHIYA,A.CHAUHAN,R.SHRIVAS,K.SANGIYA]
Co-founder-TUKESHGOYAL,SP.PUSKERNISHAD
“THEULTIMATEGOALOFFARMINGISNOTTHEGROWINGCROPBUTTHECULTIVATION
ANDPERFECTIONOFHUMANBEING”
RAMPRASAD POTAICOLLEGEOFAGRICULTUREANDRESEARCHSTATION
KANKER
Thetwomostimportantdaysinyourlifearethedayyouare
bornandthedayyoufindoutwhy.”
-MarkTwain
Agri:Shortforagriculture,indicatingafocusontheagriculturalsectororrelatedtopics.
Memo:Indicatesastructuredordocumentedapproach,possiblyinvolvingmemosornotes.
Quest:Referstoajourneyorpursuit,oftenimplyingasearchforknowledge,improvement,orachievement.
2 "AgriMemoQuest"

3. "Yourtimeislimited,
AGRIBUSINESS-
Agri-businessasaconceptwasborninHarvardUniversityin1957withthepublicationbook
“aconceptofAgri-business“writtenbyJohnDavidandGoldBerg.Itwasintroducedinealy
,whentheuniversityofthephilippinesofferedanAgriculturebusinessmanagement(ABM)
programmeattheunder-graguatelevel.In1969,thefirstAdvancedAgribusiness
ManagementseminarwasheldinManila.
Definition :
Agribusinessisthesumtotalofalltheoperationsinvolvedinthemanufactureand
distributionoffarmsupplies,productionactivitiesonthefarm,storage,processing
anddistributionoffarmcommoditiesanditemsmadefromthem.-(JohnandGold
Berg)
TheCoordinatingscienceofsupplyinginagricultureproductioninput&
subsequentlyproducing,processing&distributionfood&fiber.-(E.PaulRoy)
Agribusiness:referstothecollectiveactivitiesinvolvedintheproduction,processing,and
distributionofagriculturalproductsandservices.Itencompassestheintegrationof
agriculturalproductionwithrelatedindustriessuchasinputsupply(e.g.,seeds,fertilizers),
machinery,processing,marketing,anddistribution.Agribusinessoperateswithina
commercialframework,leveragingtechnology,marketinsights,andglobaltradeto
optimizeproductivity,profitability,andsustainabilityintheagriculturalsector.
Thetransformationofagricultureintoagribusinessrepresentsafundamentalshiftinhow
agriculturalactivitiesareconductedandperceived.Here’sacomprehensiveoverviewof
thistransformation:
●TraditionalAgriculture:Historically,agriculturewasprimarilysubsistence-based,
wherefarmersproducedcropsandlivestockprimarilyfortheirownconsumptionor
localmarkets.Communitieswerelargelyself-sufficient,andfarmingmethodswere
oftentraditionalandlabor-intensive.
●Agribusiness:Incontrast,agribusinessencompassesthecommercializationand
modernizationofagriculture,integratingadvancedtechnologies,marketprinciples,
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4. "Yourtimeislimited,
andaglobalperspective.Itextendsbeyondtraditionalfarmingtoincludevarious
sectorssuchasinputsupply,production,processing,marketing,anddistribution.
L1.Transformationofagricultureintoagribusiness,various
stakeholderandcomponentsofagribusinesssystem
TRANSFORMATIONOFAGRICULTUREINTOAGRIBUSINESS:
Thetransformationofagricultureintoagribusinessmarksasignificantshiftfrom
traditionalfarmingpracticestoamoreindustrialized,market-orientedapproach.
Historically,agriculturewasprimarilyasubsistenceactivity,withmostpeoplelivingonor
nearfarmsandengagingincropandlivestockproductionfortheirownneeds.However,in
recentyears,agriculturehasevolvedintoacomplexindustrythatencompassesnotonly
farmingbutalsosophisticatedagri-scienceandbusinessactivities.
Thistransformationhasintegratedagricultureintothenationalandglobaleconomy,
creatingavastnetworkofactivitiesbeyondthefarm.Manypeoplewhoworkinagriculture
todayarenotdirectlyinvolvedinfarmingbutareinsteadengagedinvariousbusinesses
relatedtoagriculture.Theseincludeindustriesthatprovideinputstofarmers,suchas
seeds,fertilizers,agro-chemicals,andfarmmachinery,aswellasthoseinvolvedinfood
processing,marketing,andtrade.
Agribusinessesalsoplayacriticalroleinprovidingservicestofarmers,suchascredit,
insurance,andinformation.Theyensurethattheagriculturalproductsproducedby
farmersreachconsumersbyprocessing,marketing,anddistributingthem.Inaddition,
agribusinessesengageinactivitiesliketrading,promoting,andevenlobbyingfor
agriculturalproducts.
Thisshifthasmadeagricultureasignificantpartoftheglobaleconomy,withmillionsof
peopleemployedinvariousaspectsofagribusiness.Theindustrynowservesnotonlythe
productionneedsoffarmersbutalsothefoodandnon-foodrequirementsofpeople
worldwide.Asaresult,agriculturehastransformedfromasimple,self-sufficientactivity
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intoamajoreconomicforce,deeplyintertwinedwithglobalbusinessandtechnological
advancements
Keyaspectsofthistransformationinclude:
1.TechnologicalAdvancements:Adoptionofprecisionfarming,biotechnology,and
informationtechnologytoenhanceproductivity,efficiency,andsustainability.
2.MarketOrientation:Integrationintoglobalmarkets,respondingtoconsumer
preferences,andadaptingtomarketdemandsthroughefficientsupplychainsand
marketingstrategies.
3.DiversificationofStakeholders:Involvementofvariousactorsbeyondfarmers,
includinginputsuppliers,processors,traders,financialinstitutions,researchers,and
governmentagencies,allcontributingtotheagribusinessecosystem.
4.EconomicImpact:Contributiontonationaleconomiesthroughemployment
generation,exportearnings,andeconomicgrowth,whileensuringfoodsecurityand
meetingbothdomesticandinternationalmarketneeds.
STAKEHOLDERSOFAGRIBUSINESSSYSTEM:Fundamentally,there
arefourstakeholdersintheagribusinesssystem.Theseare:
⦁ Farmers
⦁ Researchers
⦁ Publicsector
⦁ Businesssector
Farmers:Farmersarethemainactorsinintegratedagricultureinformationsystems.They
aretheconsumersoffinancialresources,informationsources.Themembersarethe
farmers,farmersunion,farmers’community,etc.
Researchers:Researchersactassourcesofinformation,researchanddevelopment.The
interactionbetweenresearchersandfarmershelptodevelopnewtechnologyfor
agribusiness.Researchersprovidetrainingtofarmersaboutnewtechnologyandnew
developmentintheagriculturesector.Facultymembersofagriculturalscience,Faculty
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membersofinformationtechnologyandhighereducationresearchersareincludedinthis
group.
Publicsector:Publicsectorprovidesinformationtechnologyinfrastructure,physical
infrastructurelikereservoirs,land;distributefertilizer,seeds,farmingtoolsandequipment
tothefarmers;regulatepricesofagriculturalproduce;provideinformationanddata
relatedtoagriculture.ThemembersofthissectoraretheMinistryofCommunication,
MinistryofPublicWorkers,MinistryofAgricultureandFarmers’Welfare,Localgovernment,
agriculturalNGOsandwelfareNGOs.
Businesssector:Businesssectorprovidesfinancialserviceandinsurance;produce
pesticides,fertilizers,farmingtoolsandequipment;distributeandsellcropsandactas
informationsourcesinagriculture.Transportationandcourierserviceprovider,fertilizers
andpesticidesmanufacturers,distributorsandsuppliersoffarmequipmentsandtools,
e-Commerceande-channels,bankingandfinancialinstitutions,telecommunication
providers/operators,cooperation,informationtechnologypractitioners,retailer,general
distributors,distributorsofagriculturalproducts,distributorsofagriculturalderivatives
productsandsuppliersofagriculturalequipmentsincludedhere.
ComponentsoftheAgribusinessSystem
1.Inputsector:Itdealswiththesupplyofinputsrequiredbythefarmersforraisingcrops,
livestockandotheralliedenterprises.Theseincludeseeds,fertilizers,chemicals,machinery
andfuel.
2.Farmsector:Itaimsatproducingcrops,livestockandotherproducts.
3.Productsector:Itdealswithvariousaspectslikestorage,processingandmarketingthe
finishedproductssoastomeetthedynamicneedsofconsumers.Therefore,Agribusiness
issumtotalofalloperationsoractivitiesinvolvedintheotheragriculturalproducts.
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L2.IMPORTANCEOFAGRIBUSINESSINTHEINDIAN
ECONOMYANDNEWAGRICULTURALPOLICY:
IMPORTANCEOFAGRIBUSINESSINTHEINDIANECONOMY:
⦁ ShareinNationalIncome.
⦁ LargestEmploymentProvidingSector.
⦁ ContributiontoCapitalformation.
⦁ ProvidingRawMaterialtoindustries.
⦁ MarketforIndustrialProducts.
⦁ Provisionoffoodgrains.
⦁ Earnerofforeignexchange.
NEWAGRICULTURALPOLICY:
Thefocusofthenewagriculturalpolicyisonefficientuseofresourcesandtechnology,
adequateavailabilityofcredittofarmersandprotectingthemfromseasonalandprice
fluctuations.Overthenexttwodecades,thepolicyaimstoattainagrowthrateinexcessof
fourpercentperannumintheagriculturesector.Thenewpolicyseekstointroduce
economicallyviable,technicallysound,environmentallynon-degradingandnon-hazardous
andsociallyacceptableuseofnaturalresourcesofthecountryforpromotingtheconcept
ofsustainableagriculture.
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Thenewagriculturalpolicyclearlyaimsto:
CoreObjectives
●Enhanceefficiency:Throughoptimaluseofresources,technology,andcredit.
●Stabilizeincome:Byprotectingfarmersfrompriceandseasonalfluctuations.
●Accelerategrowth:Targetinga4%annualgrowthrateinthesector.
●Promotesustainability:Byadoptingenvironmentallyfriendlypractices
●Technologicalintegration:Emphasizingtheroleoftechnologyinimproving
productivity.
●Financialsupport:Ensuringadequatecreditavailabilityforfarmers.
●Riskmanagement:Implementingmeasurestoprotectfarmersfrompriceand
weather-relatedrisks.
●Sustainabledevelopment:Balancingeconomicgrowthwithenvironmental
conservation.
FEATURESOFNEWAGRICULTURALPOLICY:
BoostGrowth:Aimfora4%annualgrowthratein
agriculture.
LandReform:Redistributelandtosmallfarmersto
ensurefairaccess.
ConsolidateFarms:Mergesmallfarmstoimprove
efficiency.
PrivateInvestment:Encourageprivatesectorinvestment
inagriculture.
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ProtectFarmers:Providecropinsurancetoshieldfarmersfromlosses.
AdvanceTechnology:Promotetheuseofbiotechnologyandsupportagriculturalresearch.
PURPOSE:
●MaximizeagriculturaloutputUtilizeIndia'svastagriculturalpotentialeffectively.
●EnhanceruralinfrastructureImproveroads,storagefacilities,andirrigation
systems.
●IncreaseagriculturalproductvalueFocusonprocessingandpackagingforbetter
returns.
●Promoteagro-businessesEncourageinvestmentsandgrowthintheagricultural
sector.
●GenerateruralemploymentCreatejobopportunitiesinagricultureandrelated
industries.
●Improvefarmers'livelihoodsEnsurefairincomeandlivingstandardsforfarmers.
●Reducerural-urbanmigrationMakeruralareasmoreattractiveforlivingand
working.
L3.DISTINCTIVEFEATURESOFAGRI-BUSINESS
MANAGEMENT:IMPORTANCEANDNEEDFOR
AGRI-BUSINESSINDUSTRIES
DistinctiveFeaturesofAgri-BusinessManagement
1.DiverseParticipantsAgribusinessinvolvesawiderangeofplayers,fromfarmersto
retailers.
2.LargeScaleandComplexityTheindustryisvast,handlingnumerousproducts
throughvariouschannels.
3.VariedBusinessStructuresAgribusinessesrangefromsmallfamilyfarmstolarge
corporations.
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4.SeasonalFluctuationsProductionisofteninfluencedbyweatherandseasonal
cycles.
5.MarketOrientationSuccessdependsonunderstandingandrespondingto
consumerdemands.
6.VerticalIntegrationManyagribusinessescontrolmultiplestagesoftheproduction
anddistributionprocess.
7.GovernmentInfluencepoliciessignificantlyimpacttheindustry.
IMPORTANCEOFAGRI-BUSINESSINDUSTRIES:
EconomicBenefits:
●Ruraldevelopment:Createsjobsandincomeopportunities.
●Reducedexploitation:Protectsfarmersfrommiddlemen.
●Increasedagriculturalproduction:Encouragescropdiversification.
●Costreduction:Minimizestransportationcostsforrawmaterials.
SocialBenefits:
●Improvedlivelihoods:Raisesthestandardoflivingforruralpopulations.
●Reducedmigration:Createsemploymentopportunitiesinruralareas.
●Balancedregionaldevelopment:Preventsover-concentrationofindustries.
EnvironmentalBenefits:
●Reducedwastage:Minimizesspoilageofperishableagriculturalproducts.
NEEDFORAGRI-BUSINESSINDUSTRIES:
⦁ Suitabletoruralareasastheyarerawmaterialoriented.
⦁ Forupliftmentoftheruraleconomy.
⦁ Tosolvetheproblemofunemployment.
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⦁ Togenerateincomeandincreasestandardofliving.
⦁ Fordecentralizationanddispersalofindustries.
⦁ Toreducedisparitybetweenruralandurbanareas.
⦁ Toencouragebalancedgrowthbetweenagricultureandindustry.
⦁ Tosolvetheproblemofexploitationoffarmingcommunity
⦁ Toreducetransportationcosts.
⦁ Togiveabigpushtoagricultureandactasasourceofdemandandsupply.
⦁ Toavoidwastageofperishableagriculturalproducts.
⦁ Topreventmigrationofruralpeople.
⦁ Todevelopsuitablebackwardareas.
⦁ Toimproveinfrastructuralfacilities
L4.CLASSIFICATIONOFINDUSTRIESANDTYPESOF
AGRO-BASEDINDUSTRIES,INSTITUTIONAL
ARRANGEMENTS, PROCEDURETOSETUPAGROBASED
INDUSTRIES
CLASSIFICATIONOFINDUSTRIES:Industriesaredividedintofourgroups.
⦁ Resourcebased
⦁ Demandbased
⦁ Skillbased
⦁ Ancillary
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●Resource-basedindustries:Theseindustriesareprimarilydependentonthe
availabilityofnaturalresourceswithinaspecificregion.Examplesinclude
agriculture,mining,forestry,andfisheries.
●Demand-basedindustries:Theseindustriesareestablishedinresponseto
consumerdemandforspecificproductsorservices.Theyareoftenlocatednear
marketstoreducetransportationcosts.Examplesincludefashion,electronics,and
foodprocessing.
●Skill-basedindustries:Theseindustriesrelyheavilyonskilledlaborfortheir
operations.Theyareoftenfoundinregionswithahighconcentrationofskilled
workers.ExamplesincludeIT,softwaredevelopment,andresearchand
development.
●Ancillaryindustries:Theseindustriessupporttheprimaryindustriesbyproviding
rawmaterials,components,orservices.Theyareoftenlocatedneartheindustries
theyserve.Examplesincludeautocomponentmanufacturing,textilemachinery
production,andfoodpackaging.
TYPESOFAGRO-BASEDINDUSTRIES:Agro-basedindustriesarethoseindustries
whichhaveeitherdirect/indirectlinkwithagriculture.Industrieswhicharebasedon
agriculturalproduceandindustrieswhichsupportagriculturecomeunderagro-based
industries.Therearefourtypesofagro-basedindustries
1.Agro-ProduceProcessingUnits:
●Theseunitsprocessrawagriculturalmaterialstopreservethemandmakethem
easiertotransport.
●Examplesincludericemills,dalmills,andfacilitiesthatclean,sort,orpackage
agriculturalproduce.
2.
3.Agro-ProduceManufacturingUnits:
●Theseunitstransformrawagriculturalmaterialsintocompletelynewproducts.
●Examplesincludesugarfactories,bakeriesusingagriculturalproducts,solvent
extractionunits,andtextilemillsusingcottonorsilk.
4.Agro-InputsManufacturingUnits:
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●Theseunitsproducegoodsthatsupportagriculturalactivitiesorenhance
productivity.
●Examplesincludemanufacturersofagriculturalimplements(tractors,plows),seed
industriesproducingseedsforcrops,andunitsproducingfertilizersandpesticides.
5.AgroServiceCentres:
●Thesecentersproviderepairandmaintenanceservicesforagriculturalmachinery
andequipment.
●Theysupportfarmersbyservicingpumpsets,dieselengines,tractors,andvarious
farmequipment,ensuringoperationalefficiency.
INSTITUTIONALARRANGEMENTSFORPROMOTIONOFAGROBASED
INDUSTRIES:
⦁ MinistryofAgricultureandFarmersWelfare:Dealswithricemills,oilmills,sugar
mills,bakeries,coldstorage,etc.
⦁ KhadiandVillageIndustriesBoard:Coverstraditionalagrobasedindustrieslike
„gur‟,handicrafts,khandsari,etc.
⦁ DirectorGeneralofTradeandDevelopment:Looksaftertheindustriesengagedin
themanufactureoftractors,powertillers,dieselengines,pumpsets,etc.
⦁ Agro-industriesDevelopmentCorporation:Ineachstatemainlysupplyagricultural
machinery,inputsandagriculturaladvisoryservicestofarmers.Somecorporationshave
alsoundertakencertainmanufacturingactivitiesintheagro-industriessector.
⦁ SmallIndustryDevelopmentOrganization:Dealswithsmallagro-industrieslike
hosiery,processingoffoodproducts,beverages,foodandfruitpreservation,agricultural
implements,pesticideformulations,etc.
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PROCEDURETOSETUPAGROBASEDINDUSTRIES:Followingsteparetobe
followedhere'saconciseprocedureforsettingupagro-basedindustries:
1.AssessAgriculturalPotential:Evaluateavailableresourceslikecrops,water,and
landsuitability.
2.EvaluateOutputsandInputs:Analyzeagriculturaloutputsandinputssuchas
seedsandfertilizers.
3.StudyExistingUtilization:Reviewhowresourcesareusedincurrentagro-based
units.
4.UtilizeSurplusProduce:Identifysurplusagriculturalproduceforprocessingto
reducewastage.
5.AddressPreservationNeeds:Determineprocessingneedsforpreserving
agriculturalproducts.
6.SelectKeyProducts:Chooseproductsbasedonmarketdemandandresource
availability.
7.StrategicLocation:Optimizelocationtomaximizeinfrastructureuseandminimize
waste.
8.FeasibilityStudies:Conductprofitabilityandfeasibilitystudies.
9.IdentifyEntrepreneurs:Findinterestedentrepreneursorinvestors.
10.TechnologyandTraining:Providesuitabletechnologyandtraining.
11.FinanceSolutions:Securefundingandmanagefinances.
12.MarketStrategy:Developmarketingplansanddistributionchannels.
CONSTRAINTSINESTABLISHINGAGROBASEDINDUSTRIES:
Herearethemainconstraintsinestablishingagro-basedindustries:
1.LackofEntrepreneurialGuidance:Insufficientsupportandguidancefor
entrepreneurs.
2.RiskElement:Inherentrisksassociatedwithmarketvolatilityandagricultural
uncertainties.
3.CropandVarietyChanges:Adaptationtochangingcroptypesandvarietiesdueto
technologicaladvancementsandmarketshifts.
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4.DependencyonMonsoon:Vulnerabilitytofluctuationsinrawmaterialsupplydue
tovariationsinmonsoonpatterns.
5.TrainingandTechnologyGaps:Limitedavailabilityoftrainingandmodern
technologyforsophisticatedagro-industries.
6.FinancialChallenges:Difficultyinsecuringsufficientfinancingduetothe
capital-intensivenatureofmodernsmallindustries.
7.InadequatePromotion:Lackofpromotionalcampaignsandindustry-specific
guidanceforpotentialentrepreneurs.
8.MarketUncertainty:Unclearfuturemarketdemands,quantity,andquality
requirements.
9.DiversityofAgriculturalProduce:Widerangeofagriculturalproductswithout
clearmethodologiesforselectingsuitableindustriesforspecificregions.
10.SeasonalProductionIssues:Underutilizationofindustrialcapacityduetoseasonal
supplyofagriculturalproduce,suchaswithsugarcane.
11.VariabilityinFruitandVegetableSupply:Inconsistenciesinavailabilityofspecific
varietiesthroughouttheyear,affectingprocessingindustries.
12.LackofIntegrationAmongAgencies:Poorcoordinationamongdistrict-level
developmentagenciessupportingagro-industrialdevelopment.
⦁ AGRIVALUECHAIN:
UNDERSTANDINGPRIMARY&SUPPORT
ACTIVITIESANDTHEIRINTERLINKAGES:
AGRIVALUECHAIN:
Thetermvaluechainwasfirstpopularizedinabookpublishedin1985byMichaelPorter
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todescribehowcompaniescouldachieve“competitiveadvantage”byaddingvaluewithin
theirorganization.Thisconcepthighlightstheimportanceofoptimizingeachstepinthe
productionanddeliveryprocesstoenhanceoverallefficiencyandprofitability.
Theagriculturalvaluechaincomprisesallessentialstagesandservicesinvolvedinbringing
agriculturalproductsfromfarmstoconsumers.Itstartswithdevelopinganddisseminating
geneticmaterialandsupplyinginputslikeseedsandmachinery.Farmerorganizationand
farmproductionoptimizecultivationandlivestockrearing,followedbypost-harvest
handlingandprocessing.Technologiesensurequalityandefficiency,withgradingand
packingmaintainingstandards.Localandindustrialprocessingmeetdiversemarketneeds,
supportedbystorage,transport,finance,andmarketfeedback.Thegoalofunderstanding
theagriculturalvaluechainistooptimizeefficiency,quality,andprofitabilitywhileensuring
Atoolforidentifyingwaytocreatemorecustomervalue
Helptofindoutactivitieswhichprovidevalueadditiontoaproductorservice
Definitions:
●WorldBank:"Theterm'valuechain'describesthefullrangeofvalue-adding
activitiesrequiredtobringaproductorservicethroughthedifferentphasesof
production,includingprocurementofrawmaterialsandotherinputs."
●UNIDO(UnitedNationsIndustrialDevelopmentOrganization):"Actors
connectedalongachainproducing,transforming,andbringinggoodsandservices
toend-consumersthroughasequencedsetofactivities."
●ICAT(InternationalCenterforTropicalAgriculture):"Astrategicnetworkamong
anumberofbusinessorganizations.
Primary&SupportActivities
Mostorganizationsengageinnumerousactivitiesintheprocessofconvertinginputsto
outputs.Theseactivitiescanbeclassifiedgenerallyaseitherprimaryorsupportactivities
thatallbusinessesmustundertakeinsomeform.
PrimaryActivities
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AccordingtoPorter(1985),theprimaryactivitiesare:
PrimaryActivities
1.InboundLogistics:Includeactivities-“Getting,storing,andhandlingoftheraw
materials.
2.Operations:Turningrawmaterialsintofinishedproducts.
3.OutboundLogistics:Storinganddeliveringfinishedproductstocustomers.
4.MarketingandSales:Promotingandsellingproductstocustomers.
5.Service:Maintainingandfixingproductsaftertheyaresold.
SupportActivities
1.Procurement:Buyingtherawmaterialsandsuppliesneededforproduction.
2.HumanResourceManagement:Hiring,training,andmanagingemployees.
3.TechnologicalDevelopment:Usingtechnologyandknowledgetoimprove
processesandproducts.
4.Infrastructure:Managingcompany-widefunctionslikefinance,legal,and
administration.
LINKAGESBETWEENTOPRIMARY&SUPPORTACTIVITIES:Theprimaryand
supportactivitiesarecloselyinterlinkedwitheachother.Supportactivitieshelpperform
primaryactivitiesmoreeffectivelyandefficiently.Forexample,procurement(asupport
activity)helpsinperforminginboundlogistics(aprimaryactivity).Similarly,technological
developmentleadstonewtechniquesforperformingvariousoperations.Thus,theprimary
andsupportactivitiesoftheagriculturalvaluechainarecloselyinterrelated.
L7.BUSINESSENVIRONMENT:PEST&SWOTANALYSIS
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PESTAnalysis
Pestusedtoaccessforeexternalfactorinrelationtobusinesssituation
Thisismainlyananalysisforatoolusedtoidentifymicro(external)forcesfacingon
organization
Inmarketing,beforeanykindofstrategyortacticalplancanbeimplementeditis
fundamentaltoconductasituationalanalysis.pesttermofthatareshouldberepeatedat
regularstagetoidentifymacroenvironment
Pestcanhelpeverybusinessownedinidentifyingsignificantchangeinthepolitical
,economical,social,technological,environmentalandlegalfactor
Ithelpinbetterstrategicplanning
Apartfromacompany’sinternalresourcesandindustryfactors,severalmacro-economic
factorscanprofoundlyimpactacompany'sperformance.Particularlyinsituationssuchas
newventuresorproductlaunchideas,thesefactorsneedtobecarefullyanalyzedto
determinetheirroleintheorganization’ssuccess.Oneofthemostcommonlyused
analyticaltoolsforassessingexternalmacro-economicfactorsrelatedtoaparticular
situationisPESTAnalysis
ElementsofaPESTAnalysis
Political:Governmentregulationsandlegalfactorsareassessedinthissection.Issues
addressedincludepoliticalstability,taxguidelines,traderegulations,safetyregulations,
andemploymentlaws.
○Examples:Changesintradetariffs,introductionofnewagricultural
subsidies,changesinlaborlaws.
Economic:Businessesexamineeconomicissuesthatareboundtoimpactthecompany.
Thisincludesfactorslikeinflation,interestrates,economicgrowth,theunemploymentrate
andpolicies,andthebusinesscyclefollowedinthecountry.
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○Examples:Economicrecessionsaffectingconsumerspending,inflation
increasinginputcosts,changesininterestratesimpactingloansforfarm
equipment.
Social:Businessescananalyzethesocio-economicenvironmentoftheirmarketvia
elementslikecustomerdemographics,culturallimitations,lifestyleattitudes,and
education.Withthese,abusinesscanunderstandhowconsumerneedsareshapedand
whatbringsthemtothemarketforapurchase.
○Examples:Increasingdemandfororganicproducts,demographicshifts
leadingtochangesinfoodconsumptionpatterns,culturaltrendsinfluencing
dietchoices.
Technological:Theimpactoftechnologyontheintroductionofaproductorserviceintoa
marketplaceisassessedhere.Thesefactorsincludetechnologicaladvancements,lifecycle
oftechnologies,theroleoftheInternet,andgovernmentspendingontechnologyresearch.
○Examples:Advancesinprecisionfarmingtechnology,theadoptionof
biotechnologyincropproduction,increaseduseofe-commerceforselling
produce.
SWOTAnalysis:
Astudyundertakenbyanorganizationtoidentifyitsinternal-strengthandweaknessand
external-opportunityandthreats.
Frameworkusedtoevaluateacompany'scompetitivepositionhelpsdictatethestrategies
appropriatetothefirm
SWOTAnalysisisastrategicplanningframeworkusedtoassesstheStrengths,
Weaknesses,Opportunities,andThreatsinvolvedinabusinessventure,project,or
organization.Itinvolvesidentifyinginternalfactors(StrengthsandWeaknesses)and
externalfactors(OpportunitiesandThreats)thatcanaffecttheachievementofobjectives.
Thisanalysishelpsbusinessesorindividualstounderstandtheircurrentpositionrelativeto
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theirgoalsandcompetitors,enablingthemtodevelopstrategiestoleveragestrengths,
minimizeweaknesses,capitalizeonopportunities,andmitigatethreats.
ElementsofaSWOTAnalysis
TheFourComponentsofSWOT
1.Strengths:Internalattributesthatgiveanorganizationanadvantage
overitscompetitors.
○Examples:strongbrandreputation,experiencedworkforce,
financialstability,proprietarytechnology.
2.Weaknesses:Internallimitationsthathinderanorganization's
performance.
○Examples:lackofskilledlabor,outdatedtechnology,weak
financialposition,poorcustomerservice.
3.Opportunities:Externalfactorsthatanorganizationcanleveragetoits
advantage.
○Examples:emergingmarkets,technologicaladvancements,
changingcustomerpreferences,governmentderegulation.
4.Threats:Externalfactorsthatcouldharmanorganization's
performance.
○Examples:economicdownturn,increasedcompetition,natural
disasters,unfavorableregulatorychanges.
SWOTMatrix:
1.Maxi-Maxi(Exploit):Usestrengthstocapitalizeonopportunitieswhileaddressing
weaknessesandthreats.
2.Mini-Maxi(Search):Minimizeweaknessestoleverageexistingopportunities.
3.Mini-Mini(Avoid):Avoidareaswhereweaknessesalignwiththreatstoreducerisk.
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4.Maxi-Mini(Confront):Usestrengthstomitigateorcounteractexternalthreats.
.
L8.MANAGEMENTFUNCTIONS:ROLESANDACTIVITIES:
MANAGEMENT:Managementcanbeviewedasagroupefforttowardsacommongoal
inwhichteambehaviorplaysanimportantrole.Accordingtothisviewthematerial
resourcesandexternalenvironmentarecommontoallmanagement;whatmakesfor
effectivenessandsuccessofonegrouprelativetoothersismanagement-thatisthe
humanelement-behavingingroupandleadingthebusinesstoitsdeterminedgoal.
Management:Managementistheprocessofplanning,organizing,leading,andcontrolling
theresourcesofanorganizationtoachieveitsgoalsefficientlyandeffectively.Itinvolves
coordinatingpeople,processes,andtechnologytoaccomplishdesiredoutcomes.
Definitions:
AccordingtoHaroldKoontz,“managementisanartofgettingthingsdonethroughand
withpeopleinformallyorganizedgroups.”
AccordingtoKoontsandO’Donnell,“Managementisthecreationandmaintenanceofan
internalenvironmentinanenterprisewhereindividuals,workinginagroup,canperform
efficientlyandeffectivelytowardtheattainmentofthegroup'sgoal.”
AccordingtoH.L.Sisk,“Managementisthecoordinationofallresourcesthroughthe
processofplanning,directingandcontrollinginordertoattainstatedgoals.”
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22. "Yourtimeislimited,
AccordingtoWilliamSpriegel,“managementisthatfunctionofanenterprise,which
concernsitselfwiththedirection,andcontrolofthevariousactivitiestoattainbusiness
objectives.Managementembracesallfunctionsthatrelatetotheinitiationofanenterprise
–itsfinancing,theestablishmentofallmajorpolicies,theprovisionofallnecessary
equipment,theoutliningofthegeneralformoforganizationunderwhichtheenterpriseis
tooperateandtheselectionoftheprincipalofficers”.
RoleofManagement:Mintzberg'sTenManagerialRoles
1.Figurehead:Representstheorganizationsymbolically.
○Performssymbolicdutiessuchasmakingspeeches,bestowinghonors,
welcomingvisitors,anddistributinggiftstoretiringemployees.
2.Leader:Motivatesandinspiresemployees.
○Managesrelationshipswithsubordinates,setsexamples,legitimizesthe
powerofsubordinates,andalignstheirneedswiththoseoftheorganization.
3.Liaison:Buildsrelationshipswithexternalstakeholders.
○Maintainsrelationshipswithoutsiders,suchasotherorganizations,
governments,andindustrygroups.
4.Monitor:Gathersinformationabouttheorganizationanditsenvironment
○.Gathersandreceivesinformationabouttheorganizationandexternal
events,likepickinguprumorsabouttheorganization.
5.Disseminator:Sharesinformationwithemployees.
○Transmitsinformationandjudgmentstomembersoftheorganization
regardinginternaloperationsandtheexternalenvironment,suchascallinga
meetingafterabusinesstrip.
6.Spokesman:Communicatesinformationabouttheorganizationtooutsiders.
○Representstheorganization,lobbies,anddefendsit,suchasaddressinga
tradeunion.
7.Entrepreneur:Initiateschangeandinnovation.
○Initiateschangeoractsasachangeagent,likelaunchingafeasibilitystudy
foranewplant.
8.DisturbanceHandler:Dealswithcrisesandconflicts.
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○Takeschargeduringproblemsorcrises,handlingconflicts,complaints,and
competitiveactions,likedealingwithastrikeorafeudbetween
subordinates.
9.ResourceAllocator:Makesdecisionsaboutresourceallocation.
○Approvesbudgetsandschedules,setspriorities,anddistributesresources.
10.Negotiator:RepresentstheorganizationinnegotiationsBargainswithsuppliers,
dealers,tradeunions,agents,andothers.
ManagementFunctions
Amanagerperformsseveralfunctionsinanorganization,whichcanbegroupedintotwo
categories:mainfunctionsandsubsidiaryfunctions.
A.MainFunctions:
1.Planning:Settingobjectivesanddeterminingthebestcourseofactiontoachieve
them.
2.Organizing:Arrangingresourcesandtaskstoimplementtheplanseffectively.
3.Staffing:Recruiting,training,anddevelopingtherightpeopleforthejob.
4.Directing:Guidingandleadingemployeestoachieveorganizationalgoals.
5.Controlling:Monitoringperformanceandmakingnecessaryadjustmentstostayon
trackwithgoals.
6.Co-ordinating:Ensuringallpartsoftheorganizationworktogetherharmoniously.
7.Motivating:Encouragingandinspiringemployeestoperformtheirbest.
B.SubsidiaryFunctions:
1.Communication:Sharinginformationeffectivelywithintheorganization.
2.DecisionMaking:Makingchoicesthataffectthedirectionandoperationofthe
organization.
3.Innovation:Introducingnewideasandmethodstoimprovetheorganization.
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L9.ORGANIZATIONALCULTURE,PLANNING,MEANING,
DEFINITION,TYPESOFPLANS:
OrganizationalCulture
Organizationalculturereferstothesharedperceptionsandvaluesamongthemembers
ofanorganization.Itisadescriptivetermthathighlightstheuniqueanddistinctcultureof
eachorganization.
AccordingtoCampbelletal.,“Organizationalcultureisconcernedwithhowemployees
perceivethebasiccharacteristicslikeindividualautonomy,structure,reward,conflict,and
consideration.”
PLANNING:
Planningistheprocessbywhichamanagerlookstothefutureanddiscoversalternate
coursesofaction.
Planningdescribestheadoptionofspecificprogrammesinordertoachievedesired
results.
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25. "Yourtimeislimited,
Itmeanstheselectionfromamongalternativesoffuturecoursesofactionforthe
enterpriseasawholeandeachdepartmentwithinit.
Itisdetermininggoals,policiesandcoursesofactionanditinvolvestheprocesseslike
workscheduling,budgeting,settingupprocedures,settinggoalsorstandards,preparing
agendaandprogramming.
Planningistheprocessofmakingorcarryingoutplans,suchasestablishinggoals,policies,
andproceduresforasocialoreconomicunit.Itcanalsobeviewedasasystematicwayof
problemsolving,helpingtoguidedecisionsconcerningfutureneeds.
Definitions:
AccordingtoHaimann,“Planningisthefunctionthatdeterminesin
advancewhatshouldbedone.Itconsistsofselectingenterprise
objectives,policies,programmes,proceduresandothermeansof
achievingtheseobjectives.
”
InthewordsofKoontzandO’Donnell,“Planninginvolvesselectingenterpriseobjectives,
departmentalgoals,andprogrammesanddeterminingthewaysofreachingthem.
Planningthusprovidesarationalapproach”.
CharacteristicsofPlanning
1.Future-Oriented:Planningisfocusedonanticipatingandpreparingforfuture
eventsandconditions.
2.Goal-Oriented:Itinvolvessettingspecificobjectivesandgoalsthattheorganization
aimstoachieve.
3.PrimaryFunction:Planningisfundamentaltoallothermanagerialfunctionsasit
laysthegroundworkfororganizing,staffing,directing,andcontrolling.
4.Pervasive:Planningisapplicableatalllevelsoftheorganization,fromstrategic
planningatthetoptooperationalplanningatlowerlevels.
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26. "Yourtimeislimited,
5.ContinuousProcess:Itisanongoingactivitythatrequiresregularreviewand
adaptationtochangingcircumstances.
6.Decision-Making:Planninginvolvesmakingchoicesamongalternativecoursesof
actiontoachievedesiredoutcomes.
7.Integrated:Planningintegratesvariousorganizationalresources,suchashuman,
financial,andmaterialresources,towardsachievinggoals.
8.Flexibility:Plansshouldbeadaptabletoaccommodateunforeseenchangesand
uncertaintiesintheenvironment.
9.Efficiency:Effectiveplanningensuresresourcesareallocatedefficientlytoachieve
optimalresults.
10.ControlTool:Itservesasabenchmarkformonitoringandcontrollingactivitiesto
ensuretheyalignwithorganizationalgoalsandstandards.
ImportanceofPlanning
1.ProvidesDirection:Establishescleargoalsandobjectives,givingemployeesa
senseofpurpose.
2.ReducesUncertainty:Anticipatespotentialchallengesanddevelopsstrategiesto
mitigaterisks.
3.ImprovesDecisionMaking:Offersaframeworkformakinginformedchoices.
4.EnhancesEfficiency:Optimizesresourceallocationandminimizeswaste.
5.FacilitatesCoordination:Alignsindividualanddepartmentaleffortstowards
commongoals.
6.ImprovesControl:Providesbenchmarksformeasuringperformanceandtaking
correctiveactions.
7.MotivatesEmployees:Givesemployeesasenseofownershipandinvolvementin
theorganization'sfuture.
TypesofPlanning
OntheBasisofTimeSpan:
1.Long-RangePlanning:
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27. "Yourtimeislimited,
○Definition:Long-rangeplanningspansoverasignificantperiod,typicallyfive
totenyearsormore.Itfocusesonachievingstrategicobjectivesamidst
long-termeconomic,social,andtechnologicalchanges.
○Purpose:Preparetheorganizationtoadapttonewproducts,competitors,
andproductiontechniques.
○Alias:Strategicplanning.
2.Medium-TermorIntermediatePlanning:
○Definition:Coversaperiodofmorethanoneyearbutlessthanfiveyears.It
involvesdetailedplanstoimplementlong-rangestrategiesbycoordinating
variousdepartments.
○Purpose:Addressspecificchallengeslikedemandfluctuationsorresource
shortages.
○Alias:Tacticalplanning.
3.Short-RangePlanning:
○Definition:Alsoknownastacticalplanning,itcoversashortperiod,usually
oneyear.Itfocusesonimmediatetaskstoachieveobjectivessetby
long-rangeandintermediateplans.
○Purpose:Manageday-to-dayoperationsinareaslikeproduction,sales,
finance,andpersonnel.
OntheBasisofScope:
1.GrouporSectionalPlanning:
○Definition:Planningforspecificgroupsorsectionswithinadepartmentor
division.Italignswithdepartmentalordivisionalplansandisaction-oriented
attheoperationalmanagementlevel.
○Example:Theadvertisingsectionpreparingaplantoexecutethecompany's
salesstrategy.
2.DepartmentalorDivisionalPlanning:
○Definition:Planstailoredfordifferentdepartmentsordivisionsofan
organization.Thesefunctionalplansdeterminethescopeandactivitiesof
eachdepartment.
○Examples:Salesbudget,productionschedule,financialforecasts.
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28. "Yourtimeislimited,
3.CorporatePlanning:
○Definition:Planningfortheentireorganization,settingoutobjectives,
strategies,andpoliciesatabroad,top-levelmanagementperspective.
○Purpose:Establishoverarchinggoalssuchasmarketsharegrowth,
technologicalleadership,orreturnoninvestmenttargets.
TypesofPlans:
1.PurposeorMission:Definetheorganization'sfundamentalpurposeandreasonfor
existence.
2.GoalsorObjectives:Specific,measurabletargetsthatanorganizationaimsto
achievewithinadefinedtimeframe.
3.Strategies:Broadapproachesormethodsusedtoachieveorganizationalgoals.
4.Policies:Guidelinesorprinciplestoguidedecision-makingandactionswithinthe
organization.
5.Procedures:Step-by-stepsequencesdetailinghowtasksoractivitiesaretobe
executed.
6.Rules:Specificdirectivesorregulationsgoverningbehaviororactionswithinthe
organization.
7.Programs:Coordinatedsetsofactivitiesorprojectsdesignedtoachievespecific
objectives.
8.Budgets:Financialplansoutliningexpectedrevenuesandexpendituresforagiven
period.
L10.PURPOSEORMISSION,GOALSOR
OBJECTIVES,STRATEGIES,POLICIES,
PROCEDURES,RULES,PROGRAMME,
BUDGET:Componentsofbusinessplan:
PurposeorMission:
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29. "Yourtimeislimited,
●Definition:Missionisabroadstatementreflectingtheidealismandphilosophyof
anorganization,outliningitslong-termobjectivesandcommitments.
●Function:Itservesastheraisond'êtrefortheorganization,definingitscore
businessandguidingprinciplesoveritslifetime.
●Significance:Providesdirectionandpurpose,legitimizingtheorganization'srolein
societyandguidingstrategicdecisions.
GoalsorObjectives:
●Definition:Goalsarespecificdesiredoutcomesthatanorganizationaimsto
achieve,guidingitseffortsandactivities.
Goalsorobjectivesinorganizationalcontextrepresentdesiredoutcomesor
achievementsthatanorganizationaimstoattain.Theyserveasguidingprinciples
thatshapetheorganization'sdirectionandpurpose,providingaframeworkfor
decision-makingandresourceallocation.
Goalsorobjectivesshouldbe:
1.Specific:Clearlydefinedandfocusedonaparticularoutcome.
2.Measurable:Abletobequantifiedorevaluatedtodetermineprogress.
3.Achievable:Realisticandfeasiblegiventheresourcesandconstraintsofthe
project.
4.Relevant:Directlyalignedwiththeoverallpurposeandprioritiesoftheproject.
5.Time-bound:Associatedwithaspecifictimeframeordeadlineforcompletion.
Strategies:
●Definition:Strategiesarecomplexplansdesignedtomovetheorganizationfromits
currentpositiontoadesiredfuturestate,consideringexternalenvironmental
factors.
●Function:Theyanswercrucialquestionsabouttheorganization'sidentity,market,
customers,societalacceptance,andcompetitiveadvantage.
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30. "Yourtimeislimited,
●Significance:Guidesdecision-makingonresourceallocation,competitive
positioning,andlong-termsustainabilityinthemarket.
Policies:
●Definition:Policiesarebroadstatementsthatguidedecision-makingatlowerlevels
ofmanagement,settingboundariesandintentionsforemployeebehavior.
●Function:Theyreflecttheorganization'sofficialattitudesandpreferences,ensuring
consistencyandcomplianceindecision-makingprocesses.
●Significance:Providesaframeworkforoperationaldecisions,enhancingefficiency,
andaligningactionswithorganizationalgoals.
Procedures:
●Definition:Proceduresaresystematicsequencesofstepstobefollowedtoenforce
policiesandachievespecificobjectives.
●Function:Theystandardizeandstreamlinerepetitivetasks,ensuringconsistency
andefficiencyinoperations.
●Significance:Clarifieshowtasksshouldbeperformed,promotinguniformityand
minimizingerrorsinday-to-dayactivities.
Rules:
●Definition:Rulesarespecificguidelinesthatdictateactionsorbehaviorsingiven
situations,leavingnoroomfordiscretion.
●Function:Theyenforcedesiredbehaviorandensurepredictabilityinemployee
actions,contributingtoorganizationaldiscipline.
●Significance:Facilitatesconsistencyandfairnessindecision-making,promotinga
harmoniousworkenvironment.
Programmes:
●Definition:Programmesarecomprehensiveplansoutliningsteps,resources,and
timelinestoimplementpoliciesandachieveorganizationalobjectives.
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31. "Yourtimeislimited,
●Function:Theyoperationalizestrategicinitiativesandensurecoordinatedefforts
towardsspecificoutcomes.
●Significance:Guidestheallocationofresourcesandresponsibilities,facilitating
effectiveexecutionoforganizationalstrategies.
Budget:
●Definition:Abudgetisafinancialplanthatforecastsexpectedoutcomesand
resourceallocationsforaspecifiedfutureperiod.
●Function:Itprovidesablueprintforfinancialmanagement,projectingcosts,
revenues,andresourceneeds.
●Significance:Enablesfinancialcontrol,alignsexpenditureswithorganizational
priorities,andmeasuresperformanceagainstfinancialtargets.
Componentsofbusinessplan:
1.ExecutiveSummary:
○Providesaconciseoverviewoftheentirebusinessplan.
○Includesthebusinessname,location,product/service,missionstatement,
andthepurposeoftheplan.
○Summarizesthekeypointsofeachsectionoftheplan.
2.BusinessDescription:
○Offersdetailedinformationaboutthebusiness,includingitshistory,
structure,andownership.
○Describesthebusinessmodelandwhatthecompanydoes.
○Providesinformationontheindustry,marketneeds,andhowthebusiness
meetsthoseneeds.
3.MarketAnalysis:
○Analyzestheindustry,marketsize,expectedgrowth,andtargetmarket
demographics.
○Identifiesmarkettrends,customersegments,andcompetition.
○Discussesthecompetitivelandscapeandpotentialmarketopportunities.
4.OrganizationandManagement:
○Outlinesthebusiness’sorganizationalstructure.
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32. "Yourtimeislimited,
○Detailstheownership,managementteam,andboardofdirectors.
○Includesbiosofkeymanagementpersonnelhighlightingtheirqualifications
andexperience.
5.ProductsorServices:
○Describestheproductsorservicesofferedbythebusiness.
○Explainsthebenefits,lifecycle,andcompetitiveadvantagesofthe
products/services.
○Discussestheresearchanddevelopment,patents,orproprietarytechnology,
ifapplicable.
6.MarketingandSalesStrategy:
○Detailsthemarketingplanandstrategyforreachingthetargetmarket.
○Describesthesalesstrategy,includingsalesprocesses,pricing,promotions,
anddistributionchannels.
○Includesplansforadvertising,publicrelations,andsalespromotions.
7.OperationalPlan:
○Outlinestheday-to-dayoperationsofthebusiness.
○Discussesthelocation,facilities,equipment,andtechnologyusedin
operations.
○Describestheproductionprocess,suppliers,inventorymanagement,and
logistics.
8.FinancialPlan:
○Providesdetailedfinancialprojections,includingincomestatements,cash
flowstatements,andbalancesheets.
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33. "Yourtimeislimited,
○Includesfundingrequirements,sourcesoffunds,andtheintendeduseofthe
funds.
○Offersfinancialassumptions,break-evenanalysis,andriskassessment.
9.Appendix:
○Containssupportingdocumentsandadditionalinformation.
○Mayincluderesumesofthemanagementteam,productphotos,legal
agreements,marketresearchdata,andanyotherrelevantdocuments.
L11.StepsinPlanningandImplementation:
StepsinPlanningandImplementation:
1.IdentificationoftheOpportunityorProblem:
○Recognizeopportunitiesorissuesthatalignwiththeorganization’s
environment,suchasgovernmentregulations,culturalnorms,limited
financialresources,technologicalchanges,andcustomerpreferences.
2.CollectionandAnalysisofRelevantInformation:
○Gatherandanalyzerelevantdatafrombothexternalsources(e.g.,suppliers,
customers,tradepublications)andinternalsources(e.g.,meetings,reports,
internalcontacts).
3.EstablishmentofObjectives:
○Defineclearobjectivessuchasstabilityofoperations,growth,higherreturn
rates,ormarketleadership.
4.DeterminationofPlanningPremisesorLimitations:
○Considerinternalfactors(e.g.,technology,organizationaldesign,employee
attitudes,anddecision-makingprocesses)andexternalfactors(e.g.,
governmentpolicies,economicconditions,populationtrends,consumer
preferences,competitors’activities).
5.ExaminingAlternativeCoursesofAction:
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34. "Yourtimeislimited,
○Identifymultiplewaystoachieveobjectives,consideringdifferentstrategies
suchasmarketexpansion,salesintensification,pricingchanges,orproduct
diversification.
6.WeighingAlternativeCoursesofAction:
○Evaluateeachalternativebasedonitseffectiveness,abilitytowithstand
environmentalchanges,andintegrationwithongoingplans.
7.SelectingaCourse:
○Choosethebestcourseofactionbasedonresourceavailability,objectives,
efficiency,andeconomy,usingindividualjudgmentorstatisticaltechniques.
8.DeterminingSecondaryPlans:
○Developsupportingplanstofacilitatetheexecutionofthemainplan,suchas
plansforrawmaterialprocurement,machineacquisition,hiring,and
training.
9.ProvidingforFutureEvaluation:
○Implementasystemforcontinuousevaluationtoensurethatplansare
progressingcorrectlyandmakingnecessaryadjustments.
L12.ORGANIZATION,STAFFING,DIRECTING,AND
MOTIVAITON,ODERING,LEADING,SUPERVISON,
COMMUNICATION,CONTROL:
ORGANIZATION:Thetermorganizationisusedinmanagementliteratureintwodifferent
ways:i.Organizationasastructure.ii.Organizationasaprocess.
i.Organizationasastructure:Itreferstothenetworkofrelationshipamongjobsand
positionsinanorganization.Itistheskeletonframeworkofanenterprisedesignedto
achieveitscommongoal.AccordingtoMcFarland,organizationis“anidentifiablegroupof
peoplecontributingtheireffortstowardstheattainmentofgoals.”Thus,asastructure
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35. "Yourtimeislimited,
organizationisthestructuralframeworkwithinwhichtheeffortsofdifferentpeopleare
coordinatedandrelatedtoeachother.
ii.Organizationasaprocess:Itistheprocessofdetermining,arranging,groupingand
assigningtheactivitiestobeperformedfortheattainmentofobjectives.Organizing
involvesidentifyingtheworktobedone,dividingtheworkandcoordinatingtheeffortsto
accomplishgoals.AccordingtoHaimann,“Organizationistheprocessofdefiningand
groupingtheactivitiesoftheenterpriseandestablishingtheauthorityrelationshipamong
them.Inperformingtheorganizingfunction,themanagerdefines,departmentalizesand
assignsactivitiessothattheycanbemosteffectivelyexecuted.”
NatureorCharacteristicsofanOrganization:
1.DivisionofLabor
●Specialization:Beyondfunctionaldivisions,considerhowrolesarefurther
specializedwithindepartmentstomaximizeefficiencyandexpertise.
●WorkBreakdownStructure(WBS):Explorehowtaskscanbebrokendowninto
smaller,manageableunitsforbetterplanningandcontrol.
2.Coordination
●DepartmentalCoordination:Discussmechanismslikemeetings,cross-functional
teams,andsharedgoalstofostercollaboration.
●InterpersonalCoordination:Emphasizetheroleofeffectivecommunication,trust,
andconflictresolutioninmaintainingharmoniousrelationships.
3.Objectives
●GoalSetting:Explaintheimportanceofclear,measurable,andachievable
objectivesalignedwiththeorganization'smission.
●StrategicPlanning:Discusshowobjectivescontributetotheoverallstrategic
directionoftheorganization.
4.Authority
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36. "Yourtimeislimited,
●ResponsibilityandAccountability:Delineatetherelationshipbetweenauthority,
responsibility,andaccountabilityinensuringorganizationalsuccess.
●Delegation:Explorehoweffectivedelegationempowersemployeesandenhances
organizationalperformance.
5.Communication
●CommunicationChannels:Discussthevariouschannels(verbal,written,
electronic)andtheirappropriateuseindifferentsituations.
●CommunicationBarriers:Identifycommonobstaclestoeffectivecommunication
andstrategiestoovercomethem.
ProcessofOrganization:
1.DeterminingActivitiestobePerformed
●JobAnalysisandDesign:Howtobreakdownrolesintospecifictasksand
responsibilities.
●WorkflowAnalysis:Understandingthesequenceofactivitiestooptimizeefficiency.
2.AssignmentofResponsibilities
●JobDescriptions:Creatingclearandcomprehensiveoutlinesofjobduties,
responsibilities,andreportingrelationships.
●Person-JobFit:Matchingemployeeskillsandqualificationstoappropriateroles.
3.DelegationofAuthority
●LevelsofAuthority:Distinguishingbetweendifferentlevelsofdecision-making
power.
●Accountability:Clarifyingwhoisresponsiblefortheoutcomesofdelegatedtasks.
4.SelectingRightMenforRightJobs
●RecruitmentandSelectionProcess:Effectivestrategiesforattractingandhiring
qualifiedcandidates.
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37. "Yourtimeislimited,
●PerformanceAppraisal:Evaluatingemployeeperformancetoidentifystrengths
andareasfordevelopment.
5.ProvidingRightEnvironment
●OrganizationalCulture:Creatingapositiveandsupportiveworkenvironment.
●EmployeeEmpowerment:Fosteringasenseofownershipandautonomyamong
employees.
●EfficiencyandEffectiveness:Balancingresourceutilizationwithachieving
organizationalgoals.
LEADING:Leadershipistheprocessofinfluencingthebehaviorofotherstowardsthe
accomplishmentofgoalsinagivensituation.AccordingtoGeorgeR.Terry,“leadershipis
theactivityofinfluencingpeopletostrivewillinglyforgroupobjectives.”Koontzand
O’Donnellhavedefinedleadershipas“Influencingpeopletofollowtheachievementof
commongoal.Itistheabilitytoexertinter-personalinfluencebymeansofcommunication
towardstheachievementofagoal.”
LeadershipStyles
●SituationalLeadership:Discusshowleadershipstylescanvarybasedonthe
situation,subordinates,andtaskathand.
●TransformationalLeadership:Exploretheconceptofinspiringandmotivating
followerstoachieveextraordinaryoutcomes.
●ServantLeadership:Discussthefocusonservingtheneedsofothersratherthan
exercisingpower.
QualitiesofLeadership
●EmotionalIntelligence:Emphasizetheimportanceofunderstandingand
managingemotionsforeffectiveleadership.
●Adaptability:Discusstheabilitytoadjustleadershipstyletofitdifferentsituations
andorganizationalcultures.
●VisionandStrategy:Exploretheroleofaleaderinsettingacleardirectionand
developingstrategicplans.
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38. "Yourtimeislimited,
Supervision
●PerformanceManagement:Discusshowsupervisioncanbelinkedtoperformance
evaluationandgoalsetting.
●EmployeeDevelopment:Exploretheroleofasupervisorincoachingand
mentoringsubordinates.
●ConflictResolution:Emphasizetheimportanceofeffectiveconflictmanagement
skillsforsupervisors.
COMMUNICATION:ThetermcommunicationhasbeenderivedfromtheLatinword
‘communis’whichmeans‘common’.Communicationmaybedefinedasanexchangeof
facts,ideas,opinionsoremotionstocreatemutualunderstanding.Itisthesumtotalof
directlyorindirectly,consciouslyorunconsciously,transmittedwords,attitudes,gestures,
actionsorfeelings.Communicationisthesumofallthethingsonepersondoesinorderto
createunderstandinginthemindofothers.Itisthesystematicandcontinuousprocessof
makingoneselfunderstoodbyothersandofunderstandingothers.AccordingtoKoontz
andO’Donnell,“Communicationisanintercoursebywords,letters,symbolsormessages
andisawaythatoneorganizationmembersharesmeaningandunderstandingwith
others.”
TheCommunicationProcess
●Sender,Message,Channel,Receiver,Feedback:Delineatethekeycomponents
involvedincommunication.
●NoiseandBarriers:Discussfactorsthatcaninterferewitheffective
communication.
TypesofCommunication
●Verbal,Nonverbal,andWritten:Explorethedifferentformsofcommunication
andtheirstrengthsandweaknesses.
●Interpersonal,Group,andMassCommunication:Differentiatebetween
communicationinvariouscontexts.
ImportanceofCommunication
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39. "Yourtimeislimited,
●OrganizationalEffectiveness:Explainhoweffectivecommunicationcontributesto
organizationalsuccess.
●InterpersonalRelationships:Discusstheroleofcommunicationinbuildingand
maintainingrelationships.
CommunicationSkills
●ActiveListening:Emphasizetheimportanceofunderstandingandrespondingto
others.
●ClarityandConciseness:Discussthevalueofclearandconcisecommunication.
Natureofcommunication:
1.Communicationisapervasivefunction.
2.Communicationisacontinuousprocess.
3.Communicationcreatesmutualunderstandingandcooperativehumanrelationships.
4.Communicationisatwo-wayprocess.
ProcessofCommunication:Thecommunicationprocessconsistsofthefollowingelements:
1.Sender:Itisthepersonwhosendsamessageoranidea.Heisthesourceandinitiates
theprocessofcommunication.Sendermaybeaspeaker,writeroractor.
2.Message:Messageiswhatisconveyedbythesender.Itconsistsofthewords,facts,
ideas,opinions,etc.
3.Encoding:Itistheuseofappropriateverbalornonverballanguagefortransmittingthe
message.Inordertotransmittheidea,thesendertranslatestheideaintoalanguage
(words,symbols,gestures)knowntoboththeparties.
4.Channel:Itisthemediumorroutethroughwhichthemessageispassedfromthe
sendertothereceiver.Itmaybeface-to-facetalk,telephone,letter,radio,television,etc.
39 "AgriMemoQuest"

