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AGEC 340 - EXAM 1 (TAMU) QUESTIONS WITH COMPLETE SOLUTIONS
“Key Functions of Management - CORRECT ANSWER marketing, financial, supply chain,
human resources"
"Marketing Management - CORRECT ANSWER The process of how products flow through
the U.S. food system from producer to final consumer. Key aspects include understanding customer needs and effectively positioning and selling products and services in the marketplace. Requires integration of several different activities: selling, advertising, web page design, promotions, marketing research, new product development, customer service, and pricing—all focused on customer needs, wants, and satisfaction."
"Financial Management - CORRECT ANSWER Profit is the driver for agribusinesses as they
work to generate the greatest possible returns from their resources. Key aspects include generating the data needed to make good decisions, using the tools of finance to make effective decisions, and managing the assets, liabilities, and owner's investment in the firm."
"Food Sector - CORRECT ANSWER At some point, it all comes down to getting raw farm
commodities processed, packaged, distributed, and sold to the consumer. A very wide variety of processing and marketing firms are responsible for adding value or utility to commodities as they leave the farm gate." "Management is both an ______ and a ______________ of successfully pursuing desire results with the
resources available to the organization. - CORRECT ANSWER art, science"
"Management requires - CORRECT ANSWER Technical knowledge about the organization's
product and/or function , Good and effective communicators, Ability to motivate people, Proficient in technical skills, Strong understanding of industry"
"4 key aspects of management - CORRECT ANSWER planning, organizing, directing,
controlling"
"Manager - CORRECT ANSWER applies the technical skills of business to the management of
things"
"Leader - CORRECT ANSWER influences the attitudes and behavior of followers and
motivates them to do their best work"
"Policies - CORRECT ANSWER are used to guide the thinking process during planning and
decision making."
"Procedures - CORRECT ANSWER are a step-by-step guide to implementing a policy for a
specific activity or function."
"Disadvantage of cooperative - CORRECT ANSWER Farmer members have a low voice in the
business, Biased election of the board of directors, Only one vote on issues for each member regardless of shares scale."
"A kkey point is to keep the focus on business planning - CORRECT ANSWER Focusing on the
future, succession."
"C Corporation - CORRECT ANSWER The most common type of corporation, which is a legal
business entity that offers limited liability to all of its owners, who are called stockholders"
"S Corporation - CORRECT ANSWER A form of corporation that avoids double taxation by
having its income taxed as if it were a partnership"
"B corporation - CORRECT ANSWER A business that explicitly seeks to blend its social
objectives with its financial goals"
"Close Corporation - CORRECT ANSWER A corporation whose shareholders are limited to a
small group of persons, often family members."
"Nonprofit Corporation - CORRECT ANSWER a corporation that does not seek to earn a
profit"
"Benefits of international business - CORRECT ANSWER Expand sales, take advantage of
scale economies, Capture the benefits of a global brand, Reduce risk by diversifying across markets, Lower costs of production, Access lower-cost raw materials through international sourcing, Broaden access to credit, Leverage experiences from operating in international markets into domestic markets"
"4 international trends - CORRECT ANSWER Growing population in the global market, U.S.
agribusiness trade and investment growth, Bulk commodities (high-value products), World Trade Organization"
"Challenges of international business - CORRECT ANSWER Cultural differences, Exchange
rate fluctuations, Accounting differences, Uncertainty of Political and Economic Climate, International law and property rights issues, Sanitary and phytosanitary regulations, Management challenges"
"Cross price elasticity equation - CORRECT ANSWER % change in quantity demanded for
good X ÷ % change in price of good Y"
"Midpoint Cross Price Elasticity Formula - CORRECT ANSWER (Qx2-Qx1) ÷ (Py2-Py1) x
(Py1+Py2) ÷ (Qx1+Qx2)"
"Point Cross Price Elasticity Formula - CORRECT ANSWER (Qx2-Qx1) ÷ (Py2-Py1) x (Py1 ÷
Qx1)"
"If the Cross Price Elasticity of Demand Coefficient is LESS THAN (<) 0 - CORRECT ANSWER
Substitute"
"If the Cross Price Elasticity of Demand Coefficient is GREATER THAN (>) 0 - CORRECT
ANSWER Independent"
"If the Cross Price Elasticity of Demand Coefficient is EQUAL TO (=) 0 - CORRECT ANSWER
Complement"
"Market Clearing - CORRECT ANSWER When there is no excess supply or demand. Supply
equals demand."
What are the 4 key functions of management? - CORRECT ANSWER Marketing, Financial,
Supply Chain and Human Resource management."
