Management Important Terms for Viva / Management Glossary


Absenteeism - Any failure of an employee to report for or to remain at work as scheduled, regardless of the reason.

Absolute advantage theory- (Adam Smith)- suggests that a country should export those goods for which it is more productive than other countries are and import those goods for which other countries are more productive than it is.

Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information.

Accounting Breakeven Point: The level at which total sales is equal to the total cost. It is calculated as being the number of units that need to be sold to make zero profit.

Accounting Profit: Accounting profit is the difference between total revenue and total cost excluding the opportunity cost of the owner’s resources such as time and capital.

Action plan- a plan used to operationalize any other kind of plan.

Administrative intensity- the degree to which managerial positions are concentrated in staff positions.

Aggregate Production Planning (APP) determines the capacity of the resources needed to meet demand over an intermediate time horizon - 6 to 12 months.

Amortization- A noncash charge similar to depreciation except that it is used to write off the costs of intangible assets.

Assets of bank: What a bank owns, including loans, reserves, investment, securities, and physical assets. Bank’s largest asset category is the loan which generates investment revenue, the critical asset reserves.

Asset-based loans: Loan secured by a business firm’s assets, particularly accounts receivables and inventory.

Asset liability Management: The process of decision making to control a bank or other financial institution’s exposure to interest rate risk.

Asset liquidity management: A strategy for meeting liquidity needs, in which liquid funds are stored in readily marketable assets that can be quickly converted into cash as needed.

Assignment problem is a special case of a transportation model in which the objective is to assign a number of origins to the equal number of destinations at a minimum cost or maximum profit

Arbitrage can be defined as the simultaneous purchase and sale of the same assets or commodities on the different markets to profit from price discrepancies.

- Location arbitrage

- Triangular arbitrage

- Covered arbitrage

Attitudes are evaluative statements—either favorable or unfavorable—concerning objects, people, or events.

Attribution theory was developed to explain how we judge people differently depending on the meaning we attribute to a given behavior

Authority refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it.


Balance of payments of a country is a systematic record of all economic transactions (value of all goods, all gifts, foreign aid, capital investments or loans, and all gold coming in and going out) between the residents of the reporting country and the residents of the foreign country in a given period of time. It consists of 3 types of accounts: current A/C, capital A/C, and Official reserve A/C.

Balance of trade is the statement of a visible transaction between the residents of reporting country and the foreign country.

Balance Liquidity Management: The combined use of both asset management and liability management to cover liquidity needs.

Balanced scorecard is a performance measurement tool that looks at four areas—financial, customer, internal processes, and people/innovation/growth assets—that contribute to a company's performance.

Bank is a financial institution which earns profit through acceptance of deposit, extending credit, issuing notes and cheques, receiving and paying interest.

Schedule Bank refers to those banks which are working within the country and enlisted in the schedule of central bank ,i.e. AB Bank

Non- Schedule Bank refers to those banks whose name doesn’t appear at the list of scheduled bank maintained by central bank, such as Jubilee Bank.

Banking systems

Branch Banking: An arrangement in which a bank offers a full range of services from multiple locations, including a head office and one or more branch offices.

Chain Banking: Chain banking is a system where an individual or a small group or members of a family controls two or more banks. Introduced in USA in 1930.

Group banking: The term group banking refers to bringing two or more banks under single control and management. Group banking refers to two or more individually incorporated banks operating under the control of a holding company.

Agent Banking: A bank that acts in same capacity on behalf of another bank. It can mean any of three types of bank.

 The bank in a loan syndicate that advices other participating banks.

 A bank that participates in the credit card program of another bank by issuing credit cards and performing other duties.

 A foreign bank doing business in the U S on behalf of its parents banks, performing such tasks as issuing international letter of credit but not accepting deposit.

Deposit Banking: Deposit banking is a system of banking where the banks involve themselves only in acceptance of deposits repayable on demand and lending money to trade and industry for short periods not exceeding a year or meeting the working capital requirements.

Mixed banking: Mixed banking is a system where banks combine both the deposit banking and investment banking functions.

An investment bank is a financial institution that assists individuals, corporations, and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities.

A merchant bank is a financial institution which provides capital to companies in the form of share ownership instead of loans. A merchant bank also provides advisory on corporate matters to the firms they lend to. In the United Kingdom, the term "merchant bank" refers to an investment bank

Basic Banking or life line banking: Low cost deposits and other services that are designed to meet the needs of customer of limited means.

Affiliated bank: Bank whose stock has been acquired by a holding company.

Unit banking: Unit banking means a system of banking under which banking services are provided by a single office. It grew in the USA. Different unit banks in the USA are linked with each other and with other financial centers through “Correspondent Bank”. There is no branch. Govt. does not permit to open a branch office. It operates actively in a small area or local area. Some sometimes it is called localized bank.

Bank rate is the interest rate charged by central bank for loans made by it either to its member banks or to the money market.

Behavior is the actions of people.

Behavioral Theories: Leadership theories that indentified behaviors that differentiated effective leaders from ineffective.

Behavioral Dimension Conclusion

University of Iowa

Democratic style: involving subordinates, delegating authority, and encouraging participation

Autocratic style: dictating work methods, centralizing decision making, and limiting participation

Laissez-faire style: giving group freedom to make decisions and complete work.

Democratic style of leadership was most effective, although later studies showed mixed results.

Ohio State Consideration: being considerate of followers' ideas and feelings

Initiating structure: structuring work and work relationships to meet job goals.

High-high leader (high in consideration and high in initiating structure) achieved high subordinate performance and satisfaction, but not in all situations.

University of Michigan

Employee oriented: emphasized interpersonal relationships and taking care of employees' needs

Production oriented: emphasized technical or task aspects of job.

Employee-oriented leaders were associated with high group productivity and higher job satisfaction.

Managerial Grid Concern for people & Concern for production

(a) Impoverished (1-1)

b) Country-club (1-9)

(c) Task (9,1)

d) Team(9,9)

(e) Middle of the Road (5-5)

Leaders performed best with a 9,9 style (high concern for production and high concern for people).

Benchmarking is the search for the best practices among competitors or noncompetitors that lead to their superior performance

Big-Five Model of Personality

Extraversion: The degree to which someone is sociable, talkative, and assertive.

Agreeableness: The degree to which someone is good-natured, cooperative, and trusting.

Conscientiousness: The degree to which someone is responsible, dependable, persistent, and achievement-oriented.

Emotional stability: The degree to which someone is calm, enthusiastic, and secure (positive) or tense, nervous, depressed, and insecure (negative).

Openness to experience: The degree to which someone is imaginative, artistically sensitive, and intellectual.

Bill of exchange is an instrument containing a direction to pay certain amount of money only to or to the order of certain person or to the bearer of the instrument. Types of BOE include Inland bill, foreign bill, time bill, demand bill, accommodation bill and trade bill.

Bill of lading is a receipt for goods delivered to a ship for carriage.

Bond- A long-term debt instrument.

Boundaryless organization, an organization whose design is not defined by, or limited to, the horizontal, vertical, or external boundaries imposed by a predefined structure.

Bounded rationality suggests that decision makers are limited by their values and unconscious reflexes, skills and habits.

Brainstorming is an approach to improve problem discovery and solving by encouraging unfettered suggestions and ideas, usually from a group of individuals.

Brand - A name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers.

Break-even analysis is a method of determining the relationship between total cost and total revenue at various levels of production or sales activities.

Budget is a numerical plan for allocating resources to specific activities.

Sales budget: The sales budget is an estimate of future sales, often broken down into both units and dollars. It is used to create company sales goals.

Production budget: Product oriented companies create a production budget which estimates the number of units that must be manufactured to meet the sales goals. The production budget also estimates the various costs involved with manufacturing those units, including labor and material.

Cash Flow/Cash budget: The cash flow budget is a prediction of future cash receipts and expenditures for a particular time period. It usually covers a period in the short term future. The cash flow budget helps the business determine when income will be sufficient to cover expenses and when the company will need to seek outside financing.

Marketing budget: The marketing budget is an estimate of the funds needed for promotion, advertising, and public relations in order to market the product or service.

Project budget: The project budget is a prediction of the costs associated with a particular company project. These costs include labor, materials, and other related expenses. The project budget is often broken down into specific tasks, with task budgets assigned to each.

Revenue budget: The Revenue Budget consists of revenue receipts of government and the expenditure met from these revenues. Tax revenues are made up of taxes and other duties that the government levies.

Expenditure budget: A budget type which include of spending data items.

1. Government Budget: a Government Budget is a document plan of public revenue and expenditure that is often passed by the legislature approved by the chief executive or president and presented by the finance minister to the nation. The budget is also known as the annual financial statement of a country. Government budgets are of three types:

i. Balanced Budget: when government revenue and expenditures are equal.

ii. Surplus Budget: when anticipated revenue is more than expenditure

iii. Deficit Budget: when anticipated expenditure is greater than revenues.

2. Capital Budget: A Capital Budget includes planed outlays for capital assets with long expected lives and which are designed to produce or support operations. Like land building machinery office equipment furniture and fixture.

3. Supplementary Budget: there is a range of the budget minimum and maximum. The minimum budget is called supplementary budget. During the budget year unanticipated needs may arise that affect the central budget. An agency may, for example, need more money than planned. In such a situation the government can revise the central government budget by proposing an increase. This is known as supplementary budget.

Budgeting is the planned allocation of available funds to each department within a company.

Budgetary control denotes using budget as a means of controlling managerial functions and activities.