40. "Yourtimeislimited,
5.Receiver:Receiverorcommunicateisthepersonorgroupwhoissupposedtoreceive
themessage.Hemaybealistener,areaderoranobserver.
6.Decoding:Itmeanstranslatingthemessageintowordsforthepurposeof
understanding.Thereceiverinterceptsthemessagetoderiveitsmeaning.
7.Feedback:Itreferstothereaction,reply,responsewhichthereceiversendsto
acknowledgehisunderstandingofthemessage.Itmayconsistofwords,actionsorfacial
expressions.
CONTROL:Controllingmaybedefinedastheprocessofensuringthatactivitiesare
producingthedesiredresults.AccordingtoKoontzandO’Donnell,“Managerialcontrol
impliesthemeasurementofaccomplishmentagainstthestandardandthecorrectionof
deviationstoassureattainmentofobjectivesaccordingtoplans.”InthewordsofRobertN.
Anthony,“Managementcontrolistheprocessbywhichmanagersassurethatresources
areobtainedandusedeffectivelyandefficientlyintheaccomplishmentofanorganization’s
objectives.
TheControlProcess
●SettingStandards:Discusstheimportanceofclearandachievableperformance
benchmarks.
●MeasuringPerformance:Explorevariousmethodsforgatheringperformance
data.
●ComparingActualPerformancetoStandards:Analyzethesignificanceof
deviations.
●TakingCorrectiveAction:Discussstrategiesforaddressingperformancegaps.
TypesofControl
●Feedforward,Concurrent,andFeedbackControls:Explainthetimingandfocus
ofdifferentcontrolmechanisms.
●FinancialandNon-financialControls:Differentiatebetweenquantitativeand
qualitativemeasuresofperformance.
40 "AgriMemoQuest"