"Explain Marketing Management? - CORRECT ANSWER The process in which products flow
from producer to consumer."
"Describe Production Sector. - CORRECT ANSWER Includes farms and ranches that produce
crop and livestock products that provide combined purchased inputs, natural resources, and managerial talent to produce crop and livestock products. Every industry is effected by production ag."
"Define a Farm? - CORRECT ANSWER any place from which $1,000 or more of ag product
were produced and sold, or would have been sold in normal given year"
"Net Farm Income? - CORRECT ANSWER Income after expenses, production yields. Can be
highly volatile moving upward quickly in response to low yields or oversupply."
"Describe the Food Sector. - CORRECT ANSWER raw commodities being processed,
packaged, distributed and sold to the final consumer. Includes all the steps from raw product to final product. includes food retailers and away from home food firms," "Management is both an _____ and a __________ of successfully pursuing desire results with the
resources available to the organization. - CORRECT ANSWER Art and Science"
"What are some management requirements? - CORRECT ANSWER 1. Technical knowledge
about the organization's product and/or function
- Good and effective communicators
- The ability to motivate people
- Proficient in technical skills, like accounting, finance, and forecasting
- Strong understanding of biological and institutional factors surrounding the production of food and fiber"
"Four key task of agribusiness managers? - CORRECT ANSWER Planning
Organizing Directing Controlling BUT Communication is key to making aspects successful."
"Income Elasticity of Demand - CORRECT ANSWER measures quantity demanded with
responds to change in income"
"Cross Price Elasticity of Demand - CORRECT ANSWER measures quantity demanded for one
product responding to price change in different product"
"5 basic forms of business structure. - CORRECT ANSWER 1. Sole Proprietorship
- Partnership
- Corporation
- Limited Liability Company (LLC)
- Cooperative"
"Sole Proprietorship define, advantages and disadvantages. - CORRECT ANSWER
Organization owned and controlled by one person or family Oldest and simplest form of business structure Most popular business structure in US (account for 72% of all businesses and only 4% of cash) Advantages- Minimal legal requirements
- Owner is the boss (decisions made quickly)
"Management is defined as the ______ and _________ of successfully pursuing desired results with
the resources available to the organization. - CORRECT ANSWER Art and Science"
"A _________ ___________ helps to spell out the direction for a firm and describes the destination. -
CORRECT ANSWER Mission Statement"
"An organizational chart shows the formal organization structure of a company and captures
ideas about? - CORRECT ANSWER Division of labor, Chain of command, Bureaucracy"
"The ________ task represents monitoring the evaluation of activities. - CORRECT ANSWER
Controlling"
"Tactical planning is focused on developing courses of action for the longer term. - CORRECT
ANSWER False"
"Strategic planning by top management in an agribusiness would include the following
characteristics- - CORRECT ANSWER Written analysis, Broad, Long term"
"Organizing is defined as guiding the efforts of others toward achieving a common goal. -
CORRECT ANSWER False"
"What are two types of profit? - CORRECT ANSWER Accounting Profit
Economic Profit"
"_____________ is the application of basic economics principles of decisions within the firm? -
CORRECT ANSWER Microeconomics"
"Major factors that cause the demand curve to shift include? - CORRECT ANSWER
Expectations"
"If the price elasticity of demand is -1.3. the demand is? - CORRECT ANSWER Price elastic"
"If the cross-price elasticity of demand is 1.9, the items are? - CORRECT ANSWER
Substituties"
"If the income elasticity of demand is -0.5 the goods are? - CORRECT ANSWER Inferior"
"Find surplus, shortage, equilibrium on graph given - CORRECT ANSWER "
"Cooperatives are member- ______ and member- __________. - CORRECT ANSWER Owned
Controlled"
"A disadvantage of a partnership is? - CORRECT ANSWER Unlimited liability of each general
partnership"
"A disadvantage of forming a corporation is - CORRECT ANSWER Double taxation"
"The benefits firms receive from doing business internationally include - CORRECT ANSWER
All of the above" "In 1947, an international organization was established to reduce trade barriers through
multilateral trade negotiations. The organization is known as - CORRECT ANSWER GATT
which then turned into WTO in 1995" "Sanitary and phytosanitary regulations are intended to protect human, animals, or plant life or
health. - CORRECT ANSWER TRUE"
"Accounting methods for noncurrent assets, such as machinery, are standardized across the
world to facilitate trade. - CORRECT ANSWER FALSE"
"When the value of the US dollar decreases relative to the currencies of other competitors, US
agricultural goods become less expensive. - CORRECT ANSWER TRUE"
What does the following statement mean to you? - CORRECT ANSWER *"Agribusiness
management is about the integration of science and business management."" "Combining Science, Technology, and Business Management. Today's agri food system is the‐
result of: - CORRECT ANSWER 1. The transformation of science into technology, and
- The application of effective business management"
"Evolution of the Marketing System - CORRECT ANSWER 1. Specialization and trade
- Central markets
- Money
- Middlemen"
"The Role of Marketing in the Economy - CORRECT ANSWER Increases the level of
consumer satisfaction in the economy."