Bureaucracy—a form of organization characterized by division of labor, a clearly defined hierarchy, detailed rules and regulations, and impersonal relationships.

Business may be defined as human activity directed towards producing or acquiring wealth through buying or selling.

Business cycle refers to fluctuation in output and employment with alternative period of boom and recession.

Business environment consists of the surrounding factors that either help or hinder the development of business.

Business-level strategy seeks to determine how an organization should compete in each of its businesses.

Business plan is a written document that describes the business, the goods or service, the customers, the competition, the financing and all the activates necessary to enter business and make or sell a good or service.

Business processes refer to the unique ways in which organizations coordinate work, information and knowledge and the ways in which management chooses to coordinate work.

Business Profit is the difference between business income and business expenses.


Call Money Rate: Interbank short-term borrowing rate.

CAMELS Rating: CAMELS stands for Capital adequacy, Asset quality, Managements efficiency, Earning capacity, liquidity, and Sensitivity of market risk. CAMELS Rating means assigning a numerical rating to a bank. It actually a five principle areas to be examined in evaluating a banking organization

Canons of Tax:

a) Canon of equity

b) Canon of certainty

c) Canon of convenience

d) Canon of economy

Capital Markets- The financial markets for stocks and for intermediate or long-term debt (one year or longer).

Capital market instrument:

1. Common stock

2. Preferred stock

3. Mortgaged bond

4. Treasury notes and bonds.

5. Corporate notes and bonds.

6. Municipal notes and bonds.

7. Govt. notes and bonds

Cascade Approach is a procedure for setting objective in which the objectives are set from the top level management down.

Cash Credit: Cash credit is a type of working capital facility which is generally sanctioned by bank to industrial business and trading units

Cash Reserve ratio: Cash reserve ratio is the amount of funds that a bank have to keep with the central bank.6%.

Central bank: Central bank is main govt. controlled bank in a country, which controls the financial affairs of the country by fixing main interest rates, issuing currency, supervising the commercial banks and controlling the foreign exchange rate,

Centralization describes the degree to which decision making is concentrated at a single point in the organization. If top managers make the organization's key decisions with little or no input from below, then the organization is centralized.

Certainty is a situation in which a manager can make accurate decisions because the outcome of every alternative is known.

Circular-flow of money- a visual model of the economy that shows how money flows through markets among households and firms.

Chain of command is the continuous line of authority that extends from upper organizational levels to the lowest levels and clarifies who reports to whom.

Change agents- People who act as catalysts and assume the responsibility for managing the change process.

Charismatic leader—an enthusiastic, self-confident leader whose personality and actions influence people to behave in certain ways

Channel -A set of interdependent organizations involved in the process of making a product or service available for use or consumption by consumer or business user.

Cheque is a bill of exchange drawn upon a specified banker and payable on demand.

CHIPS- Clearing House Interbank Payment System- electronic payment system that transfers funds and settles transaction in US $.

Classical Conditioning- A type of conditioning in which an individual responds to some stimulus that would not ordinarily produce such a response.

Clearing house - a centralized system that provides clearing and settlement service for its members. Or, an institution where cheques and other commercial papers drawn on member banks are settled so that only net balance are payable.

Code of ethics, a formal statement of an organization's primary values and the ethical rules it expects its employees to follow, is a popular choice for reducing that ambiguity.

Cognitive dissonance is any incompatibility or inconsistency between attitudes or between behavior and attitudes.

Communication is the process of transmitting information from one person to another.

Comparative advantage theory (David Ricardo) states that a country should produce and export those goods for which it is relatively more productive than other countries and import those goods for which other countries are relatively more productive than others.

Comparative management is the study and analysis of management in different environments and in various countries.

Competitive advantage is what sets an organization apart, that is, its distinct edge. That distinct edge comes from the organization's core competencies. For example, Dell has developed a competitive advantage from its ability to create a direct-selling channel that's highly responsive to customers

Competitor Intelligence is a process by which organizations gather information about their competitors and get answers to questions such as: Who are they? What are they doing? How will what they're doing affect us?

Compressed workweek is a workweek in which employees work longer hours per day but fewer days per week.

Concepts are mental images of anything formed by generalization from particulars; for example, a word or terms.

Consortium - activities of individuals, groups, and organizations aimed at protecting consumer rights.

Consumer behavior - The behavior of the consumer or decision maker in the market place of products and services.

Consumer Price Index (CPI) a measure of the overall cost of the goods and services bought by a typical consumer.

Contingency perspective (sometimes called the situational approach) of management underscores and emphasizes the fact that because organizations are different, they face different circumstances (contingencies) and, thus, may require different ways of managing.

Contingent variables are Organization Size, Routineness of Task Technology, and Environmental Uncertainty, Individual differences.

Contract is a legally enforceable, voluntary agreement between two or more parties.

Controlling involves monitoring actual performance, comparing actual to standard and taking actions if necessary

Control is the process of monitoring activities to ensure that they are being accomplished as planned and of correcting any significant deviations. Market control is an approach to control that emphasizes the use of external market mechanisms, such as price competition and relative market share, to establish the standards used in the control system.

Bureaucratic control, which emphasizes organizational authority and relies on administrative rules, regulations, procedures, and policies.

Clan control, employee behaviors are regulated by the shared values, norms, traditions, rituals, beliefs, and other aspects of the organization's culture.

Feedforward control—prevents anticipated problems since it takes place in advance of the actual activity.

Concurrent control-takes place while an activity is in progress

Feedback control - The control takes place after the activity is done.

Control Chart is graphic device for presenting data so as to directly reveal the frequency and extent of variations from established standards or goals.

Cooperative society is an association for supplying goods or carrying some branch of industry, the profit which go to the members.

Coordination means achieving harmony of individual and group efforts toward the achievement of goals.

Core Competencies are the organization's major value-creating skills, capabilities, and resources that determine the organization's competitive weapons.

Correlation is a measure of association between two or more variables.

Correlation Analysis is a statistical technique used to indicate the nature and degree of relationship existing between one variable and the other(s).

Corporation- A legal entity created by a state, separate and distinct from its owners and managers, having unlimited life, easy transferability of ownership, and limited liability.

Corporate bonds: Debt security issued by private corporations with maturities longer than five years.

Corporate Notes: Debt security issued by private corporations with maturities five years or less.

Corporate entrepreneurship (CE) refers to building entrepreneurial businesses within existing corporations.

Corporate governance addresses the relationship between various participants in determining the overall direction and performance of corporations. It consists of three primary participants— shareholders, management, and the board of directors.

Corporate-level strategy seeks to determine what businesses a company should be in or wants to be in. PepsiCo's corporate-level strategy integrates the strategies of its various business units—Soft Drinks (Pepsi, Mountain Dew, Slice), Snacks (Frito-Lay and Rold Gold pretzels),

1. The growth strategy is a corporate-level strategy that seeks to increase the level of the organization's operations. This includes increasing such popular quantitative measures as sales revenues, number of employees, and market share.

2. A stability strategy is a corporate-level strategy characterized by an absence of significant change. Examples of this strategy include continuing to serve the same clients by offering the same product or service, maintaining market share, and sustaining the organization's return-on-investment results.

3. A retrenchment strategy is a corporate-level strategy designed to address organizational weaknesses that are leading to performance declines.

Corporate Portfolio Analysis- The first portfolio matrix—the BCG matrix—developed by the Boston Consulting Group, introduced the idea that an organization's businesses could be evaluated and plotted using a 2 × 2 matrix to identify which ones offered high potential and which were a drain on organizational resources. The horizontal axis represents market share, which was evaluated as either low or high; and the vertical axis indicates anticipated market growth, which also was evaluated as either low or high. Based on its evaluation, the business was placed in one of four categories:

Cash cows (low growth, high market share). Businesses in this category generate large amounts of cash, but their prospects for future growth are limited.

Stars (high growth, high market share). These businesses are in a fast-growing market and hold a dominant share of that market. Their contribution to cash flow depends on their need for resources.

Question marks (high growth, low market share). These businesses are in an attractive industry but hold a small market share percentage.

Dogs (low growth, low market share). Businesses in this category do not produce or consume much cash. They have a low market share in a low-growth industry.

Contemporary Planning Techniques: Project Management, Scenario Planning Contrast Effects evaluation of a person’s characteristics that are affected by comparisons with other people recently encountered who rank higher or lower on the same characteristics.

Cost refers to the total amount of money spent on the production of a commodity.

Cost leadership requires a tight set of interrelated tactics such as: aggressive construction of efficient-scale facilities, vigorous pursuit of cost reductions from experience, tight cost and overhead control, avoidance of managerial customer accounts, and cost minimization in all activities in a firm’s value chain.

Creativity refers to the ability to combine ideas in a unique way or to make unusual associations between ideas.

Credit control - techniques used by central bank to stabilize the supply of money in country or to keep the supply of money at optimum level.

Crisis management- the set of procedures the organization uses in the event of a disaster or the unexpected calamity.

Crowding out: Crowding out is a situation where there is a little money available for lending to private companies due to heavy borrowing of the government.

Crowding-out effect the offset in aggregate investment that results when expansionary fiscal policy raises the interest rate and thereby reduces spending.

Current Ratio- This ratio is calculated by dividing current assets by current liabilities. It indicates the extent to which current liabilities are covered by those assets expected to be converted to cash in the near future.


Decentralization is the degree to which lower-level employees provide input or actually make decisions

Decision means making choices from two or more alternatives.