41. "Yourtimeislimited,
●Operational,Tactical,andStrategicControls:Relatecontroltodifferentlevelsof
management.
ImportanceofControl
●AchievingOrganizationalGoals:Explainhowcontrolhelpsensurethatplansare
executedeffectively.
●ImprovingEfficiencyandEffectiveness:Discusshowcontrolcanidentifyareasfor
improvement.
●RiskManagement:Exploretheroleofcontrolinmitigatingpotentialproblems.
Natureofcontrol:
⦁ Controlprocessisuniversal.
⦁ Controlisacontinuousprocess
⦁ Controlisaforwardlooking.
⦁ Controlinvolvesmeasurement.
⦁ Controlisaninfluenceprocess.
⦁ Managementcontrolisasystem.
NeedforControl:Acontrolsystemisneededforthreepurposeswhicharegivenbelow:
⦁ Tomeasureprogress
⦁ Touncoverdeviation
⦁ Toindicatecorrectiveaction
⦁ Tomeasureprogress:Thecontrolprocessmeasuresprogresstowardsthosegoals.
Inanundertaking,controlconsistsinvaryingwhethereverythingoccursinconformitywith
theplanadopted,theinstructionsissuedandprinciplesestablished.
41 "AgriMemoQuest"

42. "Yourtimeislimited,
⦁ Touncoverdeviations:Onceabusinessorganizationissetintomotiontowardsits
specificobjectives,eventsoccurthattendtopullit‘offtarget’.Majoreventswhichtendto
pullonorganization‘offtarget’areasfollows:
⦁ Changes
⦁ Complexity
⦁ Mistakes
⦁ Delegation
⦁ Toindicatecorrectiveaction:Controlsareneededtoindicatecorrectiveactions.
Theymayrevealthatplansneedtoberedrawnorgoalsneedtobemodifiedorthereis
needforreassignmentorclarificationofdutiesoradditionalstaffing.
Stepsinacontrolprocess:Therearethreebasicstepsincontrolprocess:
⦁ Establishingstandards
⦁ Measuringandcomparingactualagainststandards
⦁ Takingcorrectiveaction
⦁ Establishmentofstandards:Establishingstandardsagainstwhichresultstobe
measured.Identifykeyareasforestablishingstandardslikeprofitability,marketposition,
productivityetc.
⦁ Physicalstandards
⦁ Labourhoursperunitofoutput
⦁ Levelofproductionpermachinehour
⦁ Coststandard:Directandindirectcostsperunitproduced,materialcostperunit,
sellingcostperunitofsaleetc.
42 "AgriMemoQuest"

43. "Yourtimeislimited,
⦁ Revenuestandard:Averagesalespercustomer,salespercapitainagivenmarket
areaetc.
⦁ Capitalstandard:RateofreturnoncapitalinvestedCurrentasset/currentliabilities
=currentratio.
⦁ Intangiblestandard:Competenceofmanagerandemployees.Standardsshould
emphasizetheachievementofresultsmorethanconformitytorulestomethods.
⦁ Measuringandcomparingactualresultsagainststandards:Measurementof
performancecanbedonebypersonalobservationwhiletheyareengagedinworkandbya
studyofsummariesoffigures,reports,chartsandstatements.
⦁ Desirablevariations:Outputabovethestandardorexpensesbelowthestandard.
⦁ Undesirablevariations:Avariationinthedeliveryscheduleagreeduponwiththe
customer,orvariationsindieselconsumptionbyvehicles.
⦁ Whotointroduceacontrolsystem:Whethermeasurementandcomparisonareto
bedoneatstagesinthetotalprocessorattheend.Itdependsuponpurpose.Ifthe
purposeofcontrolistocatchtroublewhileitisforming,thenthisshouldbedoneat
variousstrategicpointsbeforetheendoftheprocess.
⦁ Takingcorrectiveaction:Compareactualperformancewithprescribedstandards
andfinddeviations.Correctiveactionshouldbetakenwithoutwastingtimesothatnormal
positioncanberestoredquickly.Identifythecausesfordeviationslikeinadequateand
poorequipmentandmachinery,inadequatecommunicationsystem,lackofmotivationof
subordinates,defectivesystemoftrainingandselectionofpersonnel,defectivesystemof
remunerationetc.
Typesofcontrol:Dependinguponthetimeatwhichcorrectiveactionistaken,controlsare
ofthreekinds:
⦁ Historicalorfeedbackcontrol
⦁ Concurrentcontrol
43 "AgriMemoQuest"

44. "Yourtimeislimited,
⦁ Feedforwardcontrol
⦁ Historicalorfeedbackcontrol:Itinvolvescheckingacompletedactivityandlearning
frommistakes.Underthis,resultsaremeasuredaftertheperformance.Such
measurementprovidesinformationabouthowgoalshavebeenachieved.Thisinformation
isknownasfeedbackandonthisbasiscorrectiveactionistaken.Example:Bymonitoring
complaintsfromdischargedpatientsaboutbillingerrors,ahospitalcanlearnaboutpast
performance.
⦁ Concurrentcontrol:Itisknownasrealtimeorsteeringcontrol.Itinvolves
monitoringandadjustingongoingactivitiesandprocessestoensurecompliancewith
standards.Concurrentcontroloccurswhileanactivityisstilltakingplace.Example:The
navigatorofashipadjustsitsmovementsdependinguponthedirectionofdestination,
controlchartofanindustry,etc.
⦁ Feedforwardcontrol:Itisalsoknownaspredictivecontrol.Thiscontrolsystem
anticipatestheproblemsthatthemanagementislikelytoencounterinfutureand
identifiesthestepstobetakentoovercomethem.Itattemptstoanticipatedeviationsin
advanceoftheproblem.Itisamoreaggressiveapproachtocontrolbecausecorrectioncan
bemadebeforethesystemoutputisaffected.Example:Preventivemaintenance
programmeofanindustry.
ImportantDevicesorToolsofControl:
⦁ TraditionalDevices
⦁ Budgetingorbudgetarycontrol
⦁ Costcontrol
⦁ Productioncontrol
⦁ Inventorycontrol
⦁ Break-evenpointanalysis
44 "AgriMemoQuest"