"Five Barriers to Consumer Satisfaction - CORRECT ANSWER 1. Inability to transfer
ownership (ownership separation)
- Product is not available when it is desired (time separation)
"Important Quote - CORRECT ANSWER *Only by satisfying a customer need does a business
earn its right to make a profit"
"The Business Plan - CORRECT ANSWER The success of a business is directly attributed to
- Good planning
- Communication
- Execution
- The first step to success is a good business plan
- The business plan explains how the business plans to achieve success
- Firm's Purpose: What the firm is going to do
- Firm's Objective: How it is going to achieve its purpose"
"Structure of the Business Plan - CORRECT ANSWER Composed of separate sub plans that‐
deal with
- Organizational structure
- Personnel
- Production
- Finances
- Marketing"
"The Marketing Plan - Purpose Statement - CORRECT ANSWER Can be stated without a great
deal of consumer input
- Can be based on an analyst's assessment of perceived consumers wants
- If the assessment stops here, it will fail.
- Success depends on the right mix of product, price, place, and promotion. Consumer preferences and needs must be thoroughly researched to clearly identify
- The firm's purpose and objectives based on precise needs the company will service
- How these needs will be filled."
"Marketing - Highest Priority in the Planning Process - CORRECT ANSWER 1. The marketing
plan is a complete assessment of consumer
- Identifies, analyzes, and understands the consumer need
- Dictates how the rest of the firm will be organized Finance tells the firm whether "it" can be done profitably Production tells the firm whether "it" can be done technically Personnel tells the firm whether the right people can be found to accomplish "it"
- Decisions about what "it" is and how "it" should be done are made in the marketing plan
- After establishing the firm's purpose and objective, the marketing plan becomes the starting point for the rest of the business plan The major parts of the marketing plan include: 1. Analysis of the current market situation
- Analysis of opportunities and issues
- Marketing strategy
- Implementation program 5. Financial analysis
- Controls"
"The Current Market Situation - Macroeconomic Environment - CORRECT ANSWER A
discussion of the macroeconomic environment includes factors such as
- Demographics
- The economic climate
- Technology
- The political situation
- Legal issues
- Social issues
- Cultural issues"
"Mass Marketing ‐ example - CORRECT ANSWER The same product is offered to all
customers at the same price and at the same types of locations using the same promotion materials nationwide Example:
- A firm sells hamburgers and identifies that most people like a well‐ done burger with ketchup
- Therefore, the firm sells only well done burgers with ketchup since that will satisfy most‐ people"
"Estimating Market Potential ‐ Terminology - CORRECT ANSWER Market Potential = the
total level of sales possible in a target market for all firms Sales Forecast = the level of sales a firm can expect to receive from a target market Market Share is the percentage of total sales from the target market achieved by a firm Market Share = sales forecast divided by market potential"
"How Strategic Management Fits In - CORRECT ANSWER • Return on invested capital
(ROIC)
— best measure of long run efficiency and‐ effectiveness
- Two sources of sustainable competitive advantage —Lowest cost provider —Differentiated product Must do both to survive today"
"Three Parts of a Strategic Plan - CORRECT ANSWER • Business vision statement
- The strategic plan
- Implementation of the strategic plan"
"The three Parts of The Business Vision - CORRECT ANSWER 1. Vision Statement
"A manager applies - CORRECT ANSWER the technical skills of business to the management
of things(inventory, production, and so on).• More of an autocratic style"
"A leader influences - CORRECT ANSWER the attitudes and behavior of followers and
motivates them to do their best work.
- More of a participatory style"
"What is needed for Shaping a Work climate: - CORRECT ANSWER • Set a good example
- Conscientiously seek participation
- Be goals- and results-centered
- Give credit and blame as needed
- Be fair, consistent, and honest
- Inspire confidence and lend encouragement"
"Policies are - CORRECT ANSWER used to guide the thinking process during planning and
decision-making"
"A procedure is - CORRECT ANSWER a step-by-step guide to implementing a policy for a
specificactivity or function"
"Practices represent - CORRECT ANSWER what is actually done in the agribusiness, and they
may conflict with policies and procedures."