Decision-Making Process

Step 1: Identifying a Problem

Step 2: Identifying Decision Criteria

Step 3: Allocating Weights to the Criteria

Step 4: Developing Alternatives

Step 5: Analyzing Alternatives

Step 6: Selecting an Alternative

Step 7: Implementing the Alternative

Step 8: Evaluating Decision Effectiveness

Decision-Making Styles

Directive style.-People using the directive style have low tolerance for ambiguity and are rational in their way of thinking.

Analytic style- Decision makers with an analytic style have much greater tolerance for ambiguity than do directive types.

Conceptual style- Individuals with a conceptual style tend to be very broad in their outlook and will look at many alternatives.

Behavioral style- Decision makers with a behavioral style work well with others.

Decision support system (DSS) - A decision support system (marketing definition) is a systematic collection of data, techniques and supporting software and hardware by which an organization gathers and interprets relevant information from business and the environment and turns it into a basis for making management decisions.

Decision tree is a way to analyze a decision. It involves decision points, chance events and probabilities.

Degree of complexity refers to the number of components in an organization's environment and the extent of the knowledge that the organization has about those components.

Delphi group - Rand Corp.- a form of group decision making in which a group is used to achieve a consensus of expert opinion.

Demand for a commodity refers to the desire backed by ability to pay and willingness to buy it.

Departments of a Bank: 1. Cash 2. Human resources 3. Accounts 4. Investment 5. Loan 6. Treasurer

7. Foreign exchange.

Departmentalization - The basis by which jobs are grouped together. Functional departmentalization, Product departmentalization, Geographical departmentalization, Process departmentalization, customer departmentalization .

Depreciation- The charge to reflect the cost of assets used up in the production process. Depreciation is not a cash outlay.

Development- teaching managers and professionals the skills needed for both present and future jobs.

Deviant Workplace Behavior- Antisocial actions by organizational members that intentionally violate established norms and result in negative consequences for the organization, its members, or both.

Differentiation consists of creating differences in the firm’s products or service offerings by creating something that is perceived industry-wide as being unique and valued by customers.

Discount window: Department within each central bank that lands legal reserves to eligible institutions for short period of time.

Distribution - An organized network of agencies and institutions which in combination perform all the functions required to link producers with end customers to accomplish the marketing task.

Divisional structure is an organizational structure made up of separate units or divisions.

Division of labor - a principle of organization that a job can be performed more efficiently of the jobholder is allowed to specialize.

Downsizing cutting out entire layers of management in the organization.

Dual banking system: A system of banking regulations in which both federal and state authorities have significant regulatory powers and supervisory power over the activities of commercial banks.


Economic growth refers to an increase in the real output of goods and services or increment of GDP.

Economic development implies change in income, savings and investment along with progressive change in socio economic structure of a country. Economic development is a broader concept than economic growth

Economic or financial profit: Economic profit is the difference between total revenue and total cost including the opportunity cost of owner’s resources such as time and capital. (Total revenue minus total operating cost minus opportunity cost)

Economics is the study of how a society chooses to use scarce resources to produce goods and services and to distribute them for consumption.

Economies of scale (scale effect): Reduction in the average cost of (per unit) production when output is increased. Dis-Economies of scale: If the average cost of (per unit) production rise with output is called dis-economics of scale.

Economics of scope: Employing the same management, staff and facilities to offer multiple products or services thereby helping to reduce the cost of (per unit) production. Or by increasing sales reduce per unit cost.

Economic Order Quantity (EOQ): The optimal batch size for an order that minimizes the total period cost, including cost of ordering (setup cost), inventory holding cost, and cost of materials procured. For setup cost S, holding cost H, and throughput R, the optimal batch size Q* is given by Q* = square root (2 x S x R/H).

Economic Profit is the amount of money which remains after expenses and opportunity cost are subtracted from resources.

Economic System is the set of structures and processes that guides the allocation of resources and shapes the conduct of business activity in a country. There are 3 types of economic systems:

Market economy is an economic system in which most goods and services are produced by the private sector rather than the public sector and prices of goods and services are determined by the forces of supply and demand. For example USA, CANADA.

Command or planned economy is an economic system in which most of the goods and services are produced by the public sector and Govt. controls all the factors of production and make all production and distribution decision., i.e CUBA.

Mixed Economy- A combination partly Market economy and partly command economy.

Economic value added (EVA)/ Residual Value is a tool for measuring corporate and divisional performance. It's calculated by taking after-tax operating profit minus the total annual cost of capital.

Efficiency refers to getting the most output from the least amount of inputs. Efficiency is often referred to as "doing things right"—that is, not wasting resources.

Effectiveness is often described as "doing the right things"—that is, those work activities that will help the organization reach its goals

Elasticity- The degree that an economic variable changes in response to a change in another economic variable. For example, how much library use changes according to how far an individual must travel for library services.

Embargo is a total ban on certain imports and exports.

Emotional intelligence (EI) is an assortment of noncognitive skills, capabilities, and competencies that influence a person's ability to succeed in coping with environmental demands and pressures.

Employee Stock Ownership Plans (ESOPs)- Company-established benefit plans in which employees acquire stock as part of their benefits.

Entrepreneur is an individual who creates a new business firm and continues to manage it until it’s success.

Entrepreneurship is the process whereby an individual or a group of individuals uses organized efforts and means to pursue opportunities to create value and grow by fulfilling wants and needs through innovation and uniqueness, no matter what resources are currently controlled.

Enterprise Resource Planning (ERP)- a large scale information system for integrating and synchronizing many activities in the extended enterprise.

Entropy is a normal process leading to system decline.

Environmental monitoring tracks the evolution of trends, events, or streams of activities in the external environment.

Environmental Scanning, which is the screening of large amounts of information to anticipate and interpret changes in the environment

Environmental uncertainty is determined by two dimensions: degree of change and degree of complexity in an organization's environment.

Equilibrium is defined as the state of rest or balance from which there is no tendency for change.

Equity theory, developed by J. Stacey Adams, proposes that employees perceive what they get from a

job situation (outcomes) in relation to what they put into it (inputs) and then compare their inputsoutcomes ratio with the inputs-outcomes ratios of relevant others

Ethnocentric predisposition allows the values and interests of the parent company to guide strategic decisions

Ethics refers to rules and principles that define right and wrong conduct

- Utilitarian view of ethics says that ethical decisions are made solely on the basis of their outcomes or consequences.

- Rights view of ethics, which is concerned with respecting and protecting individual liberties and privileges such as the rights to privacy, freedom of conscience, free speech, life and safety, and due process

- Theory of justice view of ethics.- managers are to impose and enforce rules fairly and impartially and do so by following all legal rules and regulations

- The integrative social contracts theory, proposes that ethical decisions should be based on empirical (what is) and normative (what should be) factors.

ERG THEORY: The ERG need theory, developed by Clayton Alerter is a refinement of Maslow's needs

hierarchy. Instead of Maslow's five needs, ERG theory condenses these five needs into three needs. These three needs are those of Existence, Relatedness and- Growth. The E, Rand G is the initials for these needs.

Existence needs: These needs are roughly comparable to the physiological and safety needs of Maslow's model and are satisfied primarily by material incentives.

Relatedness needs: Relatedness needs roughly correspond to social and esteem needs in

Maslow's hierarchy.

Growth needs: These are the needs to develop and grow and reach the full potential that a person is capable of reaching

Executive Support System (ESS) addresses nonroutine decisions requiring judgment, evaluation and insight because there is no agreed-on procedure for arriving at a solution.

Exchange - All activities associated with receiving something from someone by giving something voluntarily in return.

Exchange control denotes the methods by which a country controls the demand for and supply of foreign currency.

Expectancy theory (Victor Vroom) states that an individual tends to act in a certain way based on the expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual.

Expectancy or effort-performance linkage is the probability perceived by the individual that exerting a given amount of effort will lead to a certain level of performance.

Instrumentality or performance-reward linkage is the degree to which the individual believes that performing at a particular level is instrumental in attaining the desired outcome.

Valence or attractiveness of reward is the importance that the individual places on the potential outcome or reward that can be achieved on the job. Valence considers both the goals and needs of the individual.

External environment refers to forces and institutions outside the organization that potentially can affect the organization's performance. The external environment is made up of two components, the specific environment and the general environment.

The specific environment includes those constituencies that have a direct and immediate impact on managers' decisions and actions and are directly relevant to the achievement of the organization's goals. The main ones are customers, suppliers, competitors, and pressure groups.

The general environment includes the broad economic, political/legal, sociocultural, demographic, technological, and global conditions that may affect the organization.

Changes in any of these areas usually do not have as large an impact as the specific environment has, but managers must consider these areas as they plan, organize, lead, and control.


Factors of production refer to those goods and services which help in the productive process.

Fiedler contingency model proposed that effective group performance depended on the proper match between the leader's style of interacting with his or her followers and the degree to which the situation allowed the leader to control and influence. The key situational factors for determining leader effectiveness are Leader-member relations 2. Task structure 3. Position power.

Finance is the study of money within the firm, the business function responsible for finding funds, manage them and determine their best use.

Financial Analysis: Financial analysis also refers financial statement analysis or accounting analysis. The process of evaluating businesses, projects, budgets and others financial entities to determine their suitability for investment. Financial analysis is used to analyze whether an entity is stable, solvent, liquid or profitable enough to be invested in.

Financial assets: A financial asset is an intangible asset that derives value because of contractual claim. Like bonds, stocks, debentures and bank deposit. Cash is financial asset because its value is based on what it represents. Non Financial or real Assets: An asset with a physical value such as real estate, equipment, machinery, gold, oil, commodity. But the value of financial asset can be based on nonfinancial asset like the value of future contract is based on the value of the commodities represented by that contract.