45. "Yourtimeislimited,
⦁ Profitorlosscontrol
⦁ StatisticalDataAnalysis
⦁ ExternalandInternalAudit
⦁ ModernDevices
⦁ ReturnonInvestmentControl
⦁ ProgrammeEvaluationandReviewTechnique(PERT)
⦁ ManagementInformationSystem(MIS)
⦁ Cybernetics
⦁ ManagementAudit
⦁ TraditionalDevices:
⦁ BudgetaryControl:Abudgetisafinancialplanforadefiniteperiodoftime.
Budgetarycontrolevolvesacourseofactionthatwouldmaketherealizationofthe
budgetedtargetspossible.Zero-basedbudgetingasamethodofbudgetingunderwhich
allactivitiesarereevaluatedeachtimeabudgetisformulated.
⦁ CostControl:Itreferstocontrolofallthecostsofanundertaking,bothdirectand
indirect,inordertoachievecosteffectivenessinbusinessoperations.
⦁ ProductionControl:Productioncontrolistheprocessofplanningproductionin
advanceofoperations,establishingtheexactrouteofeachindividualitem,partor
assembly,setting,startingandfinishingdatesforeachimportantitem,assemblyandthe
finishedproduct;andrealizingthenecessaryordersaswellasinitiatingtherequiredfollow
uptoeffectthesmoothfunctioningoftheenterprise.
⦁ InventoryControl:Itreferstocontrollingthekind,amount,location,movement,and
timingofthevariouscommoditiesusedinandproducedbytheindustrialenterprises.
45 "AgriMemoQuest"

46. "Yourtimeislimited,
⦁ Break–EvenPointAnalysis:Thebreak-evenpointmaybedefinedasthepointwhen
salesrevenueisequaltototalcost(fixedandvariable).Inotherwords,itrepresentsthe
levelofactivitywhenthereisneitheranyprofitnorloss.
⦁ ProfitandLossControl:ProfitandLossControlreferstoacontrolsystemunder
whichsales,expenses,andhenceprofitsofeachbranchor“productdivision”are
comparedwiththoseofotherbranchesandproductdivisions,aswellaswithhistorical
trends,withaviewtomeasuringdeviationsandtakingnecessarycorrectiveaction.
⦁ StatisticalAnalysis:Comparisonofratios,percentages,averagesetc.ofdifferent
periodscanbedonetomonitor–deviationsandtheircauses.
⦁ ExternalandInternalAudit:Externalauditisenforcedbylawinrespectofalljoint
stockcompanies,co-operativesetc.Itsobjectiveistosafeguardtheinterestofthe
shareholderagainstthemalpracticesofmanagement.Firmsmayalsohaveinternalaudit
underwhichstaffmembersofthecompanymayverifyfinancialtransactionsandfinancial
recordsforanalyzingtheoverallcontrolsystemoftheorganization.
⦁ CAPITALMANAGEMENTANDFINANCIALMANAGEMENTOFAGRIBUSINESS:
Capitalisnotanoriginalfactorlikeland,butitistheresultofman-madeefforts.Man
makesthecapitalgoodstoproduceothergoodsandservices,whichprovidesincome.
Capitalisproducedmeansofproduction.Ex:Machinery,rawmaterial,transport
equipment,damsetc.
CharacteristicsofCapital:
1.Capitalisnotafreegiftofnature.Itistheresultofman-madeefforts.
2.Capitalisproductive,asithelpsinenhancingtheoverallproductivityofalltheresources
employedintheproductionprocess.Investedcapitalprovidesinterestforitsproductive
capacity.Farmmachinery,whenusedwithskilledlaborersenhancestheproductivityof
land.Irrigationdam,byprovidingwatercanbringoutcomplementaryeffectonthe
productivityofotherresourceslikefertilizers,seedsetc.,
46 "AgriMemoQuest"

47. "Yourtimeislimited,
3.Capitalisprospective,asitsaccumulationrewardsincomeinfuture.Ex:Savingsand
investmentintheeconomyleadstogrowthanddevelopmentoftheeconomydueto
accumulationofcapitalovertime.
4.Capitalishighlymobileamongfactorsofproduction.Ex:Tractor
5.Capitalissupplyelastic,asitssupplycanbealteredaccordingtotheneed.Basedon
demand,supplyofthecapitalgoodscanbechanged.
Thecapitalofabusinessconsistsofthosefundsusedtostartandrunthebusiness.
Capitalmaybeoftwotypes:
⦁ Fixedcapital.
⦁ Workingcapital.
⦁ Fixedcapital:Itreferstoitemsboughtonceandusedforalongperiodoftime.This
includessuchthingsaslandbuilding,fixturesandequipment.
⦁ Workingcapital:Workingcapitalisalsocalledcirculatingcapital.Itisthetypeof
funds,whichisneededforcarryingoutdaytodayoperationsofthebusinesssmoothly.
Themanagementofworkingcapitalisnolessimportantthanthemanagementof‘long
termfinancialinvestment’.Itisregardedasthelifebloodofabusiness,becauseitsefficient
managementwillleadtosuccessofbusinessanditsinefficientmanagementwillleadto
failureofthebusiness.Workingcapitalcanbedefinedasthatportionoftheassetsina
businesswhichisusedtomeetthedaytoday/currentoperationsofthebusiness.The
assetsformedduetotheworkingcapitalarerelativelytemporaryinnature.Inaccounting,
workingcapitalisdefinedasthedifferencebetweeninflowandoutflowoffunds.Itis
otherwisecallednetcashflowperyear.
Netcashflow/Yr=Cashin-flow–Cashout-flow.
Workingcapitalistheexcessofcurrentassetsovercurrentliabilitiesofabusiness.Itis
otherwisecallednetcurrentassetsornetworkingcapital/year.
Networkingcapitalperyear=Currentassets–Currentliabilities
47 "AgriMemoQuest"

48. "Yourtimeislimited,
Workingcapitalmayalsobedefinedastotalcurrentassetsemployedbeforeoperatingthe
business.Itisalsocalledgrossworkingcapital.
Typesofworkingcapital:
1.Networkingcapital:Networkingcapitalisthedifferencebetweenthecurrentassetsand
currentliabilitiesofabusiness.Thisconceptenablesafirmtodeterminehowmuchisleft
foroperationalrequirements.
Networkingcapitalperyear=Currentassets–Currentliabilities
2.Grossworkingcapital:Itisthetotalamountofthefundsinvestedinthebusinessorthe
totalcurrentassetsemployedinthebusiness.Ithelpstoplanandcontrolthefundsusage
inthebusinessandalsohelpsinidentifyingtheprioritizedareasofinvestment.
3.Permanentworkingcapital:Thisistheminimumamountofcurrentassetswhichis
neededtoconductabusinessevenduringthedull/slackseasonoftheyear.Itisthe
amountofthefundsrequiredtoproducethegoodsandserviceswhicharenecessaryto
satisfydemandataparticularpoint.Itrepresentsthecurrentassetswhicharerequiredon
acontinuousbasisovertheentireyear.Itismaintainedasthemediumtocarryon
operationsatanytime.
4.Temporaryworkingcapital:Itrepresentstheadditionalassetswhicharerequiredat
differenttimesduringtheoperatingyearlikeadditionalinventory,extracashetc.,
5.Balancesheetworkingcapital:Theworkingcapitalthatiscalculatedfromtheitems
appearinginthebalancesheetiscalledbalancesheetworkingcapital.Ex:Grossworking
capitalandNetworkingcapital.
6.Cashworkingcapital:Thiswillbecalculatedfromtheitemsappearingintheprofit&loss
account.Itwillshowtherealflowofmoneyataparticularpointoftimeandhenceitis
consideredasthemostrealisticapproachinworkingcapitalmanagement.Itformsthe
basisfortheoperationalcycleconceptandgainedmoreimportantinfinancial
management.Themajorreasonisthatcashworkingcapitalindicatestheadequacyofthe
cashflowinthebusiness,henceconsideredasaprerequisiteofthebusiness.
48 "AgriMemoQuest"

49. "Yourtimeislimited,
7.Negativeworkingcapital:Itariseswhencurrentliabilitiesaremorethancurrentassets.
Suchasituationariseswhenafirmisnearingacrisisofsomemagnitude.
WorkingCapitalManagement:
Significanceofworkingcapital:Everyrunningbusinessneedsworkingcapital.Evena
businesswhichisfullyequippedwithalltypesoffixedassetsrequiredissuretofail
without:
⦁ Adequatesupplyofrawmaterialsforprocessing.
⦁ Cashtopaywages,powerandothercosts.
⦁ Creatingastockoffinishedgoodstofeedthemarketdemandcontinuously.
⦁ Theabilitytograntcredittocustomers..
Alltheserequireworkingcapital.Thusworkingcapitalisthelifebloodofabusinesswithout
whichabusinesswillbeunabletofunction.Nobusinesswillbeabletocarryondaytoday
activitieswithoutadequateworkingcapital.
Componentsofworkingcapital:Theworkingcapitalhasfollowingcomponents,whichare
inseveralformsofcurrentassets.Thebasisforassigningvaluetoeachcomponentis
shownagainsteach.
⦁ Stockofcash
⦁ Stockofrawmaterials
⦁ Stockoffinishedgoods
⦁ Valueofdebtors
⦁ Miscellaneouscurrentassetslikeshortterminvestmentloansandadvancesetc
Eachconstituentoftheworkingcapitalisvaluedonthebasisofvaluationenumerated
aboveoftheholdingperiodestimated.Thetotalofallsuchvaluationbecomesthetotal
estimatedworkingcapitalrequirement.
49 "AgriMemoQuest"

50. "Yourtimeislimited,
Factorsinfluencingworkingcapitalrequirement:Theimportantfactorsthatinfluencethe
workingcapitalrequirementsofbusinessarefurnishedbelow.
⦁ Natureofbusiness.
⦁ Seasonalityofoperations.
⦁ Productionpolicy.
⦁ Marketcondition.
⦁ Conditionsofsupply.
⦁ Growthandexpansion.
⦁ Pricelevelchanges.
⦁ Manufacturingcycle.
Testsofworkingcapitalpolicy:Therearefourtestsofworkingcapitalpolicy.
1.Levelofworkingcapital:Itisthetesttobedoneinacarefulmannerbyobservingthe
movementsofworkingcapitalinafirminsuccessiveperiodsofproductionactivity.Ifa
managementcandevelopapatternofflowofworkingcapitalinthesemovements,this
patternwouldserveasaguidetoitschangingrequirementsinrelationtocertaindecisions
whicharemadefromtimetotime.
2.StructuralHealth:Therelativehealthofthevariouscomponentsoftheworkingcapital
shouldbeconsideredfromthepointofviewofliquidity.Itisnecessarytodrawstructural
relationshipsinrespectofeachcomponentconstitutingthecurrentassets.
3.Circulation:Thisisoneoftheimportantfeaturesoftheliquidpositionandinvolvesthe
naturalactivitycycleofanenterprise.Ratiosmaybecalculatedtoshowtheaverageperiod
requiredfortheconversionofrawmaterialsintofinishedgoodsintosales,andsalesinto
cash.
50 "AgriMemoQuest"

51. "Yourtimeislimited,
4.Liquidity:Amorecomprehensivetesttomeasureliquiditymaybeadoptedbyusingthe
followingratiosbyexpressingtheminthepercentagesof
⦁ Workingcapitaltocurrentassets.
⦁ Stockstocurrentassets.
⦁ Liquidresourcestocurrentassets.
Planningfinancialneeds:Planningthefinancialneedsofabusinessisveryimportant.The
ownerormanagerneedstobeabletoaskthefollowingquestions.
WhydoIneedthemoney?Thegeneralareaofneedformoneyis:
⦁ Startinganewbusiness
⦁ Inventory
⦁ Expansion
⦁ Remodeling
⦁ Improvingworkingcapital
HowmuchmoneywillIneed?
Itisimportanttobeabletospecifyhowmuchmoneyyouwillneed.Itisadvisablewhen
doinganyfinancingtobeabletostipulatetheamountofmoneythatyouwillbeusingand
tospecifyifitistopurchaseinventory,paysalariesorwagesoreventobeusedto
purchasenewequipment.
WhenwillIbeabletorepaythemoney?
Friends,bankers,andbusinessassociatesarealwaysinterestedinknowingwhenandhow
youanticipaterepayingtheloans.Themajorityofloanrepaymentscomefromsalesof
merchandise,inventoryandpaymentsreceivedforservicesrendered
WherewillIobtainmoney?
51 "AgriMemoQuest"

52. "Yourtimeislimited,
Comparetheadvantagesanddisadvantagesofobtainingmoneyfromdifferentsourcesin
termsofinterestpaymentandcontroloverbusiness
Sourcingofcapitalforbusiness:Therearetwomajorformsoffinancinganybusiness;
⦁ Equityfinancing
⦁ Debtfinancing
1.Equityfinancing:Equitycapital(ownership)maycomefrompersonalsavings,from
partnershiporbysellingstockinacorporation.Equityfinancinginvolvesgivingup
ownershiptotheinvestorsofthebusiness.Italsoinvolvesdividingthebusinessownership
amongthevariousinvestors.Thatisinsteadofrepayinganinvestororgivingmoneytothe
business,theinvestornowbecomesanownerandreceivesmoneyfromthebusiness
primarilythroughdividendorprofitsharingsystem.
2.Debtcapital:Sourceofdebtcapitalarecommercialbanks,co-operativebanks,mutual
funds,vendors,equipmentmanufacturersanddistributors,factors,privateinvestors,
specialtypeoffinancelendinginstitutions.
⦁FINANCIALSTATEMENTSANDTHEIRIMPORTANCE:
Thetermfinancialstatementreferstotwobasicstatementsthatanaccountantpreparesat
theendofaspecifiedperiodoftimeforabusinessenterprise.
1.Balancesheet:Itisastatementofthefinancialpositionofafirmataparticularpointof
time.
2.Incomestatement:Itisalsocalledprofit-lossstatement.Itshowsthefirm'searningsfor
theperiodcovered,usuallyhalfyearlyoryearly.
BalanceSheetOverview
●Purpose:Thebalancesheetoffersasnapshotofthefarm'sfinancialpositionata
specificpointintime,listingallassets,liabilities,andequity.
52 "AgriMemoQuest"

53. "Yourtimeislimited,
●NetWorth/Equity:Thisiscalculatedasthedifferencebetweentotalassetsand
totalliabilities.Ifassetsexceedliabilities,thefarmhaspositiveequity;ifliabilities
exceedassets,thefarmisinadeficit.
ComponentsofaBalanceSheet
1.Assets:
○CurrentAssets:Short-term,easilyconvertibletocashwithinayear(e.g.,
cashonhand,cropsreadyforsale).
○Intermediate/WorkingAssets:Convertibletocashwithin2-5years(e.g.,
machinery,equipment,livestock).
○Long-term/FixedAssets:Takeover5yearstoconverttocash(e.g.,land,
buildings).
2.Liabilities:
○CurrentLiabilities:Debtspayablewithinayear(e.g.,croploans,
maintenancecosts).
○IntermediateLiabilities:Debtspayablewithin2-5years(e.g.,machinery
loans,livestockloans).
○Long-termLiabilities:Debtspayableovermorethan5years(e.g.,tractor
loans,landdevelopmentloans).
KeyFinancialRatios:
1.CurrentRatio(CR):Measuresthefarm'sabilitytomeetshort-termobligations.A
ratio>1indicatesgoodliquidity.
2.Intermediate/WorkingRatio(WR):Indicatesliquidityover2-5years.Aratio>1
signifiesfinancialhealth.
3.NetCapitalRatio(NCR):Reflectslong-termfinancialstability.Aratio>1shows
safetyforinstitutionallenders.
4.AcidTest/QuickRatio(QR):Similartothecurrentratio,butfocusesmorenarrowly
ontheabilitytocoverliabilitiesin1-2years.
5.CurrentLiabilityRatio(CLR):Assessesimmediatefinancialobligationsrelativeto
networth.Aratio<1ispreferable.
53 "AgriMemoQuest"