"A key to successful management is - CORRECT ANSWER accepting responsibility for
leadership and making business decisions through the skillful application of management principles"
"All effective agribusiness managers executefour principal tasks in their work: - CORRECT
ANSWER • Planning
- Organizing
- Directing
- Controlling"
"Planning can be defined - CORRECT ANSWER as forward-thinking about courses of action
based on a full understanding of all factors involved and directed at specific goals and performance objectives."
"Types of planning: - CORRECT ANSWER strategic, tactical, contingency"
"Strategic planning: - CORRECT ANSWER focused on developing courses of action for the
longer term; two to twenty-year (or longer) horizon
⚬ Typically begins with a mission statement
- Executive Management Very flexible Long term Written analysis Complex, detailed, Broad"
"Tactical planning: - CORRECT ANSWER focuses on short-term plans consistent with the
strategic plan; tomorrow or next month or next year timeline
- Middle Management Somewhat flexible Intermediate term Written reports Less detailed, outlines General"
"Contingency planning: - CORRECT ANSWER the development of alternative plans for
various possible business conditions; preparing for the unexpected
- Line Employees Inflexible Immediate Unwritten Simple Very specific"
"What is the Planning Process: - CORRECT ANSWER -Gather facts and information
- Analyze what the situation is and what problems are involved
- Forecast future developments
- Set performance objectives, the benchmarks for achieving strategic goals
- Develop alternative courses of action
- Develop a means of evaluating progress, and readjust the plan as the process unfolds"
"Organizing represents - CORRECT ANSWER the systematic classification and grouping of
human and other resources in a manner consistent with the firm's goals"
"An organizational structure is - CORRECT ANSWER the framework of a company."
"An organizational chart shows the formal organizational structure of a company. - CORRECT
ANSWER - Division of Labor
- Chain of command
- Bureaucracy"
"Law of supply reflects a direct relationship - CORRECT ANSWER between price and
quantity, which means sellers are willing to provide more products for sale in the market as prices increase"
"Demand is the - CORRECT ANSWER quantity that consumers are willing and able to buy in
the market at various prices during a particular time period"
"The law of demand finds - CORRECT ANSWER an inverse relationship between price and
quantity, or buyers are willing to purchase less as price increases"
"The process of price discovery means - CORRECT ANSWER thatmarket equilibrium for
quantity and price isdetermined (or discovered) throughtransactions between producers andconsumers."
"At market equilibrium - CORRECT ANSWER the quantity demanded is equal to the quantity
supplied"
"what causes SHIFTS IN DEMAND? - CORRECT ANSWER Change in the number of
consumers Change in price of complements Change in price of substitutes Change in consumer income Change in expectations Change in consumer tastes and preferences
- Change in price does not more the curve"
"What causes SHIFTS IN SUPPLY? - CORRECT ANSWER Change in technology
Change in the price of inputs Change in weather/nature Changes in the price of other products that can be produced Subsidies or taxes Number of suppliers (curve shifts)"
"The demand for most agricultural goods is - CORRECT ANSWER derived demand
-Anything that significantly shifts consumer demand for agricultural products will also have an impact on the demand for farm inputs through the process of derived demand. -Derived demand is one reason that agribusiness managers and marketing experts are concerned about general economic trends."
"Price elasticity of demand - CORRECT ANSWER Measures how quantity demanded
responds to a change in price -Price elasticity of demand
- Measures how quantity demanded responds to a change in price
- Two different formulas → Midpoint and Point Elasticity"
"Income elasticity of demand - CORRECT ANSWER Measures the response of quantity
demanded to changes in income (more focused on consumers)"
"Cross price elasticity of demand - CORRECT ANSWER Measures how the quantity
demanded for one product responds to a price changein a different product"
"Equation for Price elasticity of Demand - CORRECT ANSWER Price Elasticity of Demand =
% 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑑𝑒𝑚𝑎𝑛𝑑𝑒𝑑 over % 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑝𝑟𝑖𝑐𝑒"
"Equation of Income Elasticity of demand - CORRECT ANSWER Income Elasticity = %
Over % 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑖𝑛𝑐𝑜𝑚𝑒"
"Equation for Cross price elasticity of demand - CORRECT ANSWER Cross price elasticity = %
𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑑𝑒𝑚𝑎𝑛𝑑𝑒𝑑 𝑓𝑜𝑟 𝑔𝑜𝑜𝑑 𝑥 over % 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑝𝑟𝑖𝑐𝑒 𝑜𝑓 𝑔𝑜𝑜𝑑 𝑦"
"Supply Chain Management - CORRECT ANSWER Focuses on the coordination and
integration of activities,processes, and partners across the entire supply chain, from the initial production of goods and services to their distribution to end consumers. The goal is to optimize efficiency, minimize costs, and enhance overall performance."
