Agriculture Reference
In-Depth Information
Level 1: Corporate strategy
- Formulated by CEO and executive team
Corporate objective
- Generate $5 million in profit
Level 2: Line of business strategy
- Formulated by business division heads
Soybean division objective
- Sell 200,000 units of soybeans @ $20/unit,
hold production cost to $15/unit
Soybean division sales department
Level 3: Functional area strategy
- Formulated by functional
heads/department heads
- Sell 200,000 units of soybeans @ $20/unit
Level 4: Operating level strategy
- Formulated by heads of operating
units/production facilities
Sales territory 1
- Sell 500 units of soybeans @ $18/unit
Figure 2.2
Levels of planning and goals for seed company
earlier, the scope of that planning will become more focused as we move from the CEO
to the operating level. Likewise, the scope of the goals will become more focused as we
move down the organization. In terms of results, the fl ow is from bottom to top—if Sales
Territory 1 achieves the goal of selling 500 units of soybeans at $18/unit, this helps the
Soybean Division Sales Department achieve its goal, which helps the Soybean Division,
etc. In the end, accomplishment of each person's sales objective contributes directly to the
accomplishment of the fi rm's strategic goal.
Organizational structure
An
organizational structure
is the framework of a company. It provides the beams, braces,
and supports to which the appropriate “building materials” are attached. Different jobs
are connected to different parts of the whole framework. It is the formal framework by
which jobs are grouped, coordinated, and further defi ned. Whether they are called groups,
departments, or teams, coordinated communication and cooperation among work groups is
essential. Consider the Carlson Seed Company. The family run seed business has a research
group headed by Michael, a plant breeder. Michael's research group is deeply involved in
developing a particular early season, stacked-trait soybean variety.
Paul heads the production group of this small company. While Paul and his staff may not
necessarily be interested in the specifi cs of what the research group is coming up with on the
genetic level, it is essential they understand what development of this particular early season
soybean variety means to their production efforts. Paul realizes the importance of knowing
what else is going on in their business. As a savvy production manager, he realizes that get-
ting this variety ready for sale may mean juggling their current people resources—what time
of year to have extra workers available, which projects people work on. It may mean that
production juggles mechanical resources, such as changing bagging processes or movement
through the dryer system. It may mean devoting more acreage to producing seed—which
may displace production of some other product, and on and on it goes.
Even though the production department may not have anything to do with the ongoing
genetic research, it does benefi t them, other departments, and the company in general to
understand the organizational structure, and the goals within that structure. A working
knowledge of the organizational structure is essential to managers if they are to put plans
into action.
