Operational Business Management I

Learn to Plan for Economic and Marketing Success in a Horticultural Enterprise of any type

A study focussing on managing Economics, Planning and Marketing of operations in horticulture. Your ability to manage a business can make a huge difference to your success in horticulture. In this course, you will learn to the business side of horticulture, including how to plan and implement effective strategies for your business and/or services. This is a module in the Royal Horticultural Society’s Master of Horticulture

“Building on the first operational business module this course delves into the prominent legal aspects of the horticulture industry in terms of contract and employment law as well as sound financial practices. In addition, man management techniques designed to improve productivity are discussed. Ideal for anyone in a horticultural management position.” - Gavin Cole B.Sc., Psych.Cert., Cert.Garden Design, MACA, ACS Tutor.

Lesson Structure

There are 10 lessons in this course:

1. The Economic Environment
2. External Influences on Horticultural Enterprise
3. Information Management for Horticulture
4. Strategic Planning in Horticulture
5. Implementing Strategies
6. PBL Project:Developing a Business Plan
7. Business Control Systems for Horticulture
8. 8.Evaluating Horticultural Marketing
9. 9.Marketing Strategies for Horticulture
10. Each lesson should require around 10 hours of work, except for Lesson 6, which will require around 20 hours.

Each lesson culminates in an assignment which is submitted to the school, marked by the school's tutors and returned to you with any relevant suggestions, comments, and if necessary, extra reading.

Aims

• Explain the economic environment in which horticultural business operates.
• Appraise the impact of external influences.
• Establish the type of information required for operations in both commercial businesses and service organisations.
• Examine the process and analyse approaches to strategic planning.
• Examine the process and analyse approaches to strategy formation and implementation.
• Prepare a business plan.
• Assess the importance of business control systems utilising IT integration into financial management; prepare, read and interpret annual statements, appreciate the importance of budgetary control.
• Identify the benefits involved when preparing marketing plans; analyse organisational strengths, weaknesses, opportunities and threats.
• Formulate customer-orientated and realisable strategies for selected markets

UNDERSTANDING SUPPLY AND DEMAND is a basis for success in horticulture

An understanding of the balance between supply and demand is of fundamental importance. In a free enterprise exchange economy, as with agricultural and horticultural produce, prices are usually determined by the interaction between supply and demand. Other product prices are also determined this way but they don't normally fluctuate to the same degree.

Market Forces

The interaction of supply and demand and how that shapes a market economy is commonly termed as the ‘market forces’.

Demand

Without demand, supply will stagnate hence marketing sets out to stimulate demand. If demand is not sustained, production must slow down with resultant unemployment and loss of profits both in production and in every aspect of the distributive system.

Factors determining demands are:

• Consumer’s income.
• Price of produce (or services).
• Price of competing produce (or services).
• Price of complementary produce (or services).
• Season, weather conditions, consumer tastes, trends, or other such factors.

Price increases normally produce a change in demand. Refer to Fig.1 next page.

• A lower price (ie. P1), generally means a larger quantity consumed, (ie. Q2). If the price increases to P2, then the demand usually decreases and a smaller quantity will be consumed (ie. Q1).
• As income increases, consumption generally increases, but the buyer may change his/her priorities ie. 10percent increase in income generally means only 1-2 percent increase in food consumption. However there is a general trend that this increase will be demand for processed or convenience foods.

For food consumption to increase, the population must increase!

• The price of competing/substitute goods may directly affect the demand of produce ie. an increase in price of competitive goods generally means the demand for other produce will increase eg. apples: pears are substitute goods. If the price of apples increases then the demand for pears may increase (if the pears are competitively priced).
• The purchasing pattern of salad vegetables shows a good example of complementary produce. When lettuce is in demand, tomatoes and other salad vegetables will also increase in demand, and consequently price.

Supply

If supply shifts leftward up the demand curve, the price will increase and quantity decrease.

Interaction of Supply and Demand

Where the demand and supply curves intersect is where the quantity demanded by consumers equals the quantity supplied by producers. At any lower price, amount demanded exceeds amount supplied. At any higher price, amount supplied exceeds amount demanded. Refer overleaf to Fig. 2.

In fig. 3(a) following page, for quantity Q1, the market price is P1. If supply should fall the price is likely to rise to P2. This is the optimal time to sell. In fig. 3(b) overleaf, for quantity Q1 the market price is P1. If demand should rise, the price will optimally increase as will quantity supplied.

Some Factors that Determine Supply

Supply can be interrupted due to diverse reasons and depending on the product; food products contend with weather, land availability, labour, pest and disease problems and so on.

Other factors include:

• Consumer attitudes - consumers expect a greater choice of quality products, value for money, safety and environmental issues are also becoming more of an issue ie. consumers awareness of ‘clean and green’ products ie. food safety concerns drives demand for safe food; environmental concerns drives demand for clean and green (environmentally sound and sustainable) products.
• Consolidation of markets - for example fresh food sales are now dominated by a limited number of retail chains - in some markets this comprises more then 70% of sales.
• Competition – global sourcing through open international markets; improved internal efficiency by large companies; improved relationships with suppliers leading to greater control over quality, price and availability to consumers.
• Alliances – between large stake-holders are formed to meet ever-changing market requirements ie. in relation to quality assurance, international trade regulations, and traceability requirements. This also improves and increases co-operative strength and competitiveness through an integrated supply chain from the producer to the consumer.
• Trade policies – introducing change to price and policy governing the sale of products by both domestic and foreign governments ie. restricting access to export markets or the introduction of subsidies to local producers etc.
• Organisational responses - ie. if demand for pink grapefruit rises, suppliers respond by encouraging greater production output by existing producers or by new producers entering the market. A sudden subsequent fall in demand could then create an over-supply – impacting on either the price or the producer (ie. prices go up and/or producers leave the market). Understanding and predicting change in the market is a complex but necessary part of business operations.

Learn the business of horticulture with this module from the prestigious and world-renowned Royal Horticultural Society. This is a module from the RHS M.Hort (based on curriculum developed by the Royal Horticultural Society); this can be taken either as part of the M.Hort Program, as a module in one of our other qualifications or as a stand alone course (Ideal for use as a Professional Development program for persons working in the horticulture industry anywhere in the world).