"Operations Management - CORRECT ANSWER Focuses on the direction and the control of
the processes used to produce the goods and services that we buy and use each day through strategic use and movement of resources."
"Logistics Management - CORRECT ANSWER Involves the set of activities around storing
and transporting goods and services."
"Human Resources Management - CORRECT ANSWER All about the people. Encompasses
managing two areas: the mechanics of the personnel administration, and the finer points of motivating people to offer and contribute their maximum potential. Issues include: how to organize the firm, where to find people, how to hire them, how to compensate them, and how to evaluate them."
"Production Sector Trends - CORRECT ANSWER A lot of small farms but they account for a
small proportion of total agricultural output. Not many large farms but they account for a majority of the agricultural output."
"Planning - CORRECT ANSWER can be defined as forward-thinking about courses of action
based on a full understanding of all factors involved and directed at specific goals and performance objectives."
"Strategic Planning - CORRECT ANSWER focused on developing courses of action for the
longer term; two to twenty-year (or longer) horizon (mission statement). Executive level, long term, flexible, complex, broad."
"Tactical Planning - CORRECT ANSWER Focuses on short-term plans consistent with the
strategic plan; tomorrow or next month or next year timeline. Middle management, general, less detailed, somewhat flexible, intermediate term."
"Contingency Planning - CORRECT ANSWER The development of alternative plans for
various possible business conditions; prepare for the unexpected."
"Operational Level - CORRECT ANSWER Line employees, Inflexible, Immediate, Unwritten,
Simple, Very specific"
"Organizing - CORRECT ANSWER Represents the systematic classification and grouping of
human and other resources in a manner consistent with the firm's goals."
"Organization Structure - CORRECT ANSWER The framework of a company"
"Organizational chart - CORRECT ANSWER shows the formal organizational structure of a
company."
"Division of Labor - CORRECT ANSWER jobs are broken into components and then assigned"
"Chain of command - CORRECT ANSWER links between managers and those they supervise"
"Bureaucracy - CORRECT ANSWER a complex organization that has multilayered systems
and processes"
"Directing - CORRECT ANSWER guiding the efforts of others toward achieving a common
goal."
"Directing involves: - CORRECT ANSWER leading, supervising, motivating, delegating to, and
evaluating those whom you manage."
"Controlling - CORRECT ANSWER represents the monitoring and evaluation of activities."
"The act of controlling - CORRECT ANSWER plays a crucial role in determining the success or
failure of the business and allows for earlier interventions if standards are not being met and warrant investigation."
"Management by Exception - CORRECT ANSWER is the idea that managers should not spend
time focusing on the "good", but rather focus on the areas that aren't progressing well."
"Practices - CORRECT ANSWER represent what is actually done in the agribusiness, and they
may conflict with policies and procedures"
"EXPLAIN: Factors influencing choice of business - CORRECT ANSWER Amount of personal
involvement desired, importance of stability, continuity, and transfer of ownership, keeping affairs private or public (privacy) and guard public disclosure, willingness to take risk and/or liability, cost and ease of formation. Also keep in mind the tax laws of each state and the long- term financial implications."
"5 types of business structure - CORRECT ANSWER Sole Proprietorship, Partnership, Limited
Liability Company, Corporation, Cooperative"
"Advantages of Sole Proprietorship - CORRECT ANSWER Minimal legal requirements, the
owner has full control, pays no income tax as a separate business entity; taxes on profit are paid at the owner's tax rate"
"Advantages of Partnership - CORRECT ANSWER Easy to start, require little expense,
simplified taxes. Control and management are concentrated among the partners."
"Advantages of Limited Liability Company - CORRECT ANSWER Can include any number of
members, Net income is reported on members' individual tax returns and taxes are paid by the members"
"Advantages of Corperation - CORRECT ANSWER the stockholders (owners) are not
personally liable for the debts of the organization, and in most cases, not responsible for liabilities, easier transfer of ownership, easier to gain capital, perpetual in nature."
"Advantages of Cooperative - CORRECT ANSWER "Level the playing field;" set prices and
work together to purchase products. Provides a needed market where none existed before. Offers member control, lower buying costs and higher selling prices for farmers, access to goods/services"