Financial Breakeven: Level of EBIT at which firms EPS equal zero. The higher the point or level the higher the financial risk. Financial breakeven is the point where NPV is greater than or equal to zero. The point where there is economic value added.

Financial exposure is the degree to which a company is affected by exchange rate changes.

- Transaction exposure/ accounting exposure

- Translation exposure

- Operating exposure

Financial Instrument: A document that has a monetary value or represents a legally enforceable agreement between two or more parties regarding a right to payment of money.

Example cheque, draft, bond, stock, bill of exchange, option.

Financial Intermediaries- financial institutions through which savers can indirectly provide funds to borrowers.

First-line managers are the lowest level of management and manage the work of nonmanagerial individuals who are involved with the production or creation of the organization's products.

Fiscal Deficit or deficiency: When a government’s total expenditure is more than its revenue is called fiscal deficit. A fiscal deficit is a positive economic event because deficit helps countries climb out of economic recession.

Fiscal policy refers to the measures which is adopted by the govt. regarding taxation, expenditure and borrowing.

Difference between monetary and fiscal policy: While the main objective of fiscal policy is to increase the aggregate output of the economy, the main objective of the monetary policies is to control the interest and inflation rates.

Fiscal policy relates to government spending and revenue collection. For example, when demand is low in the economy, the government can step in and increase its spending to stimulate demand. Or it can lower taxes to increase disposable income for people as well as corporations.

Monetary policy relates to the supply of money, which is controlled via factors such as interest rates and reserve requirements (CRR) for banks. For example, to control high inflation, policy-makers (usually an independent central bank) can raise interest rates thereby reducing money supply.

Flexible work hours (also popularly known as flextime), which is a scheduling system in which employees are required to work a specific number of hours a week but are free to vary those hours within certain limits.

Forecasting is an important part of organizational planning and managers need forecasts that will allow them to predict future events effectively and in a timely manner.

Foreign direct investment refers to investment made to acquire lasting interest in enterprises operating outside of the economy of the investor.

- Green field investment

- Merger /Acquisition

- Brownfield investment.

Foreign exchange is the national currency of another country that is required to carry out international transactions.

Foreign exchange market (Forex, FX, or currency market) is a worldwide decentralized over the counter financial market for the trading of currencies.

Foreign exchange rate is the number of units of a given currency that exchange for a unit of some other currency.

Foreign Aid is the international transfer of capital, goods, or services from a country or international organization for the benefit of the recipient country or its population. Aid can be economic, military, or emergency humanitarian (e.g., aid given following natural disasters).

Formalization refers to the degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures.

Franchising is a system for selective distribution of goods and/or service under a brand name through outlets owned by independent business owners.

Functional-level strategy seeks to determine how to support the business-level strategy.

Functional structure is an organizational design that groups similar or related occupational specialties together.

Free Trade- A policy of no restriction on the movement of goods and services


Gainsharing, an incentive program that shares the gains of the efforts of employees with those employees.

Gantt chart was developed during the early 1900s by Henry Gantt, an associate of the scientific management expert Frederick Taylor. The bars show output, both planned and actual, over a period of time. The Gantt chart visually shows when tasks are supposed to be done and compares that with the actual progress on each.

Gearing Ratio: Debt to equity ratio.

Geocentric predisposition tries to integrate a global systems approach to decision making.

Generic strategies are that firms can use to overcome the five forces and attain competitive advantage. The first, overall cost leadership, is based on creating a low cost position relative to one’s peers. The second, differentiation, requires that the firm (or business unit) create products and/or services that are unique and valued. Finally, firms following a focus strategy must direct their attention (or “focus”) toward narrow product lines, buyer groups or geographical markets.

GDP stands for the Gross Domestic Product, a measurement of the annual productivity of the property and labor of all citizens and foreign residents within the geographic borders of a country including its foreign territories such as embassies and purchased military bases abroad.

Glass ceiling is a perceived barrier that exists in some organizations that keeps women from advancing to the top management.

Globalization reflects the trend of firms buying, selling and distributing products and services in most countries and regions of the world.

Glocalization- The development and selling of products or services intended for the global market, but adapted to suit local culture and behaviour. (Think globally, act locally.)

Global Strategy- a firm whose emphasis is on lowering costs tends to follow a global strategy.

GNP stands for the Gross National Product, a measurement of the annual economic productivity of the property and labor of all but only citizens of a country regardless where this activity occurs in the world.

Goals - A broadly stated guideline what the organization or individual wants to achieve. Goals are not always quantifiable. For example, a company’s goal may be increasing market share.

Strategic goal- a goal set by and for top management of the organization.

Tactical goal- a goal set by and for middle level management.

Operational goal- a goal set by and for lower level management.

Characteristics of Well-Designed Goals

1. Written in terms of outcomes rather than actions.

2. Measurable and quantifiable

3. Clear as to a time frame

4. Challenging yet attainable

5. Written down.

6. Communicated to all necessary organizational members

Goal-Setting Process

1. Review the organization's mission, which is the purpose of an organization.

2. Evaluate available resources.

3. Determine the goals individually or with input from others.

4. Write down the goals and communicate them to all who need to know.

5. Review results to see whether goals are being met. Change, as needed

Goal Congruence - a condition where employees working in their own perceived best interest, make decisions that help meet the overall goals of the organization.

Goal-Setting theory – the proposition that specific goals increase performance and those difficult goals, when accepted, result in higher performance than do easy goals

Group is defined as two or more interacting and interdependent individuals who come together to achieve particular goals. Groups can either be formal or informal. Research shows that groups pass through a standard sequence of five stages: forming, storming, norming, performing, and adjourning.

- Command groups. These are the basic, traditional work groups determined by formal authority relationships and depicted on the organizational chart.

- Cross-functional teams. These bring together the knowledge and skills of individuals from various work areas in order to come up with solutions to operational problems.

- Self-managed teams. These are essentially independent groups that, in addition to doing their operating jobs, take on traditional management responsibilities such as hiring, planning and scheduling, and performance evaluations.

- Task forces. These are temporary groups created to accomplish a specific task. Once the task is complete, the group is disbanded.

Grapevine is an informal communication network among people in an organization.

Groupthink- A form of conformity in which group members feel extensive pressure to align

their options with other’s options.

Groupshift - A change in decision risk between the group’s decision and the individual decision that member within the group would make; can be either toward conservatism or greater risk.

Group cohesiveness- the degree to which members are attracted to a group and share the group's



Halo effect - When we form a general impression about a person on the basis of a single characteristic, such as intelligence, sociability, or appearance.

Hawthorn Studies at Western Electric (1927- 1932) a series of experiments that found that work groups significantly affected the way workers behave and perform.

Hedging means entering into a forward contract in order to protect the home currency value of foreign currency denominated assets and liabilities in their balance sheet.

- Money market hedge involves simultaneous borrowing and lending activities in two different currency.

- Currency Option Hedge is the hedging of foreign exchange exposure through speculation.

Herzberg's Motivation-Hygiene Theory: Frederick Herzberg's motivation-hygiene theory proposes that intrinsic factors are related to job satisfaction and motivation, whereas extrinsic factors are associated with job dissatisfaction.

Extrinsic factors that create job dissatisfaction were called hygiene factors. When these factors are adequate, people will not be dissatisfied, but they will not be satisfied (or motivated) either.

To motivate people on their jobs, Herzberg suggested emphasizing motivators, the intrinsic factors that increase job satisfaction.

Hofstede’s Cultural Dimensions

1. Power distance is “the extent to which less powerful members of institutions and organizations accept that power is distributed unequally.High power distance culture: (Malaysia, India, Mexico ) Low power distance culture: (USA, Denmark, Canada )

2. Uncertainty avoidance is the extent to which people feel threatened by ambiguous situations and have created beliefs and institutions that try to avoid these. High uncertainty avoidance : (Japan , German, Spain, etc) . Low uncertainty avoidance : (USA, UK, Denmark etc)

3. Individualism & Collectivism: Individualism is the degree to which people prefer to act as individual rather than as members of groups and look after themselves and their immediate family only. (Australia, Sweden etc). Collectivism is the tendency of people to belong to groups or collectives and to look after each other in exchange for loyalty.( Indonesia ,Pakistan )

4. Masculinity & Femininity: Masculinity is defined as a culture in which the dominant social values are success, money and things. (Germany, Japan etc). Femininity is defined as a culture in which the dominate social values are caring for others and the quality of life. (Norway, Finland) Holding company structure (also referred to as a conglomerate) is another type of divisional structure. Whereas SBUs are used to group similar divisions, the holding company structure is used to manage a portfolio of unrelated businesses.

Human Resource management (HRM) is the planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance and separation of human resources for the purpose of contributing to organizational, individual and societal objectives.

Human Resource Planning (HRP) The numbers and types of personnel are determined by the jobs, which need to be staffed. Job related information in the form of Job Analysis serves this purpose or use.


Idea champions actively and enthusiastically support new ideas, build support, overcome resistance, and ensure that innovations are implemented.

IMF: The international monetary fund is an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth and reduce poverty around the world.

Impression management is a direct and intentional effort by someone to enhance his or her image in the eyes of others.

Import tariff is a duty or tax levied against goods brought into a country.

Index numbers are statistical devices designed to measure the relative changes in the level of a certain phenomenon in two or more situations

Indifference curve shows different combinations of two commodities, which give the consumer an equal satisfaction.

Indifference Map is a group of indifference curves for two commodities showing different levels of satisfaction.

