The Role of Strategic Management in Achieving Agribusiness ...

The Role of Strategic Management in Achieving Agribusiness Capstone Course Objectives

by Charles Hall Associate Professor Texas A&M University chall@tamu.edu

and Kerry Litzenberg

Professor Texas A&M University

klitz@tamu.edu

Paper presented at the Western Agricultural Economics Association Annual Meetings, Vancouver, British Columbia, June 29-July 1, 2000

Copyright 2000 by Charles Hall and Kerry Litzenberg. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies.

The Role of Strategic Management in Achieving Agribusiness Capstone Course Objectives

Charles Hall and Kerry Litzenberg Texas A&M University

Introduction During the 1990's many departments of Agricultural Economics either initiated

agribusiness degree programs or substantially changed traditional academic programs to better meet the needs of agribusiness students and the agribusiness industry. The development of undergraduate agribusiness academic programs usually includes a formalized relationship with colleges of business. General business courses such as accounting, corporate finance, marketing and organizational behavior provide the theory for operational decision making and are generally well taught by business schools. These "tool" courses are essential in an agribusiness program. However, the need for strong applied decision making capabilities of graduates have dictated the need for capstone courses. Most agribusiness programs also recognize the need for expertise in longer term, strategic management decision making.

The authors believe that a capstone course must include three elements. First, the capstone course must include significant experience in applied decision making. This most often requires the use of cases, formal presentations by individuals and groups, and even the integration of actual problems encountered by agribusiness firms. These objectives of a capstone course are usually a major concern. At the very least, the ability to present one's recommendations as an output from team analysis should be a secondary course objective. (See for example, the discussion of overt and covert teaching strategies in Westgren and Litzenberg). Second, the capstone course must empower the graduate to use economic theory to understand the behavior of agribusiness firms and develop recommendations for maximizing profit (or

1

similar firm objectives). Instructors of capstone agribusiness courses must build on the principles of economic theory to show students how operational decisions make use of this theory. Finally, capstone courses are the ideal place to introduce strategic management principles and identify their role in decision making in the agribusiness firm. To only teach students to make operational decisions limits their career advancement and value to an agribusiness firm's decision making team. These strategic management principles are the cornerstone of a capstone course. In addition, knowledge of how agribusiness firms create and sustain competitive advantage is useful in career development for graduates. Understanding the decision making environment and the development of competitive advantage can greatly enhance career advancement.

Will the Real Strategic Management Please Stand Up? In light of the discussion above, let's first define strategic management as managing an

organization in a way that recognizes the complexity of its environment while at the same time seeking to establish a sustainable competitive advantage. It is foremost a process by which managers can transform environmental factors (along with various internal, personal, and political considerations) into decisions that result in strategies (and plans of action for reaching them) that help guide the organization into the future and result in a sustainable competitive advantage.

With the reasoning behind our affirmation "strategic management principles are the cornerstone of the capstone agribusiness course" firmly grounded above, the task of the capstone professor becomes one of distinguishing which strategic management principles to include in the capstone course and how best to present those principles. This task has become

2

more daunting in the last decade with the maturing of the strategic management discipline. Over the past two decades, the nature of strategic management as a management technique has changed in two important ways (along with the changing environment). It has increased both in its breadth of detail and in its importance, particularly as the operating environment has become more complex. In that regard, a short historical perspective is provided to help crystallize the dilemma faced by today's capstone professor.

Between World War II and the early 1960s, business policy (the so-called pre-strategy paradigm), addressed the common business problem of coordinating the operations of the various functional departments of the firm. "Policies" were established by top management to integrate activities of each department. Thus policy served to specify (and even standardize) expected behavior within functional departments. Strategy was usually viewed as an implicit concept reserved for the topmost managers. In the top manager's mind, the combination of environmental characteristics, organizational goals, political circumstances, along with years of management experience, all came together to produce what was hoped would be the right combination of business policies.

The rapid rise during the 1950s and early 1960s in the number of interest groups making demands on organizations of all kinds, along with the proliferation of mergers and acquisitions, began to strain the applicability of the relatively simple business-policy approach to management. Divisionalized firms no longer had a single line of business. The internal complexity of firms had increased in an attempt to deal with the complexity of a pluralistic society. Thus a different set of policies was needed for each subsidiary and managers sought a common thread that might bind them together.

3

In response to this growth in the dimensions of the firms' environment and the growth in the number of "divisionalized" firms, strategy increasingly became interpreted as the link between an organization and its environment. All of the traditional "business policy" problems remained, but they were compounded by a baffling set of external conditions, and also by the needs imposed by multiple product lines and business-level activities. Because of the inability to deal with these factors, the business-policy model underwent several evolutionary changes and emerged as what was later called strategic planning. Labeled as the initial strategy paradigm, this view of corporate management focused heavily on the process of strategy formulation with emphasis on adapting to environmental pressures, yet it had several major shortcomings.

The strategic management paradigm is considered the third step in the evolution of thought about strategy, and it addresses the shortcomings of strategic planning. However, as initially stated in this section, the field of strategic management is far from representing a consensus (see for example Hitt et.al., Thompson et.al., Besanko, Collis et.al., and Barney). Yet there is a distinct movement toward consolidation (maturation) around many of its principles. In particular, there is now a widely accepted distinction between corporate-level, business-level, and functional-level strategy. Also, during the early 1990s, the notion of isolating global issues and direction in a separate strategy level has given way to the practice of incorporating international competitive matters into all levels of strategic decision making.

The advantage of the strategic management paradigm is that it not only distinguishes among different levels of strategy, but is sufficiently adaptable to accommodate the need for an expanded scope of strategic thinking. Responsibility for strategic thinking is viewed within this paradigm as the responsibility of all managers and not just top-level executives.

4

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download