54. "Yourtimeislimited,
6.Debt-EquityRatio(LeverageRatio):Evaluatesthefarm'slong-termdebtrelativeto
equity.Adecreasingratioisfavorable.
7.Equity-ValueRatio(DVR):Tracksproductivityinrelationtoassets.Improvement
overtimesignalsstrongerfinancialperformance.
INCOMESTATEMENTS/PROFITANDLOSSACCOUNT:
TheIncomeStatementorProfitandLossAccountisafinancialdocumentthatprovides
asummaryofafarm'sfinancialperformanceoveraspecificperiod,typicallyone
agriculturalyear.Itoutlinesthefarm'sreceipts(income)andexpenses,ultimatelyleading
tothecalculationofnetincome.Here'sadetailedbreakdown:
IncomeStatementComponents:
1.Receipts:
○Thesearethereturnsobtainedfromthesaleoffarmproducts(e.g.,crops,
milk,eggs).
○Otherreceiptsmayincludewages,gifts,andanyappreciationinthevalueof
assets.
2.Expenses:
○OperatingCosts:Variablecostsdirectlyrelatedtofarmoperations(e.g.,
seeds,fertilizers,wages).
○FixedCosts:Coststhatdonotvarywiththelevelofproduction,suchas
depreciationonequipment,landtaxes,orinsurance.
○Losses:Depreciationonassetvalueisincludedunderexpenses.
3.NetIncome:
○Thisistheincomeremainingafterallexpenseshavebeendeductedfromthe
receipts.Itcanbebrokendowninto:
■NetCashIncome:Thedifferencebetweencashreceiptsandcash
expensesduringtheperiod.
■NetOperatingIncome:Grossincomeminusoperatingexpenses,
includingcroploans.
54 "AgriMemoQuest"

55. "Yourtimeislimited,
■NetFarmIncome:Netoperatingincomeminusfixedcosts,orsimply
grossincomeminusgrossexpenses.
KeyFinancialTestRatios:
Financialratiosderivedfromtheincomestatementhelpassesstheperformanceofthe
farmbusiness:
A.Expense-IncomeRatios:
1.OperationRatio:
○Definition:Measurestherelationshipbetweenoperatingcostsandgross
income.
○Interpretation:Indicatestheamountofoperatingexpenditurerequiredto
generateoneunitofgrossincome.
2.FixedRatio:
○Definition:Representstherelationshipbetweenfixedexpensesandgross
income.
○Interpretation:Showshowmuchfixedcostisincurredtoearnoneunitof
grossincome.
3.GrossRatio:
○Definition:Reflectstherelationshipbetweentotalexpenses(operating+
fixed)andgrossincome.
○Interpretation:Knownastheinput-outputratio,itindicatesthetotal
expensesincurredtorealizeaunitofgrossincome.
B.Investment-IncomeRatios:
Theseratioscompareincomelevelsagainstcapitalinvestment,indicatingthe
income-generatingcapacityofthefarm'sinvestments.
1.CapitalTurnoverRatio:
○Definition:Measuresgrossincomeearnedperunitofcapitalinvested.
○Calculation:Averagecapitalinvestmentiscomputedbyaveragingthevalue
ofassetsatthebeginningandendoftheyear.
55 "AgriMemoQuest"

56. "Yourtimeislimited,
2.RateofReturnonInvestment(ROI):
○Definition:Indicatesthenetreturnoneachunitofcapitalinvested.
○Calculation:
■NetReturntoCapital=Netfarmincome+Interestonborrowed
funds+Interestpaidontermloans-Unpaidfamilylabor.
TypicalProfitandLossAccountStructure:
●ReceiptsSection:
○Salesofcrops
○Salesofsupplementaryproducts(e.g.,milk,eggs)
○Otherincome(e.g.,wages,gifts)
●ExpensesSection:
○Operatingexpenses(e.g.,seeds,fertilizers,wages)
○Fixedexpenses(e.g.,depreciation,landtaxes)
○Losses(e.g.,depreciationonassetvalue)
●NetIncomeCalculation:
○NetCashIncome:Cashreceipts-Cashexpenses
○NetOperatingIncome:Grossincome-Operatingexpenses
○NetFarmIncome:Grossincome-Totalexpenses(operating+fixed)
:CashFlowStatement:
●Purpose:Thecashflowstatementtrackschangesinthecashbalanceofabusiness,
capturingallcashreceipts(inflows)andcashdisbursements(outflows)overaperiod
oftime,usuallymonthbymonthforanentireyear.
●TypesofCashFlowStatements:
○Historical:Recordsactualpastcashinflowsandoutflows,providingan
accuratereflectionofthebusiness’scashmanagement.
○Projected:Estimatesfuturecashflows,helpingbusinessesanticipatefuture
cashneedsorsurpluses.
●Usefulness:Itisacriticaltoolformonitoringliquidity,ensuringthebusinesshas
enoughcashtomeetitsobligations,andplanningforfuturefinancialrequirements.
56 "AgriMemoQuest"

57. "Yourtimeislimited,
ImportanceofFinancialStatements:
●Decision-Making:Financialstatementsareessentialforinformeddecision-making
withinabusiness.Theyhelpmanagementunderstandtheprofitability,liquidity,and
overallfinancialhealthofthecompany.
●InternalUse:
○Management:Usesfinancialstatementstosetgoals,planstrategies,and
monitorthecompany’sperformanceovertime.
○Employees:Mayalsousethesestatementstounderstandthecompany's
financialstandinganditsimpactonjobsecurityandpotentialbonuses.
●ExternalUse:
○InvestorsandCreditors:Relyonfinancialstatementstoassessthefinancial
stabilityandprofitabilityofthebusinessbeforemakinginvestmentor
lendingdecisions.
○RegulatoryCompliance:Publiccompaniesarerequiredtoprepareand
publishfinancialstatementsperiodically,ensuringtransparencyand
compliancewithfinancialregulations.
●PerformanceAnalysis:
○ProfitabilityAssessment:Financialstatementshelpinjudginghow
profitablethebusinessoperationsareoverspecificperiods.
○FinancialSoundness:Theyprovideinsightsintothefinancialconditionata
particularpointintime.
○Creditworthiness:Statementshelpindeterminingthebusiness’sabilityto
meetcurrentandfuturecreditobligations.
○TrendAnalysis:Financialstatementsallowforthedevelopmentof
performancetrends,whichcanbeusedasafoundationforfuturestrategic
decisions.
⦁MARKETINGMANAGEMENT: SEGMENTATION,TARGETING
ANDPOSITIONING
57 "AgriMemoQuest"

58. "Yourtimeislimited,
MarketingManagementandMarketSegmentationarefoundationalconceptsin
developingasuccessfulstrategyfordistributingproductsorservices.Here'sadetailed
explanation:
MarketingManagement:
●Definition:Marketingmanagementinvolvesthestrategicprocessofdistributinga
firm'sproductsorservicestomeetcustomerneedswhileachievingthefirm's
objectives.
●KeyFunctions:
○ProductDevelopment:Creatingproductsorservicesthatfulfillcustomer
needs.
○Pricing:Settingpricesthatreflectvalueandarecompetitiveinthemarket.
○Distribution:Ensuringtheproductorserviceisavailablewhereandwhen
customerswantit.
○Promotion:Usingadvertising,merchandising,andpersonalsellingto
communicatetheproduct'svalue.
○Sales&Service:Directingeffortstoselltheproductandprovideafter-sales
service.
●Importance:Withouteffectivemarketingmanagement,otherbusinessfunctions
likeproduction,staffing,andfinancingarelessimpactful,astheyallrelyonthe
firm’sabilitytosellitsproductsorservices.
MarketSegmentation:
●Definition:Marketsegmentationistheprocessofdividingabroad,heterogeneous
marketintosmaller,homogeneoussegmentsbasedonspecificcharacteristics.This
allowsbusinessestotargetthesesegmentsmoreeffectivelywithtailoredmarketing
strategies.
●Purpose:Bysegmentingthemarket,abusinesscanfocusitslimitedresourceson
thesegmentsitcanservemosteffectively,thusincreasingtheefficiencyand
effectivenessofitsmarketingefforts.
●MethodsofMarketSegmentation:
1.GeographicSegmentation:
58 "AgriMemoQuest"

59. "Yourtimeislimited,
■Dividesthemarketbasedongeographicboundaries,whichaffectthe
marketingmix(product,price,promotion,distribution).
■Example:SellingdowncomfortersincolderregionslikeMichiganbut
notinwarmerclimateslikeArizona.
2.DemographicSegmentation:
■Dividesthemarketbasedondemographicfactorssuchasgender,
age,income,education,andhouseholdtype.
■Example:Marketingdifferentclothinglinesformenandwomenor
tailoringproductsbasedonincomelevels.
3.PsychographicSegmentation:
■Dividesthemarketbasedonlifestyle,values,andbeliefs.
■Example:Targetingfitnessenthusiastswithhealthandwellness
products.
4.BehavioralSegmentation:
■Dividesthemarketbasedonconsumerbehaviors,includingshopping
habits,buyingdecisions,andproductusage.
■Example:Targetingonlineshoppersversusin-storeshoppersor
differentiatingbetweenimpulsebuyersandthosewhoresearch
extensivelybeforepurchasing.
MarketTargeting:
●Definition:Markettargetingistheprocessofselectingspecificmarketsegmentsto
servefromthebroadermarket.Thesegmentschosenarereferredtoasthetarget
market.
●Process:
○Afteridentifyingdifferentsegmentsthroughmarketsegmentation,a
companyselectsoneormoresegmentstofocusitsmarketingeffortson.
○TargetMarket:Thisisthegrouporgroupsofconsumersforwhomthe
productisdesigned,priced,promoted,anddistributed.Theseconsumersare
thefocusofthecompany’smarketingstrategy.
Procedureofmarkettargeting:
59 "AgriMemoQuest"

60. "Yourtimeislimited,
1.Evaluatingmarketsegments:Evaluationofmarketsegmentscallsformeasuring
suitabilityofsegments.Thesegmentsareevaluatedwithcertainrelevantcriteriato
determinetheirfeasibility.
2.Selectingmarketsegments:Whentheevaluationofsegmentsisover,thecompanyhas
todecidewhichmarketsegmentstoenter.Thatis,thecompanydecidesonwhichandhow
manysegmentstoenter.Thistaskisrelatedtoselectingthetargetmarket.Targetmarket
consistsofvariousgroupsofbuyerstowhomthecompanywantstoselltheproduct;each
tendstobesimilarinneedsorcharacteristics.PhilipKotlerdescribesfivealternative
patternstoselectthetargetmarket.Selectionofasuitableoptiondependsonsituations
prevailinginsideandoutsidethecompany.
MarketPositioningisacrucialaspectofabrand'sstrategy,asitdefineshowaproductor
serviceisperceivedinthemindsofconsumersrelativetocompetitors.Here'sanin-depth
lookattheconcept:
MarketPositioning:
●Definition:Marketpositioningisthestrategicprocessofcreatingadistinctimageor
identityforabrandorproductinthemindsofthetargetmarket.Thispositioningis
designedtomaketheproductstandoutfromcompetitorsandberecognizedfor
specificattributesthatappealtothetargetaudience.
●Purpose:Themaingoalofmarketpositioningistodifferentiateaproductorbrand
inacrowdedmarketplace,makingitmoreattractiveanddesirabletothetarget
audience.Effectivepositioningcanleadtostrongerbrandloyalty,highersales,and
betteroverallmarketperformance.
●Process:
○IdentifyTargetAudience:Understandtheneeds,preferences,and
perceptionsofthetargetmarket.
○AnalyzeCompetitors:Assesshowcompetitorsarepositionedinthemarket
andidentifygapsoropportunitiesfordifferentiation.
○DetermineUniqueSellingProposition(USP):Developaclearand
compellingUSPthathighlightsthekeybenefitsoruniqueattributesofthe
productorbrand.
60 "AgriMemoQuest"

61. "Yourtimeislimited,
○CraftaPositioningStatement:Createaconcisestatementthat
encapsulatesthebrand'spositioninginthemarket,oftenfocusingonhow
theproductmeetstheneedsofthetargetaudiencebetterthancompetitors.
○ImplementPositioningStrategy:Communicatethepositioningthrough
marketingefforts,includingadvertising,packaging,pricing,andcustomer
experience.
●ExamplesofMarketPositioning:
○LuxuryPositioning:Acarmanufacturermaypositionitsvehiclesasluxury
statussymbols,emphasizinghigh-qualitymaterials,advancedtechnology,
andexclusiveownershipexperiences.Forexample,brandslike
Mercedes-BenzorRolls-Roycearepositionedasluxuryvehicles.
○ReliabilityPositioning:Abatterymakermightpositionitsbatteriesasthe
mostreliableandlong-lastingoptiononthemarket.Forinstance,Duracellis
oftenpositionedasabatterybrandknownforlongevityanddependability.
○ValuePositioning:Asupermarketchainmightpositionitselfasofferingthe
bestvalueformoney,focusingonlowpricesandgoodqualityproducts.
Walmart,forexample,ispositionedasaretailerthatprovidesawiderange
ofproductsatlowprices.
○Eco-FriendlyPositioning:Abrandmightpositionitselfasenvironmentally
responsible,appealingtoconsumerswhoprioritizesustainability.Tesla,for
example,positionsitselectricvehiclesaseco-friendlyalternativesto
traditionalgasolinecars.
.
⦁ MARKETINGMIXANDMARKETINGSTRATEGIES,CONSUMER
BEHAVIOURANALYSIS:
MarketingMixandMarketingStrategyaretwofundamentalconceptsthatbusinesses
usetopromotetheirproductsorserviceseffectively.Here'sadetailedexplanationofeach:
MarketingMix:
61 "AgriMemoQuest"

62. "Yourtimeislimited,
TheMarketingMixisasetoftoolsthatacompanyusestoachieveitsmarketing
objectivesinthetargetmarket.Traditionally,themarketingmixiscomposedofthe4Ps:
Price,Product,Place,andPromotion.However,modernmarketingstrategiesofteninclude
additionalelementslikePackaging,Positioning,People,andevenPolitics.
1.TheTraditional4Ps:
●Price:
○Referstotheamountofmoneycustomersmustpaytoacquiretheproduct.
○Influencestheperceivedvalueoftheproductandthecompany'smarket
share.
○Pricingstrategiesincludecost-pluspricing,competitivepricing,value-based
pricing,andpenetrationpricing.
○Example:Premiumpricingforluxurygoodstocreateaperceptionof
exclusivity.
●Product:
○Theactualgoodorservicebeingofferedtothemarket.
○Mustmeetorexceedcustomerexpectationstosucceed.
○Includesproductfeatures,quality,branding,packaging,andthelifecycleof
theproduct.
○Example:Apple’sfocusondesignandinnovationinitsproductslikethe
iPhone.
●Place:
○Referstothedistributionchannelsusedtodelivertheproducttothe
customer.
○Thegoalistoensurethattheproductisavailableintherightlocationatthe
righttime.
○Strategiesincludeonlineversusofflinechannels,retaillocation,andlogistics.
○Example:Amazon’sefficientdistributionnetworkensuringfastdeliveryto
customers.
●Promotion:
○Theactivitiesthatcommunicatetheproduct’sfeaturesandbenefitstothe
targetaudience.
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63. "Yourtimeislimited,
○Aimstogenerateawareness,interest,andultimately,sales.
○Includesadvertising,publicrelations,salespromotions,directmarketing,and
socialmediamarketing.
○Example:Coca-Cola’sextensiveglobaladvertisingcampaignstomaintain
brandpresence.
2.TheExtendedMarketingMix(AdditionalPs):
●Packaging:
○Thewayaproductispresentedtotheconsumer.Packagingcaninfluencea
customer’sperceptionanddecisiontopurchase.
○Example:Uniqueandattractivepackagingforcosmeticstoappealtothe
targetaudience.
●Positioning:
○Howaproductisperceivedinthemindsofconsumersrelativeto
competitors.Effectivepositioningcandifferentiateaproductinacrowded
market.
○Example:Volvopositionsitscarsasthesafestvehiclesonthemarket.
●People:
○Referstotheemployeesandthelevelofcustomerserviceprovided.The
humanelementiscrucialincreatingapositivecustomerexperience.
○Example:Excellentcustomerserviceatahigh-endhotelenhancesits
reputationandcustomerloyalty.
●Politics:
○Referstoexternalpoliticalfactorsthatcaninfluencemarketingstrategies.
Thiscouldincluderegulations,tradepolicies,andlobbyingefforts.
○Example:Companiesmayadjusttheirmarketingstrategiesbasedonnew
tradeagreementsortariffs.
MarketingStrategy:
AMarketingStrategyistheoverallplanforreachingandconvertingpotentialcustomers
intoloyalbuyers.Itoutlineshowacompanywilldifferentiateitselffromcompetitorsand
63 "AgriMemoQuest"