Inflation is the rise in the average level of prices for all goods and services in a particular time period, with a corresponding decline in the purchasing of the money.

Disinflation refers to a process of bringing down prices moderately from their high level.

Deflation means excessive fall in prices of goods and services and money incomes in factors of production.

Reflation means moderate degree of controlled inflation.

Stagflation- a situation when recession is accomplished by unemployment & high inflation.

Recession and Depression: recession is a situation in which GDP growth rate is negative for three consecutive quarters. If recession becomes worst it is called depression. Recession is common but depression is rare, both are generally come with deflation.

Initial Public Offering (IPO) Market- The market for stocks of companies that are in the process of going public.

Innovation is the process of taking a creative idea and turning it into a useful product, service, or work method. Types of innovation include Radical innovation, incremental innovation, technical innovation, managerial innovation, product innovation, process innovation.

Insurance is a written contract that transfer the risk of loss from the insured to the insurer, according to the terms specified in the contract.

Interest Rate Parity: A theory that difference in national interest rates for securities of similar risk and maturity should be equal to but opposite in sign to the forward exchange rate discount or premium for the foreign currency.

Interest Rate spread or bank spread: the difference between lending rate and borrowing rate.

Internal Rate of Return (IRR)- The discount rate that forces a project’s NPV to equal zero.

Internationalization reflects doing business in many countries of the world, but often limited to a certain region (e.g. Europe).

Interest group- a group organized by its members to attempt to influence business.

International Business consists of all commercial transactions- including sales, investments and transportation- that take place between two or more countries.

- Direct investment

- Portfolio investment

International Financial Management is concerned with the management of international business related financial functions i.e., finance decision and investment decision.

International Marketing is the process of planning and conducting transactions a cross national brooders to create exchanges that satisfy the objectives of individuals and organizations.

International Strategy- a firm without a strong emphasis on either differentiating their product and service offerings in order to adapt to local markets or lowering costs, is following an international strategy.

Intrapreneur is an entrepreneurial person employed by a corporation and encouraged to be innovative and creative.

Intrapreneurship or Corporate Renewal is the process by which large organizations seek to utilize, maintain or retain the edge in innovation and profit-making by asking employees to swamp business within the business.

Intuitive decision making is a subconscious process of making decisions on the basis of experience and accumulated judgment.

ISO 9000 is a series of international quality management standards established by the International Organization for Standardization that set uniform guidelines for processes to ensure that products conform to customer requirements. These standards cover everything from contract review to product design to product delivery.

ISO 9001 is related to design, development, production, installation and servicing. It is applicable to companies which are involved from designing of product to its final production.

ISO 9002 is related to production and installation. It is applicable to those companies that produce products on the basis of customers’ specification.

ISO 9003 is related to final inspection and test.

ISO 9004 is related to guidelines in quality management that should be considered in establishing and maintaining an effective quality system.

ISO 14000 is a set of standards for environmental performance.


Job is a ‘group of tasks to be performed every day.

Job Analysis is a process of studying and collecting information relating to operations and responsibilities of a specific job. The products of job analysis are job description, job specification and job evaluation.

Job Characteristics Model (JCM) can be described in terms of five core dimensions, defined as follows: 1. Skill variety 2. Task identity 3. Task significance 4. Autonomy 5. Feedback

Job Description implies objective listing of the job title, tasks, and responsibilities involved in a job.

Job Design to refer to the way tasks are combined to form complete jobs.

Job depth is the degree of control employees have over their work

Job enlargement is the reverse of Job simplification which aims at decreasing the complexity of a job. 

Job enlargement deals with assigning additional tasks and responsibilities for the employee and expects them to work better.

Job enrichment deals with improving the quality of job by assigning new responsibilities and increasing the autonomy.

Job evaluation means determination of relative worth of each job for the purpose of establishing wage and salary credentials.

Job involvement is the degree to which an employee identifies with his or her job, actively participates in it, and considers his or her job performance to be important to his or her selfworth.

Job rotation aims at shifting the jobs for an employee in required intervals in order to remove the boredom and create enough motivational levels to work for the organization.

Job satisfaction is an employee's general attitude toward his or her job. A person with a high level of job satisfaction holds positive attitudes toward the job, while a person who is dissatisfied with the job holds negative attitudes.

Job Scope—the number of different tasks required in a job and the frequency with which these tasks are repeated.

Job sharing—the practice of having two or more people split a full-time job.

Job simplification aims at decreasing the complexity nature of job by breaking down it into various tasks.

Job Specification involves listing of employee qualifications, skills and abilities required to meet the job description.

Just-in-time (JIT) is defined as “a philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity”.


Key success factor (KSF) is a factor that is necessary for a firm to compete effectively in a market niche.

Knowledge Management- Cultivating a learning culture where organizational members systematically gather knowledge and share it with others in the organization so as to achieve better performance.

Kaizen- A Japanese term which points at the importance of continuous improvement. The idea is that continuously taking small steps in improvements will be the key to long term success.

KANBAN: A card that signals the replenishment requirements in a production process.


Law is a standard or rule established by a society to govern the behaviours of its members.

Law of demand states that there is a negative or inverse relationship between the price and quantity demanded of a commodity over a period of time.

Laissez - Faire Leadership is a type of supervision in which the manager avoids power and responsibility by giving assignments and support but staying out of the group’s way.

Leader is someone who can influence others and who has managerial authority.

Transactional leaders who guide or motivate their followers in the direction of established goals by clarifying role and task requirements.

Transformational leaders inspire followers to transcend their own self-interests for the good of the organization and is capable of having a profound and extraordinary effect on his or her followers. These are transformational leaders.

Charismatic leader—an enthusiastic, self-confident leader whose personality and actions influence people to behave in certain ways.

Visionary leadership goes beyond charisma since it's the ability to create and articulate a realistic, credible, and attractive vision of the future that improves on the present situation.

Leading is the process of influencing people so that they will strive willingly and enthusiastically toward achievement of group goals.

Leader member exchange theory (LMX)- by George Graen and Fred Dansereau- Leaders create in-groups and out-groups, and subordinates with in-group status will have higher performance ratings, less turnover, and greater job satisfaction.

Leader participation model: developed by Victor Vroom and Phillip Yetton, which related leadership behavior and participation in decision making.

Least-preferred co-worker (LPC) Questionnaire: a questionnaire the measured whether a leader was task or relationship oriented.

Learning is any relatively permanent change in behavior that occurs as a result of experience.

Learning organization is an organization that has developed the capacity to continuously adapt and change because all members take an active role in identifying and resolving work-related issues.

Letter of credit (L/C) is a document issued by a banker on behalf of a customer authorizing payment to a supplier when the conditions specified in the document are met.

Liability of bank: What a bank owes including notably customer deposits. Bank’s most important liability is checkable deposit which is the part of the economy’s M1 money supply.

Largest liabilities include other types of deposit (saving deposit, certificate of deposit, and money market deposit)

Licensing is a method of entering foreign market in which the company enters into an agreements with a license in the foreign market, offering the right to use the manufacturing process, trademark, patent, trade secret or other item of value for a fee or royalty.

Line authority - unquestioned, direct authority to make decisions and take actions.

Linear programming is a mathematical device for solving the problems of optimization.

Liquidity Ratios- Ratios that show the relationship of a firm’s cash and other current assets to its current liabilities.

Locus of control is a personality attribute that measures the degree to which people believe they control their own fate


M1: Cash plus checking accounts deposit. It measures all currency in circulation, not in vaults.

M2: M1 plus saving account & money market accounts.

M3: M2 plus large deposit and other large long term deposit.

M0: Physical currency

Machiavellianism is pragmatic, maintains emotional distance, and believes that ends can justify means.

Macroeconomics studies aggregated indicators such as GDP, unemployment rates, and price indices to understand how the whole economy functions.

Maintenance is any activity designed to keep equipment and other assets in a satisfactory working condition. It has 2 types; repair and preventive maintenance.

Management is a set of activities (Including planning and decision making, organizing, leading and controlling) directed at an organization-resources (human, financial, physical and information)with the aim of achieving organizational goals in efficient and effective manner.

Manager is someone who works with and through other people by coordinating their work activities in order to accomplish organizational goals.

First-line managers are the lowest level of management and manage the work of nonmanagerial individuals who are involved with the production or creation of the organization's products.

Middle managers include all levels of management between the first-line level and the top level of the organization. These managers manage the work of first-line managers and may have titles such as department head, project leader, plant manager, or division manager.

Top managers are responsible for making organization-wide decisions and establishing the plans and goals that affect the entire organization.

Manager VS leader: Managers are appointed to their position. Their ability to influence is based on the formal authority inherent in that position. In contrast, leaders may either be appointed or emerge from within a work group. Leaders are able to influence others to perform beyond the actions dictated by formal authority

Management auditing means evaluating the quality of management and the quality of managing system.

Management by Exception (MBE): The idea that management should spend its valuable time concentrating on the more important items. The most critical or important issues will be determined by the management only. Decision support system is a tool that facilitates use of this concept.

Management by objectives (MBO) is a management system in which specific performance goals are jointly determined by employees and their managers, progress toward accomplishing these goals is periodically reviewed, and rewards are allocated on the basis of this progress.

MBO Program

1. The organization's overall objectives and strategies are formulated.

2. Major objectives are allocated among divisional and departmental units.

3. Unit managers collaboratively set specific objectives for their units with their managers.

4. Specific objectives are collaboratively set with all department members.

5. Action plans, defining how objectives are to be achieved, are specified and agreed upon by managers and employees.

6. The action plans are implemented.

7. Progress toward objectives is periodically reviewed, and feedback is provided.

Successful achievement of objectives is reinforced by performance-based rewards

Management by walking around (MBWA) is a phrase used to describe when a manager is out in the work area, interacting directly with employees, and exchanging information about what's

going on.

Management Control Report may be thought of a communication device for overseeing and rectification of actual performances from the standard and budgeted performances.

Management Control Systems (MCS) is a system which gathers and uses information to evaluate the performance of different organizational resources like human, physical, financial and also the organization as a whole considering the organizational strategies.

Management development is the process of developing and educating selected personnel in the knowledge, skills and attitudes needed to manage in future positions.

Managerial ethics are standards of behavior that guide managers in their work.

Management fad- management interest or practice for a period of time with exaggerated zeal or craze.

Management Functions Henri Fayol identifies five functions of management, viz. planning, organizing, commanding, coordinating and controlling. Luther Gulick states seven such functions under the catch word "POSDCORB' which stands for planning, organizing, staffing, directing, coordinating, reporting and budgeting. Warren Haynes and Joseph Massie classify management functions into decision-making, organizing, staffing, planning, controlling, communicating and directing. Koontz and O'Donnell divide these functions into planning organizing, staffing, directing and controlling.

Management Information Systems (MIS) is a formal system of gathering, integrating, comparing, analyzing and dispersing information internal and external to the enterprise in a timely, effective and efficient manner.

Management process is the set of ongoing decisions and work activities in which managers engage as they plan, organize, lead, and control.

Management Skills The ability to use knowledge, behaviour and attitudes to perform a task.

Research by Robert L. Katz found that managers need three essential skills or competencies.

Technical skills include knowledge of and proficiency in a certain specialized field, such as engineering, computers, accounting, or manufacturing. These skills are more important at lower levels of management since these managers are dealing directly with employees doing the organization's work.

Human skills involve the ability to work well with other people both individually and in a group. Because managers deal directly with people, this skill is crucial! Managers with good human skills are able to get the best out of their people.

Conceptual skills are the skills managers must have to think and to conceptualize about abstract and complex situations.

Management Roles Henry Mintzberg, a prominent management researcher, says that what managers do can best be described by looking at the roles they play at work. The interpersonal roles are roles that involve people (subordinates and persons outside the organization) and other duties that are ceremonial and symbolic in nature. The three interpersonal roles include being a figurehead, leader, and liaison. The informational roles involve receiving, collecting, and disseminating information. The three informational roles include a monitor, disseminator, and spokesperson. Finally, the decisional roles revolve around making choices. The four decisional roles include entrepreneur, disturbance handler, resource allocator, and negotiator.

Mass production- rapid manufacture of large quantities of goods accomplished through division of labor, specialization and standardization.

Maslow's Hierarchy of Needs Theory- There is a hierarchy of five needs—physiological, safety, social, esteem, and self-actualization; as each need is substantially satisfied, the next need becomes dominant.

Physiological needs: food, drink, shelter, sexual satisfaction, and other physical requirements.

Safety needs: security and protection from physical and emotional harm.

Social needs: affection, belongingness, acceptance, and friendship.

Esteem needs: internal esteem factors such as self-respect, autonomy, and achievement and external esteem factors such as status, recognition, and attention.

Self-actualization needs: growth, achieving one's potential, and self-fulfillment.

Master Production Schedule (MPS) formalizes the production plan and converts it into specific material and capacity requirements.

Market generally means a place or a geographical area, where buyers with money and sellers with their goods meet to exchange goods for money. In Economics market refers to a group of buyers and sellers who involve in the transaction of commodities and services.

Marketing – A social and managerial process whereby individuals and groups obtain what they need and want through creating and exchanging products and value with others.

Market value added (MVA) adds a market dimension because it measures the stock market's estimate of the value of a firm's past and expected capital investment projects.

Marketing Management is the art and science of choosing target markets and getting , keeping and growing customers through creating, delivering, and communicating superior customer value.

Matrix structure is an organizational structure that assigns specialists from different functional departments to work on one or more projects being led by project managers.

McGregor's Theory X and Theory Y

Theory X presents an essentially negative view of people. It assumes that workers have little ambition, dislike work, want to avoid responsibility, and need to be closely controlled to work effectively.

Theory Y offers a positive view. It assumes that workers can exercise self-direction, accept and actually seek out responsibility, and consider work to be a natural activity Means-Ends Chain means that higher-level goals, or ends, are linked to lower-level goals, which serve as the means for their accomplishment. In other words, the achievement of goals at a low level becomes the means to reach the goals at the next level (ends). And the accomplishment of goals at that level becomes the means to achieve the goals at the next level (ends).

Mechanistic organization is a rigid and tightly controlled structure. It's characterized by high specialization, rigid departmentalization, narrow spans of control, high formalization, a limited information network (mostly downward communication), and little participation in decision making by lower-level employees.

Merger is combining two or more business enterprises into a single entity.

Micro banking or microfinance a means of extending credit, usually in the form of small loans with no collateral, to nontraditional borrowers such as the poor in rural or undeveloped areas.

Micro economics is the study if particular firms or particular household, individual price, wage, industries and commodities.

Middle managers include all levels of management between the first-line level and the top level of the organization. These managers manage the work of first-line managers and may have titles such as department head, project leader, plant manager, or division manager.

Mission is the central guiding concept describing the fundamental reason for the existence of an organization.

Motivation is the willingness to exert high levels of effort to reach organizational goals, conditioned by the effort's ability to satisfy some individual need.

Early Theories of Motivation

Maslow's Hierarchy of Needs Theory

McGregor's Theory X and Theory Y

Herzberg's Motivation-Hygiene Theory

Modular organization type is actually a central hub surrounded by networks of outside suppliers and specialists that perform non-vital functions.

Monetary policy is a policy that employs the central bank’s control over the supply and cost of money as an instrument for achieving the objectives of economic policy.

Money Markets- The financial markets in which funds are borrowed or loaned for short periods (less than one year).

Money market instruments:

1. Treasury bill: a debt obligation of govt. by law with as original maturity of 1 year or less.

2. Commercial paper: a short-term debt obligation normally issued by accompany with a high credit rating.

Contemporary Theories of Motivation

Three- Needs Theory

Goal-Setting Theory

Reinforcement Theory

Equity Theory

Expectancy Theory

3. Bankers acceptance: a bank’s commitment to pay a stipulated amount of money on a specified future date under specified conditions.

4. Certificate of deposit: an interest bearing receipt for the deposit of funds in a bank for a stipulated time.

5. Repurchase agreement

6. Short term treasury notes and bonds

7. International emergency deposit

Monopoly is a market structure in which there is a single seller, there are no close substitutes for the commodity it produces and there are barriers to entry.

Multinational corporations (MNCs) are those organizations which maintain significant operations in multiple countries but are managed from a base in the home country. Sony, ExxonMobil.

Multidomestic Strategy- a firm whose emphasis is on differentiating their product and service offerings in order to adapt to local markets follows a multidomestic strategy.

Myers-Briggs Type Indicator

1. Social interaction: Extrovert or Introvert (E or I)

2. Preference for gathering data: Sensing or Intuitive (S or N)

3. Preference for decision making: Feeling or Thinking (F or T)

4. Style of making decisions: Perceptive or Judgmental (P or J)


National culture is the values and attitudes shared by individuals from a specific country that shape their behavior and their beliefs about what is important.

National Income is the value of final goods and services produced in a year.

Nationalization: The taking of property with or without compensation by the govt.

Nature of Management:

- Management is a universal process

- Management is goal oriented

- Management is a system of authority

Needs Theory: David McClelland and others have proposed the three-needs theory, which says there are three needs that are major motives in work. These three needs include

The need for achievement (nAch), which is the drive to excel, to achieve in relation to a set of standards, and to strive to succeed;

The need for power (nPow), which is the need to make others behave in a way that they would not have behaved otherwise; and

The need for affiliation (nAff), which is the desire for friendly and close interpersonal relationships.

Negotiation is the process of bargaining with one or more parties to arrive at a solution that is acceptable to all.

Negotiable Instrument means a written document which creates a right in favor of some person and which is freely transferable .i.e. promissory note, bill of exchange etc.

Net Present Value (NPV)- A method of ranking investment proposals using the NPV, which is equal to the present value of future net cash flows, discounted at the cost of capital.

Net national product = GNP -depreciation.

Norms are established or acceptable standards or expectations that are shared by the group's members.

Nominal group - a structured technique used to generate creative and innovative alternative or ideas.

Net worth- Total assets - total liabilities


Off –balance sheet Items: Off –balance sheet Items are those assets or liabilities which don’t appear on the balance sheet. For example:

1. Guarantees which are given by banks to company

2. L/C issued by banks to company

3. Litigation cost

4. Contingent Liabilities

Off –balance sheet financing: financing in which the assists and liabilities involved don’t appear on the firm’s balance sheet.

Off-shore Banking: A off- shore banking is bank located outside of the country of residence of the depositor. Example HSBC, Swissbank.

Oligopoly refers to a form of imperfect competition where there will be only a few sellers producing either homogenous or differentiated products.

Open-book management- a motivational approach in which an organization’s financial statements (the "books") are shared with the employees.

Operant conditioning is a type of behaviour in which desired voluntary behaviour leads to a reward or prevents a punishment.

Operations management refers to the design, operation, and control of the transformation process that converts such resources as labor and raw materials into goods and services that are sold to customers

Operation research is the application of scientific methods to the management and administration of organized military, governmental, commercial, and industrial processes.