64. "Yourtimeislimited,
delivervaluetoitstargetmarket.Thestrategyincludeskeybrandmessaging,dataon
targetcustomerdemographics,andthecompany’svalueproposition.
ComponentsofaMarketingStrategy:
●ValueProposition:
○Aclearstatementofthebenefitsthecompanyofferstoitscustomers.It
explainswhyaconsumershouldchoosetheproductovercompetitors.
○Example:“Nike’svaluepropositionistobringinspirationandinnovationto
everyathleteintheworld.”
●TargetMarket:
○Thespecificgroupofcustomersthecompanyaimstoserve.Itinvolves
segmentingthemarketbasedonfactorslikedemographics,psychographics,
andbehavior.
○Example:Aluxurycarbrandtargetingaffluent,middle-agedprofessionals.
●KeyBrandMessaging:
○Thecoremessagethatcommunicatesthebrand’sidentityandvaluestothe
targetaudience.
○Example:Apple’sbrandmessagefocusesoninnovation,simplicity,and
premiumquality.
CommonMarketingStrategies:
●CauseMarketing:
○Aligningthebrandwithasocialcauseorissuetoenhanceitsappealand
buildemotionalconnectionswithconsumers.
○Example:TOMSShoes'"OneforOne"campaign,whereapairofshoesis
donatedforeverypairpurchased.
●DirectSelling:
○Sellingproductsdirectlytoconsumers,bypassingtraditionalretailchannels.
○Example:Avon’sdoor-to-doorsalesstrategy.
●Co-BrandingandAffinityMarketing:
○Partneringwithanotherbrandtoofferacombinedproductorservicethat
leveragesthestrengthsofbothbrands.
64 "AgriMemoQuest"

65. "Yourtimeislimited,
○Example:NikeandApple’scollaborationontheNike+productline.
●EarnedMedia/PR:
○Gainingfreepublicitythroughmediacoverage,wordofmouth,orsocial
sharing.
○Example:Aviralsocialmediapostthatgenerateswidespreadmedia
coverage.
●Point-of-Purchase(POP)Marketing:
○Marketingmaterialsplacedatthelocationwherethepurchasedecisionis
made,suchasdisplaysinretailstores.
○Example:Eye-catchingproductdisplaysatthecheckoutcounter.
●InternetMarketing:
○Usingonlinechannels,includingwebsites,socialmedia,andemail,toreach
andengagecustomers.
○Example:GoogleAdsandsocialmediacampaigns.
●PaidMediaAdvertising:
○Payingforadvertisingspacetopromoteaproduct,suchasTVcommercials,
onlineads,andsponsoredcontent.
○Example:ASuperBowladtoreachalargeaudience.
●WordofMouthAdvertising:
○Encouragingcustomerstotalkabouttheproductandsharetheir
experienceswithothers.
○Example:Referralprogramsthatrewardcustomersforbringinginnew
business.
ConsumerBehaviorAnalysisfocusesonunderstandinghowconsumersmakepurchasing
decisionsandinteractwithproducts,services,orbrands.Bystudyingconsumerbehavior,
businessescantailortheirmarketingstrategiestobettermeetcustomerneedsand
preferences,whichcanleadtoincreasedsatisfactionandloyalty.
KeyQuestionsinConsumerBehaviorAnalysis:
●Howdoconsumersfeelaboutalternativestotheirpreferredbrands?
○Thishelpsbusinessesidentifywheretheyneedtoimproveorinnovateto
retaincustomers.
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66. "Yourtimeislimited,
●Howdoconsumerschoosebetweenalternatives?
○Understandingthedecision-makingprocess,suchascriterialikeprice,
quality,andbrandreputation,iscrucial.
●Howdoconsumersbehavewhileshopping?
○Observingshoppinghabits,bothonlineandoffline,helpsoptimizethe
shoppingexperience.
●Howisconsumerbehaviorinfluencedbythesurroundingenvironment?
○Factorslikestorelayout,socialmedia,andpeerinfluencecanaffect
decisions.
●Howcanmarketingcampaignsbeimprovedtoinfluencecustomerbehavior?
○Analyzingpastcampaignsandconsumerresponseshelpsrefinefuture
marketingefforts.
FactorsAffectingConsumerBehavior:
1.PsychologicalFactors:
○Perception,Motivation,Personality,Beliefs,andAttitudesplay
significantrolesinshapingconsumerchoices.
2.PersonalFactors:
○Age,Occupation,FinancialSituation,andLifestyleinfluencepurchasing
decisionsandpreferences.
3.SocialFactors:
○Family,Communities,andSocialInteractionimpactconsumerbehavior,
oftenthroughpeerrecommendationsandsharedexperiences.
4.GeographicalFactors:
○LocationandClimateaffectwhatproductsconsumersneedandprefer.
AdvantagesofConsumerBehaviorAnalysis:
●UnderstandingAttitudesandPerceptions:Helpsbusinessesimprovetheir
productsandmarketingstrategies.
●AdaptingtoCultures:Essentialfortailoringproductsandcampaignstodifferent
culturalcontexts.
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67. "Yourtimeislimited,
●AligningwithLifestyles:Ensuresproductsmeetspecificconsumerneeds,leading
tohighersatisfactionandloyalty.
ProductLifeCycle(PLC)
Theproductlifecycle(PLC)isaconceptthatdescribesthestagesaproductgoesthrough
fromitsintroductiontothemarketuntilitseventualwithdrawal.
PRODUCTLIFECYCLE:Whenaproductentersthemarket,oftenunbeknownsttothe
consumer,ithasalifecyclethatcarriesitfrombeingnewandusefultoeventuallybeing
retiredoutofcirculationinthemarket.Thisprocesshappenscontinually-takingproducts
fromtheirbeginningintroductionstagesallthewaythroughtheirdeclineandeventual
retirement.Theproductlifecycleistheprocessaproductgoesthroughfromwhenitisfirst
introducedintothemarketuntilitdeclinesorisremovedfromthemarket.Thelifecycle
hasfourstages-introduction,growth,maturityanddecline.
Stagesoftheproductlifecycle:Generally,therearefourstagestotheproductlifecycle,
fromtheproduct'sdevelopmenttoitsdeclineinvalueandeventualretirementfromthe
market.Theseare:
⦁ Introduction.
⦁ Growth.
⦁ Maturity.
⦁ Decline.
StagesoftheProductLifeCycle
1.Introduction:
○Thisistheinitialstagewhenanewproductislaunchedintothemarket.
○Salesaretypicallylowasconsumersareunawareoftheproduct.
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68. "Yourtimeislimited,
○Highmarketingandproductioncosts.
○Focusoncreatingawarenessandbuildingacustomerbase.
2.Growth:
○Rapidincreaseinsalesastheproductgainspopularity.
○Competitorsmaystartenteringthemarket.
○Profitsstarttoriseasproductioncostsdecrease.
○Focusonexpandingmarketshareandbuildingbrandloyalty.
3.Maturity:
○Salesgrowthstartstoslowdownandeventuallystabilizes.
○Competitionintensifies.
○Profitspeakandthenstarttodecline.
○Focusondefendingmarketshare,productdifferentiation,andcost
reduction.
4.Decline:
○Salesdeclineduetonewtechnologies,changingconsumerpreferences,or
increasedcompetition.
○Profitscontinuetodecline.
○Focusonreducingcosts,harvestingremainingprofits,orphasingoutthe
product.
⦁ Introduction:Onceaproducthasbeendeveloped,thefirststageisitsintroduction
stage.Inthisstage,theproductisbeingreleasedintothemarket.Whenanewproductis
released,itisoftenahigh-stakestimeintheproduct'slifecycle-althoughitdoesnot
necessarilymakeorbreaktheproduct'seventualsuccess.Duringtheintroductionstage,
marketingandpromotionareatahigh-andthecompanyofteninveststhemostin
promotingtheproductandgettingitintothehandsofconsumers.Itisinthisstagethat
thecompanyisfirstabletogetasenseofhowconsumersrespondtotheproduct,ifthey
likeitandhowsuccessfulitmaybe.However,itisalsooftenaheavy-spendingperiodfor
thecompanywithnoguaranteethattheproductwillpayforitselfthroughsales.Costsare
68 "AgriMemoQuest"

69. "Yourtimeislimited,
generallyveryhighandthereistypicallylittlecompetition.Theprincipalgoalsofthe
introductionstagearetobuilddemandfortheproductandgetitintothehandsof
consumers,hopingtolatercashinonitsgrowingpopularity.Marketingstrategiesusedin
introductionstagesinclude:
⦁ Rapidskimming-launchingtheproductatahighpriceandhighpromotionallevel
⦁ Slowskimming-launchingtheproductatahighpriceandlowpromotionallevel
⦁ Rapidpenetration-launchingtheproductatalowpricewithsignificantpromotion
⦁ Slowpenetration-launchingtheproductatalowpriceandminimalpromotion
Duringtheintroductionstage,firmshouldaimto:
⦁ Establishaclearbrandidentity
⦁ Connectwiththerightpartnerstopromoteyourproduct
⦁ Setupconsumertests,orprovidesamplesortrialstokeytargetmarkets
⦁ Pricetheproductorserviceashighasyoubelieveyoucansellit,andtoreflectthe
qualitylevelyouareproviding
⦁ Growth:Bythegrowthstage,consumersarealreadytakingtotheproductand
increasinglybuyingit.Theproductconceptisprovenandisbecomingmorepopular-and
salesareincreasing.Othercompaniesbecomeawareoftheproductanditsspaceinthe
market,whichisbeginningtodrawattentionandincreasinglypullinrevenue.If
competitionfortheproductisespeciallyhigh,thecompanymaystillheavilyinvestin
advertisingandpromotionoftheproducttobeatoutcompetitors.Asaresultofthe
productgrowing,themarketitselftendstoexpand.Theproductinthegrowthstageis
typicallytweakedtoimprovefunctionsandfeatures.Asthemarketexpands,more
competitionoftendrivespricesdowntomakethespecificproductscompetitive.However,
salesareusuallyincreasinginvolumeandgeneratingrevenue.Marketinginthisstageis
aimedatincreasingtheproduct'smarketshare.Marketingstrategiesusedinthegrowth
stagemainlyaimtoincreaseprofits.Someofthecommonstrategiestotryare:
69 "AgriMemoQuest"

70. "Yourtimeislimited,
⦁ Improvingproductquality
⦁ Addingnewproductfeaturesorsupportservicestogrowyourmarketshare
⦁ Enternewmarketssegments
⦁ Keeppricingashighasisreasonabletokeepdemandandprofitshigh
⦁ Increasedistributionchannelstocopewithgrowingdemand
⦁ Shiftingmarketingmessagesfromproductawarenesstoproductpreference
⦁ Skimmingproductpricesifyourprofitsaretoolow.
⦁ Maturity:Whenaproductreachesmaturity,itssalestendtosloworevenstop-
signalingalargelysaturatedmarket.Atthispoint,salescanevenstarttodrop.Pricingat
thisstagecantendtogetcompetitive,signalingmarginshrinkingaspricesbeginfallingdue
totheweightofoutsidepressureslikecompetitionorlowerdemand.Marketingatthis
pointistargetedatfendingoffcompetition,andcompanieswilloftendevelopnewor
alteredproductstoreachdifferentmarketsegments.Giventhehighlysaturatedmarket,it
istypicallyinthematuritystageofaproductthatlesssuccessfulcompetitorsarepushed
outofcompetition-oftencalledthe"shake-outpoint."Inthisstage,saturationisreached
andsalesvolumeismaxedout.Companiesoftenbegininnovatingtomaintainorincrease
theirmarketshare,changingordevelopingtheirproducttomeetwithnewdemographics
ordevelopingtechnologies.Thematuritystagemaylastalongtimeorashorttime
dependingontheproduct.Commonstrategiesthatcanhelpduringthisstagefallunder
oneoftwocategories:
⦁ Marketmodification-Thisincludesenteringnewmarketsegments,redefining
targetmarkets,winningovercompetitor’scustomers,convertingnon-users
⦁ Productmodification-Forexample,adjustingorimprovingyourproduct’sfeatures,
quality,pricinganddifferentiatingitfromotherproductsinthemarking
⦁ Decline:Althoughcompanieswillgenerallyattempttokeeptheproductaliveinthe
maturitystageaslongaspossible,declineforeveryproductisinevitable.Inthedecline
stage,productsalesdropsignificantlyandconsumerbehaviorchangesasthereisless
70 "AgriMemoQuest"

71. "Yourtimeislimited,
demandfortheproduct.Thecompany'sproductlosesmoreandmoremarketshare,and
competitiontendstocausesalestodeteriorate.Marketinginthedeclinestageisoften
minimalortargetedatalreadyloyalcustomers,andpricesarereduced.Eventually,the
productwillberetiredoutofthemarketunlessitisabletoredesignitselftoremain
relevantorin-demand.Forexample,productsliketypewriters,telegramsandmusketsare
deepintheirdeclinestages(andinfactarealmostorcompletelyretiredfromthemarket).
Atthisstage,firmcanadoptfollowingstrategies:
⦁ Reduceyourpromotionalexpenditureontheproducts
⦁ Reducethenumberofdistributionoutletsthatsellthem
⦁ Implementpricecutstogetthecustomerstobuytheproduct
⦁ Findanotherusefortheproduct
⦁ Maintaintheproductandwaitforcompetitorstowithdrawfromthemarketfirst
⦁ Harvesttheproductorservicebeforediscontinuingit
⦁ Sellthebrandtoanotherbusiness
⦁ Significantlyreducethepricetogetridofalltheinventory
Decline
Maturity
Growth
Introduction
Time
Sales
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72. "Yourtimeislimited,
O
⦁PRICINGPOLICYANDPRICINGMETHODS:
PRICINGPOLICY:Itreferstoasystematicapproachofpricingofdifferentproductsin
differentmarketstoevolveanappropriatepatternofpricesinthelong-run.Itisthe
philosophyregardingpricethatguidespricefixinginactualpractice.Someoftheimportant
pricingpolicieswhichbusinessfirmsfollowinpracticearedescribedbelow:
⦁ Skimming-the-cream-pricing:Thisreferstothestrategyofcharginghighpricesin
theinitialstagesofthelifeofaproduct.Theinitialhighpriceservestoskimthecreamof
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73. "Yourtimeislimited,
inelasticmarketdemandandinitialinvestmentisrecoveredquickly.Themanufacturersets
highpricesforhisproducetoobtainhighimmediateprofitsforfearofcompetitionatthe
latterstage.Theskin-the-creampriceissetashighasthemarketwillbear.Thisstrategyis
usefulinthecaseofnewandspecialtyproducts.
⦁ Penetrationpricing:Thepricepolicyinvolvessettingalowinitialpricetoattractas
manybuyersaspossible.Pricesarefixedbelowthecompetitiontomaximizethemarket
shareandtomakethebrandpopularquickly.Themanufacturerseekstoselltothe
masses.Thispolicyresultsinthehighersalesvolumeduringtheinitialstageoftheproduct
lifecycle.Thisisanaggressivepricingpolicyandhelpsindevelopingbrandpreference
amongconsumers.
⦁ Competitivepricing:Itisalsoknownasmarketlevelpricingorgoingratepricing.It
impliessellingaproductatagoingmarketrate.Whenthemarketishighlycompetitiveand
theproductisnotdifferentiatedsignificantlyfromthecompetitiveproductthispolicyis
quiteuseful.Underperfectcompetition,pricesaredeterminedbytheforcesofdemand
andsupply.Everyfirmtendstofollowthecurrentmarketpricebecauseproductsare
standardizedandnofirmhascontroloverthemarketandbuyersandsellersarewell
informedaboutmarketconditions.
⦁ Followtheleaderpricing:Thispolicyisalsoknownaspriceleadershiporpattern
pricing.Insomeindustries,thereareafewfirmsbutoneofthemcontrolssolargeshares
ofthemarketthatchangeinitssupplywillaffectthemarketprice.Suchadominantfirm
actsasthepriceleader.Theleadersetsthepriceoftheproductandallotherfirmsfollow
thatprice.Thispricepolicyisgenerallyadoptedundertheoligopolymarketinwhichsmall
firmscannotdaretodisturbthepricesetbytheleader.Whentheleaderfixesahighprice
toprotectitssmallcompetitors,itisknownasumbrellapricing.
⦁ Leaderpricing:Underthis,afirmorproducersellshisproductatthepricebelow
costtoattractcustomersandtopromotethesaleofothergoods.Suchafirmorproducer
isknownaslossleaderandstrategyinvolvingtheuseoflossleaderiscalledleaderpricing.
Theitemsarefrequentlypurchasedconsumeritemslikebread,soap,toothpaste,etc.
⦁ Pricelining:Priceliningreferstothepolicyofsellingdifferentquantitiesofaproduct
atdifferentprices.Manyretailers’offersagood,better,bestassortmentofmerchandiseat
73 "AgriMemoQuest"