Operating income: Operating income is the income that comes from a bank’s ongoing operation that income is generated from loans. Noninterest income of bank service charge of deposit account and off balance-sheet activities which generates from fees or trading profits for the bank.

Operating Expenses: The expenses incurred in conducting the banks ongoing operations. Major element is interest payment on its deposits. Noninterest expenses include the cost of running a banking business. Elements salaries of teller and officer, rent on bank building, purchase of equipment such as desks and bolds and service cost of equipment.

Opportunity Cost is the cost of choosing to use resources for a purpose, which results oon sacrificing the next best alternative for the use of those resources.

Organic organization which is as highly adaptive and flexible a structure as the mechanistic organization is rigid and stable. Rather than having standardized jobs and regulations, the organic organization is flexible, which allows it to change rapidly as needs require.

Organizing involves the process of determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made .

Organizational behavior (OB)- A field of study that investigates the impact that individuals, groups, and structure have on behavior within organizations, for the purpose of applying such knowledge toward improving an organization’s effectiveness. Organizational behavior focuses primarily on two major areas. First, OB looks at individual behavior. Second, OB is concerned with group behavior, which includes norms, roles, team building, leadership, and conflict.

Organizational change is any alterations in people, structure, or technology.

External Forces Internal Forces


Governmental laws and regulations


labor markets

Economic changes



Employee attitude

Types of Change

- Changing structure includes any alteration in authority relations, coordination mechanisms, degree of centralization, job redesign, or similar structural variables.

- Changing technology encompasses modifications in the way work is performed or the methods and equipment that are used.

- Changing people refers to changes in employee attitudes, expectations, perceptions, and behavior.

Why do people resist Change? Techniques for Reducing Resistance

- Ambiguity and uncertainty

- Fear of losing something already possessed

- Person's belief that the change is incompatible with the goals and interests of the organization

- Education and Communication

- Participation

- Facilitation and Support

- Negotiation

- Manipulation and Cooptation

- Coercion

Organizational citizenship behavior (OCB) is discretionary behavior that is not part of an employee's formal job requirements but that nevertheless promotes the effective functioning of the organization.

Organizational commitment represents an employee's orientation toward the organization in terms of his or her loyalty to, identification with, and involvement in the organization.

Organizational culture is a system of shared meaning and beliefs held by organizational members that determines, in large degree, how they act. Strong cultures—cultures in which the key values are deeply held and widely shared—have a greater influence on employees than do weak cultures. Employees Learn Culture: stories, rituals, symbols, and language.

Organizational development (OD) focuses on techniques or programs to change people and the nature and quality of interpersonal work relationships.

Organizational design a process that involves decisions about six key elements: work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization.

Organizational effectiveness is a measure of how appropriate organizational goals are and how well an organization is achieving those goals.

Organizational performance—the accumulated end results of all the organization's work processes and activities.

Organizational socialization is the process that employees go through to adapt to an organization's culture.

Organizational strategies include strategies at the corporate level, business level, and functional level.

Organizational structure is the formal framework by which job tasks are divided, grouped, and coordinated. Appropriate structure depends on four contingency variables: the organization's strategy, size, technology, and degree of environmental uncertainty.

Over-the-Counter (OTC)- Market A large collection of brokers and dealers, connected electronically by telephones and computers, that provides for trading in unlisted securities.


Parochialism views the world solely through its own eyes and perspectives.

Partnership is an association of people, usually 2-20 person, who carry on business together for the purpose of making profit. For bank 2-10 person.

Path-Goal Model: Developed by Robert House, which states that it's the leader's job to assist his or her followers in attaining their goals and to provide the direction or support needed to ensure that their goals are compatible with the overall objectives of the group or organization. House identified four leadership behaviors: Directive leader, Supportive leader, Participative leader,

Achievement-oriented leader.

Planning function involves the process of defining goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate activities.

Per capita income - A nation’s or other geographic market’s total income divided by the number of persons in its population.

Perception is a process by which individuals give meaning to their environment by organizing and interpreting their sensory impressions.

PERT network is a flowchart like diagram that depicts the sequence of activities needed to complete a project and the time or costs associated with each activity.

- Events are end points that represent the completion of major activities.

- Activities represent the time or resources required to progress from one event to another.

- Slack time is the amount of time an individual activity can be delayed without delaying the whole project.

- Critical path is the longest or most time-consuming sequence of events and activities in a PERT network

Personality is the unique combination of the psychological traits that affect how a person reacts and interacts with others.

Point-of-sale (POS) - A data collection system that electronically receives and stores bar code information derived from a sales transaction. This could the zip codes for library users, facilitating the library in determining geographic market are that users reside in.

Policy is a guideline to channel a manager's thinking in a specific direction.

Polycentric predisposition make strategic decisions tailored to suit the cultures of the countries where the MNC operates.

Political risk- confiscation, expropriation, domestication.

Planning involves defining the organization's goals, establishing an overall strategy for achieving those goals, and developing a comprehensive set of plans to integrate and coordinate organizational work.

- Strategic Plans are plans that apply to the entire organization, establish the organization's overall goals, and seek to position the organization in terms of its environment.

- Operational Plans specify the details of how the overall goals are to be achieved.

- Long term plans are those plans with a time frame beyond 3 years.

- Short-Term Plans as those covering one year or less.

- Specific plans are clearly defined and leave no room for interpretation.

- Directional plans are flexible plans that set out general guidelines.

- Single-use plan is a one-time plan specifically designed to meet the needs of a unique situation.

- Action plan- a plan used to operationalize any other kind of plan.

- Reaction plan-a plan developed to react to an unfortunate circumstances.

- Standing plans are ongoing plans that provide guidance for activities performed repeatedly , it include policies, rules, and procedures

Power- the capacity of leader to influence work actions or decisions

Legitimate power and authority are the same. Legitimate power represents the power a leader has as a result of his or her position in the organization.

Coercive power is the power that rests on the leader's ability to punish or control.

Reward power is the power to give positive benefits or rewards.

Expert power is influence that's based on expertise, special skills, or knowledge.

Referent Power is the power that arises because of a person's desirable resources or personal traits.

Purposes of planning:

 Planning gives direction, reduces the impact of change, minimizes waste and redundancy, and sets the standards used in controlling

 Planning establishes coordinated effort

 Planning also reduces uncertainty by forcing managers to look ahead, anticipate change, consider the impact of change, and develop appropriate responses

 Planning reduces overlapping and wasteful activities.

 Planning establishes goals or standards that are used in controlling

Price discrimination means the practice of selling the same commodity at different prices to different buyers.

Primary data: Those data which do not already exist in any form, and thus have to be collected for the first time from the primary source(s).

Primary Markets- Markets in which corporations raise capital by issuing new securities.

Primary Reserve: absolutely non- earning liquid asset held by a bank. Such As: Cash in hand of bank, Cash reserved in vault of bank, Cash holding with central bank, Demand deposit with other bank. Secondary reserve: the aggregate of highly liquid earning assets.

Types of primary reserve:

1. Legal reserve: that portion of primary reserve which the law requires a bank to maintain.

2. Working reserve: cash reserve maintained in excess of the legal minimum reserve to meet depositor claims to satisfy credit needs of the community and to provide protection against unforeseen withdrawals.

Private Public Partnership (PPP). Private public partnership is a long term partnering relationship between the public & private sectors to deliver services. Through PPP , the public sector seeks to bring together the expertise and resources of the public and private sectors to provide service to the public at the best value for money. There are many possible PPP models including joint venture ,strategic partnership to make better uses of govt. assets.

Principles of Management by Henry Fayol- Father of Modern Management

1. Division of Work

2. Authority

3. Discipline:

4. Unity of command

5. Unity of direction

6. Subordination of individual interest

7. Remuneration

8. Centralization.

9. Scalar chain: A hierarchy is necessary for unity of direction.

10. Order

11. Equity

12. Stability of tenure of personnel:

13. Initiative:

14. Espirit De Corps: Management must for her morale of its employees.

Privatization: the act of returning state owned or state run companies back to the private sector ,usually by selling them off.

Probability is a quantitative measure of uncertainty - a number that conveys the strength of our belief in the occurrence of an uncertain event.

Problem is a discrepancy between an existing and a desired state of affairs.

Problems and Decisions

-Well-structured problems are straightforward, familiar, and easily defined problems

- Programmed decision are repetitive and routine and to the extent that a definite approach has been worked out for handling them.

-Unstructured problems are problems that are new or unusual and for which information is ambiguous or incomplete. For example, the selection of an architect to design a new corporate manufacturing facility in Bangkok is an example of a unstructured problem.

-Nonprogrammed decisions are unique and nonrecurring. It requires a custom-made response through nonprogrammed decision making is a series of interrelated sequential steps that a manager can use for responding to a structured problem. For instance, a purchasing manager receives a request from the sales department for 15 Palm Pilots for use by the company's customer service representatives. The purchasing manager knows that there is a definite procedure for handling this decision.

Product- A bundle of attributes or features, functions, benefits and uses capable of exchange, usually in tangible or intangible forms.

Product mix - The full set of products offered by an organization e.g., books, videos, etc.

Product life cycle - The four stages products go through from birth to death: introductory, growth, maturity, and decline.

Production planning is the determination of activities to be discharged to transform inputs into outputs.

Productivity is an economic measures of efficiency those summaries the value of outputs relative to the value of inputs used to create them.

Project is any series of activities and tasks that have a specific objective to be completed within certain specification, have defined start and ending dates, have funding limit.