74. "Yourtimeislimited,
differentprices.Examples:Aretailerofjeansmaysellthematthreeprices,i.e.,Rs.100,Rs.
250andRs.500.
⦁ Pricediscrimination:Inthispricingpolicy,thesameproductissoldatdifferent
pricestodifferentconsumersdependingupontheelasticityofdemand.Theconsumersare
dividedintodifferentgroupsbasedontheirdemandelasticity.Generally,eachconsumer
chargesdifferentpricesforthesameproductbutinsomecases,acommonpriceis
chargedbyonegroupofpeopleandanothergroupofpeoplepaysanotherpriceforthe
sameproduct.
⦁ Keepoutpricing:Thispricingpolicyseekstodiscouragethecompetitivefirmsto
offersubstitutesandpreventtheentryofnewfirmsintheindustry.Itisapreemptive
pricingpolicyinvolvingthefixationoflowprices.Thispolicycanbeadoptedbybigfirms
whichhavehugeresourcesattheircommand.
⦁ Fixedpriceversusvariablepricepolicy:Incaseoffixedpricepolicyorsingleprice
policy,aproductissoldatthesamepriceperunittoallcustomersirrespectiveofthe
amountofthepurchase.However,thepricemayvaryaccordingtothequantitypurchased.
Whereas,undervariablepricepolicy,thesamequantitiesofproductaresoldtosimilar
buyersatdifferentprices.
⦁ Psychologicalpricing:Underthispricingpolicy,asellerhastodecidewhetherto
chargeanevenpricei.e.,Rs100perunitoroddpricese.g.,Rs.99perunit.Oddpriceshave
afavorablepsychologicalinfluenceonthebuyers.
⦁ Unitpricing:
PRICINGMETHODS:Thetechniqueoffixingpricesdependuponthepricingobjectivesand
policyofthefirmssomeoftheimportantmethodofpricingaredescribedbelow:
⦁ Costplusorfullcostpricing:Itisthemostcommonpricingmethodusedby
businessfirms.Underthismethod,thesellingpriceofaproductisdeterminedaddinga
marginofprofittotheestimatedcostoftheproduct.Themarginmaybeafixedamount
perunitorapercentageofcost.Themarginisknownas‘markup’andtherefore,costsplus
74 "AgriMemoQuest"

75. "Yourtimeislimited,
pricingisalsoknownas‘mark-uppricing’.Followingformulaisgenerallyusedtofixprices
underthisapproach.
Sellingprice=Totalcostperunit+desiredprofitperunit
Advantages:
⦁ Itisthemostwidelyusedtechniqueofpricing.
⦁ Itisasafeapproachtopricing.
⦁ Itensuresfullcoverageofcostsandhelpsinachievingareasonablereturnofcapital
employed.
⦁ Itdiscouragescut-throatcompetitioninthemarket.
Disadvantages:
⦁ Itisdifficulttodetermineaccuratelythecostperunitduetocommonoverheads
andjointproducts.
⦁ Themethodignoresthenatureandlevelofdemand.
⦁ Itfailstoreflectcompetitioninthemarket.
⦁ Themark-uponthecostoftheproductisnotfixedbutmaychangewithchangein
demand.
⦁ Marginalcostpricing:underthismethod,priceofproductsarefixedonthebasisof
marginalcostinvolvedinproducingtheproduct.Marginalcostisthechangeintotalcost
whicharisesduetochangeinvolumeofproductionbyoneunit.Marginalcostpricing
techniqueisusedtoselltheproductduringcertainconditionslikedepression,changein
fashion,severecompetition,underutilizationofproductioncapacity.
Advantages:
⦁ Itishelpfulinquotingthepriceoftheproductforspecialorders.
75 "AgriMemoQuest"

76. "Yourtimeislimited,
⦁ Ithelpsintakingdecisionswhethertosellbelowtotalcostortostopproduction
duringthedepression.
⦁ Intuitivepricing:Sometimes,amanufacturermaysetthepriceofhisproductsimply
byestimatinghowmuchtheconsumerswillbewillingtopayandwithoutregardtocost.
Thismethodofpricingissubjectiveandunscientific.Itmaybeusedinthecaseoffashion.
⦁ Break-evenanalysis:Itisanimportanttechniquefordeterminingthepriceofa
product.Itisbaseduponforecasteddemandandactualcostofoperations.Itinvolvesthe
divisionofcostsintothetwocategories,namelyfixedcostandvariablecost.Byassuminga
certainsellingpricetablesorchartsarepreparedfordifferentvolumesofproduction.
Expectedprofitoflossisestimatedforeachlevelofproductionandsales.Thevolumeof
saleatwhichtotalcostisequaltototalrevenueisknownasbreak-evenpointorthepoint
ofnoprofitandnoloss.Thepriceatwhichtotalrevenueisgreaterthantotalcostis
selectedasapriceofproduct.
⦁ PROJECTMANAGEMENT:DEFINITION,PROJECTCYCLE,
IDENTIFICATIONFORMULATION,APPRAISAL,IMPLEMENTATION,
MONITORINGANDEVALUATION:
PROJECT:Meaning,Definition
Projectsarecuttingedgesofdevelopment.Theyaremeantforincreasingtheoutputfrom
thegivenresources.TheWorldBankhasrecognizedsiximportantaspectsofproject
preparation.Theyaretechnical,administrative,organization,commercial,financialand
economic.
Projectisaninvestmentactivitywhereincapitalresourcesarespenttocreateaproductive
assetforrealizingbenefitsovertime.Generally,“Projectisanactivityonwhichmoneyis
spentinexpectationofreturns,whichlendsitselftoplanning,financingand
implementationasaunit.Italsoreferstothespecificactivity,withspecificstartingpoint
76 "AgriMemoQuest"

77. "Yourtimeislimited,
andspecificendpointtoachieveaspecificobjective.Itshouldbemeasurableincostsand
returns.Itmusthaveprioritiesforareadevelopmentandreachaspecificclientelegroup.
Insum,“Itisaninvestmentactivitymeantforprovidingthereturnsforspecificclientele
groupsforspecificactivity,specificobjectiveandspecificareadevelopment.Itshould
facilitateanalysisinplanning,financing,implementation,monitoring,controllingand
evaluation.
PROJECTCYCLE:Projectisconsideredasacyclebecause,eachphasenotonlygrowsoutof
theprecedingone,butleadsintothesubsequentphaseanditisaself-renewingcycle.The
importantphasesinprojectcycleare:
⦁ Identificationorconception.
⦁ Formulationorpreparationoftheproject.
⦁ Appraisaloranalysis.
⦁ Implementation.
⦁ Monitoring.
⦁ Evaluation.
⦁ Identificationofconception:Atthisstage,thevariouscostslikeprojectcosts,
associatecosts,primaryordirectcosts,secondaryorindirectcosts,realcostsandnominal
costsandsocialcostsinvolvedintheprojectmustbeassessedproperly.Apartfromthe
costs,thebenefitsthatareexpectedfromtheprojectmustalsobeassessedmost
accurately.Thetangibleandintangiblebenefitsthattheprojectisexpectedtoprovideis
ascertainedatthisstage.
⦁ Formulationorpreparationofproject:Followingpointsareconsideredwhile
formulatingtheproject.Thelocationandsiteoftheprojectbasedontechnicalanalysisand
technicalfeasibilityoftheproject.Thelocationoftheprojectdependsuponavailable
physicalresources,marketcondition,marketingfacilities,alternativeinvestmentprospects,
administrativeexperience,farmers’objectives,technicalskill,motivations,demandforthe
project,etc.Technicalanalysismusttakeintoconsiderationallaspectsoftechnologytobe
77 "AgriMemoQuest"

78. "Yourtimeislimited,
usedintheprojectandaccountforallinputsofgoodsandservices.Dueconsiderationisto
begiventoalltheaspectssuchastechnical,financial,commercial,managerial,
organizational,economic,social,etc.intheformulationoftheproject.
⦁ Appraisaloranalysis:Appraisalshouldtakeplacebeforetheimplementationofthe
project.Itisdoneindependentlybyspecialists.Atthisstage,itisimportanttoknow
whethertheprojectistechnicallyfeasibleaccordingtothedataavailable.Managerial
aspectssuchasnewskillsandinformationgainedbythefarmersincludingadoptionof
newtechnologyshouldalsobestudied.
⦁ Implementation:Thisisthemostcrucialphaseoftheprojectcycle.Thesecretof
successfulimplementationdependsupontheextentofrealismputintotheplansdrawn
beforehand.Theprojectimplementationcanbedividedintothreeperiods,viz.,investment
period,developmentperiodandfullproductionperiod.Investmentperiodmayrangefrom
fewmonthstofewyearsdependinguponthenatureofassetstobeacquired.
Developmentperiodconsumesmoretime.Fullproductionperiodisthetimeduringwhich
thebeneficiariesstartreapingthebenefitsoftheproject.
⦁ Monitoring:Itisthetimelycollectionandanalysisofdataontheprogressofa
project,withtheobjectiveofidentifyingconstraints,whichimpedesuccessful
implementation.Monitoringhastobedonecontinuouslytooffsetvariousshortcomings
thatcropupfromtimetotimewithregardtovariousaspectsofimplementation.
⦁ Evaluation:Thisisthelastphaseoftheprojectcycle.Evaluationcanbedoneseveral
timesduringthelifeofaproject.Evaluationhelpstoknowhowfartheobjectivesofthe
projectareachieved.Evaluationprocessistobecompletedinthreephases.Theyare
midcourse,concurrentandex-postevaluation.Inmidcourseevaluation,evaluationis
attemptedbeforeanychangeoccursintheexistingsituation.Thisisprimarilymeantto
assesseconomicfeasibilityoftheprojects.Inconcurrentevaluation,evaluationiscarried
outwhileactivityisgoingon.Concurrentevaluationisbasicallymeantforidentifyingand
analyzingthepitfallsintheexecutionoftheproject.Ex-postevaluationiscarriedoutafter
theprojectiscompletedinallitsphases.Ex-postevaluationisprimarilymeanttoassess
theachievementofendsorobjectivesoftheproject.
78 "AgriMemoQuest"

79. "Yourtimeislimited,
⦁ PROJECTAPPRAISALANDEVALUATIONTECHNIQUES:
Broadly,therearetwomethodsofprojectappraisal,viz.,discountedmeasuresand
undiscountedmeasures.Undiscountedmeasuresincludepaybackperiod,rankingby
inspection,proceedsperrupeeofoutlay,averageannualproceedsofrupeeoutlay,etc.
Underdiscountedmeasures,netpresentworth(NPW),benefitcostratio(B:Cratio),
internalrateofreturn(IRR)andprofitabilityindexareprominent.
⦁ Undiscountedmeasures:Thesearethenaïvemethodsofchoosingamongthe
alternativeprojects.Themethodslistedunderthesemeasuresoftenmisleadinrankingof
theprojectsandhence,choicesgowrong.
⦁ Rankingbyinspection:Itisbasedonsizeofcostsandlengthofcash-flowstream.
Supposeifthetwoprojectsarewiththesameinvestmentandthesamenetvalueof
production,butwithdifferenceinthelengthofperiod,thentheprojectwiththelonger
durationispreferredtotheonewithshorterperiodtime.Thisleadstobiasinthechoice
obviouslyduetotheabsenceofmoreelaborateandappropriateanalysis.
⦁ Paybackperiod:Paybackperiodisthelengthoftimerequiredtogetbackthe
investmentontheproject.Thepaybackperiodoftheprojectisestimatedbyusingthe
formula:
Where,
P=Paybackperiodoftheprojectinyears.
I=InvestmentoftheprojectinRs.
E=AnnualnetcashrevenueinRs.
Theprojectwiththeshortestpaybackperiodisgivenpreferenceforimplementationover
otherprojects.
79 "AgriMemoQuest"

80. "Yourtimeislimited,
⦁ Proceedsperrupeeofoutlay:Thisisworkedoutbydividingthetotalproceedswith
thetotalamountofinvestmentandagivenprojectisrankedbasedonthehighest
magnitudeoftheparameter.
⦁ Averageannualproceedsofrupeeoutlay:Inthismethod,totalreceiptsarefirst
dividedbytheprojectlifespanandtheaverageproceedsobtainedperyeararefurther
dividedbytheinitialinvestmentontheproject.Theprojectwithhighestaverageannual
proceedsperrupeeoutlayisselectedforimplementation.
⦁ Discountedmeasures:Cashflowsaretheyearlynetbenefitsaccruedfromthe
project.Iftheyareweightedbydiscountrate,theybecomediscountedcashflows.These
discountedcashflowsarethebestestimatestodecideontheworthoftheproject.This
approachwillgivethenetpresentworthoftheproject.Thepresentworthofthecostsis
subtractedfromthepresentworthofthebenefitsinordertoarriveatthenetpresent
worthoftheprojecteveryyear.
⦁ Netpresentworth(NPW):ItisalsocalledNetPresentValue(NPV).Itisthepresent
worthofthecashflowstream.Theselectioncriteriaoftheprojectdependonthepositive
valueofNPWwhendiscountedattheopportunitycostofthecapital.NPWisanabsolute
measure,butnotrelative.TheNPWofaprojectisestimatesasbelow:
Where,
P1=Netcashflowinthefirstyear.
r=Rateofdiscount.
80 "AgriMemoQuest"

81. "Yourtimeislimited,
t=Timeperiod.
C=Initialcostoftheinvestment.
ProjectswithpositiveNPWsaregivenpreferenceintheselectioncomparedtothosewith
negativeNPWs.
⦁ Benefit-costratio(B-Cratio):InB-Cratio,presentworthofcostsiscomparedwith
presentworthofbenefits.FollowingformuladepictstheestimationoftheB-Cratio.
Where,
Bt=Netcashflow.
r=Rateofdiscount.
t=Timeperiod.
Ct=Investment.
TheprojectswithmorethanoneB-Cratioarepreferredforimplementationandprojects
withthehighestB-Cratioareselectedforimplementation.
⦁ Internalrateofreturn(IRR):TheIRRisknownasmarginalefficiencyofcapitalor
yieldontheinvestment.Itistherateofdiscountatwhichthepresentworthofthenetcash
flowsarejustequaltozeroi.e.,
NPW=0
TheIRRisfoundoutbytrialanderrormethodwithsomeapproximation.Intheworking
procedure,anarbitrarydiscountrateisassumedanditscorrespondingNPWiscomputed.
ThepositiveNPWvalueoftheprojectindicatesthatIRRisstillhigherandthenextassumed
arbitrarydiscountratemustbecomparativelyhigherthantheinitiallevel.Thisprocess
continuesuntilNOWbecomesnegative.ThenbyinterpolationmethodtheexactIRRis
foundoutusingthefollowingequation.
81 "AgriMemoQuest"

82. "Yourtimeislimited,
Where,
rl=Lowerrateofdiscount.
rh=Higherrateofdiscount.
NPWrl=Presentworthofcashflowatlowerdiscountrate.
NPWrh=Presentworthofcashflowathigherdiscountrate.
TheprojectswithIRRvaluehigherthanthecostofcapitalaregivenweightageinthe
selectioncomparedtoprojectswithIRRvaluelowerthancostofcapital.Theprojectwith
highestIRRvalueisselectedforimplementation.
REfRENCE-
AgribusinessmanagementELEECON-354(VasantraoNaikGraminCollegeof
AgricultureNehruNagarKANDHAR)
RAJMOHINIDEVICOLLEGEOFAGRICULTUREANDRESEARCHSTATION(RMDCARS),
AMBIKAPUR,SURGUJA,CHHATTISGARHLECTURENOTESOFCOURSECODE:ABM–
5221COURSETITLE:AGRIBUSINESSMANAGEMENTPREPAREDBY:DR.SUNIL
KUMARSINGH,ASSISTANTPROFESSOR,AGRICULTURALECONOMICS
82 "AgriMemoQuest"