Project management can be defined as the planning , directing and controlling of resources to meet the technical cost and time constraints of the project.

Projection- Attributing one’s own characteristics to other people.

Promissory Note/ Pro note/ Hand Note - a promissory note is an instrument I writing containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person, or to the bearer of the instruments.

Porter’s Five Forces Model of Industry Competition

Project is a one-time-only set of activities that has a definite beginning and ending point in time.

Project management is the task of getting a project's activities done on time, within budget, and according to specifications.

Process production, includes continuous-process production.

Protectionism is a state of commercial policy that draws restriction on foreign trade for safeguarding local infant industries from hyper competitive giant industries.

Price- Price is the amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefit of having or using the product or service.

Purchasing power parity is the number of units of a country’s currency required to buy the same amounts of goods and services in the domestic market that one unit of income would buy in the other country. PPP was developed by Swedish economist Gustav Cassel in 1918.


Quantity of work life (QWL) - management programs that increase outcomes such as productivity or performance by better management of jobs, people, and working conditions.

Quality is the ability of a product or service to reliably do what it's supposed to do and to satisfy customer expectations.

Product Quality Dimensions

1. Performance—Operating characteristics

2. Features—Important special characteristics

3. Flexibility—Meeting operating specifications over some period of time

4. Durability—Amount of use before performance deteriorates

5. Conformance—Match with preestablished standards

6. Serviceability—Ease and speed of repair or normal service

7. Aesthetics—How a product looks and feels

8. Perceived quality—Subjective assessment of characteristics (product image)

Service Quality Dimensions

i. Timeliness—Performed in promised period of time

ii. Courtesy—Performed cheerfully

iii. Consistency—Giving all customers similar experiences each time

iv. Convenience—Accessibility to customers

v. Completeness—Fully serviced, as required

vi. Accuracy—Performed correctly each time

Quality Circle- A work group of 8 to 10 employees, who meet regularly to discuss their quality problems, investigate causes, recommend solutions, and take corrective actions.

Quality Culture is an organizational value system that results in an environment that is conducive to the establishment and continual improvement of quality , consisting of values , traditions , procedures and expectations that promote quality.

Quality function deployment (QFD) is a comprehensive quality system that systematically links the needs of the customer with various business functions and organizational processes, such as marketing, design, quality, production etc, aligning the entire company toward achieving a common goal.

Quality leadership is perceived as encouraging the commitment of all stakeholders and establishing a knowledge base for the people so that they can learn to deliver the continued and improved quality of services, in all dimensions.

Queuing Theory is a quantitative technique useful for determining the optimum number of service facilities.

Quick (Acid Test) Ratio- This ratio is calculated by deducting inventories from current assets and then dividing the remainder by current liabilities.

Quotas are a quantity control on imported goods.


Rational decision making means that manager makes consistent, value-maximizing choices within specified constraints.

Recruitment –searching for and obtaining potential job candidates in sufficient numbers for and quality so that the organization can select the most appropriate persons for its job needs.

Reengineering- the radical redesign of all aspects of a business to achieve major gains in cost, service or time.

Regiocentric predisposition leads a firm to try to blend its own interests with those of its subsidiaries on a regional basis.

Regression refers to the statistical technique that establish a relationship between a dependent variable and one or more independent variables. Equation : Y= a+bx.

Reinforcement Theory- reinforcement theory says that behavior is a function of its consequences. Reinforcement theory argues that behavior is externally caused. What controls behavior are Reinforcers, consequences that, when given immediately following a behavior, increase the probability that the behavior will be repeated.

Related diversification is when a company grows by merging with or acquiring firms in different but related industries.

Repo Rate: Repurchase Agreement (repo) rate is the discount rate at which a central bank repurchases government securities from commercial banks. Depending on the level of money supply it decides to maintain in the country's monetary system. To temporary expand the money supply the central bank decreases repo rate so that banks can swap their holdings of government securities for cash. To contract money supply it increase repo rate. Current repo rate 7.25%

Reverse Repo Rate: the rate at which the central bank borrows money from commercial bank. Current Reverse Repo rate 5.25%

Responsibility is the obligation or expectation to perform.

Responsibility centre is an organization unit that is headed by a manager who is responsible for its objectives. Types of responsibility centre include expense/cost centre, revenue centre, profit centre and investment centre.

Revenue Centre is a segment of an organization that is responsible only for the revenues it earns.

Profit Centre is a segment of an organization that has the authority to incur and control cost and to control the revenues it earns.

Expense/Cost Centre is a segment of an organization that has the authority to incur and control cost.

Investment centre is a segment of an organization that has the authority to incur and control cost, earn revenues and control investment in assets.

Report is a medium of communication which is prepared for identifying deviations of the actual performance from the standard performance.

Resources are the assets of the organization and include financial (debt, equity, retained earnings, and other financial holdings); physical (equipment, buildings, raw materials, or other tangible assets); human (experiences, skills, knowledge, and competencies of people); intangible (brand names, patents, reputation, ); and structural/cultural (history, culture, work systems, working relationships, level of trust, policies, and structure).

Tangible resources are assets that are relatively easy to identify and include financial, physical, organizational, and technological resources that an organization uses to create value for its customers

Intangible resources are much more difficult for competitors to account for or imitate. These include human resources, innovation resources, and reputation resources.

Return on investment (ROI) is the ratio between income and assets employed.

Risks are those conditions in which the decision maker is able to estimate the likelihood of certain alternatives or outcomes.

Role refers to a set of expected behavior patterns attributed to someone who occupies a given position in a social unit.

Rule is an explicit statement that tells a manager what he or she can or cannot do. For example, rules about lateness and absenteeism permit supervisors to make disciplinary decisions rapidly and with a relatively high degree of fairness.


Satisficing suggests that rather than conducting and exhaustive search for the best possible alternative , decision makers tend to search only until they identify an alternative that meets some minimum standard of sufficiency.

Scenario is a consistent view of what the future is likely to be.

Scheduling is detailing what activities have to be done, the order in which they are to be completed, who is to do each, and when they are to be completed. Some useful scheduling devices are Gantt charts, load charts, and PERT network analysis.

Scientific management - the scientific study and breakdown of work into its smallest mechanical elements and then rearranging into their most efficient combination.

Secondary data: they already exist in some form: published or unpublished in an identifiable secondary source.

Secondary Markets- Markets in which securities and other financial assets are traded among investors after they have been issued by corporations.

Selection – Defined as the process of gathering information for the purposes of evaluating and deciding who should be employed in particular jobs.

Self-Actualization- The drive to become what one is capable of becoming.

Self-esteem -People differ in the degree to which they like or dislike themselves.

Self-efficacy refers to an individual's belief that he or she is capable of performing a task.

Self-Monitoring refers to an individual's ability to adjust his or her behavior to external, situational factors.

Sequencing problem is a problem in which it is necessary to determine the orders or sequences of jobs in which they should be performed as to minimize the total effectiveness or the sum of the pertinent costs.

Shadow banking: Shadow banking is any lending or borrowing that takes place outside banking system. It is a collection of non-bank financial intermediaries that services similar to bank.

Shadow Price: Shadow price is a proxy value of goods that does not reflect the actual value of goods. It is used when no market value for a good exists. Shadow price is often defined by what an individual must give up to gain an extra unit of the goods.

Simple structure is an organizational design with low departmentalization, wide spans of control, authority centralized in a single person, and little formalization.

Simulation is a method of learning about a real system by experimenting with a model that represents the system.

Six Ms concept: 1. Men 2. Machine 3. Market 4. Method 5. Money 6. Materials

Six Sigma is a quality standard that establishes a goal of no more than 3.4 defects per million units or procedures. Motorola popularized the use of stringent quality standards more than 30 years ago through a trademarked quality improvement program.

SME: SME stands for Small and Medium Enterprise, a business that maintains revenues on a number of employees below a certain level. SME are recognized as an engine of economic growth and employment generation for sustainable industrialization in both developed and developing countries.

Social Business: Social business day is 28 June. Social business is a non loss non dividend company designed to address a social objective with highly reputed market place of today. It is different from non profit because the business should seek to generate a modest profit but this will be used to expand the company’s reach improve the product or service.

Seven principles of social business:

1. Business objectives will be overcome poverty or one or more problem (Education, health, technology and environment) which threaten people and society; Not profit maximization

2. Financial and economic sustainability.

3. Investors get back their invested amount, no dividend is given.

4. When invested is paid back, company profits stays with the company for expansion and improvement.

5. Environmentally conscious.

6. Work force gets market wage with better working condition.

7. Do it with joy.

Social learning theory -Individuals also can learn by observing what happens to other people and just by being told about something as well as by direct experiences. This view that we can learn both through observation and direct experience.

- Attentional processes. People learn from a model only when they recognize and pay attention to its critical features. We tend to be most influenced by models who are attractive, repeatedly available, thought to be important, or are seen as similar to us.

- Retention processes. A model's influence will depend on how well the individual remembers the model's action, even after the model is no longer readily available.

- Motor reproduction processes. After a person has seen a new behavior by observing the

model, the watching must become doing. This process then demonstrates that the

individual can actually do the modeled activities.

- Reinforcement processes. Individuals will be motivated to exhibit the modeled behavior if positive incentives or rewards are provided. Behaviors that are reinforced will be given more attention, learned better, and performed more often.

Social loafing- the tendency for individuals to expend less effort when working collectively than when working in group.

Social Obligation is the obligation of a business to meet its economic and legal responsibilities.

Social responsibility as a business firm's obligation, beyond that required by law and economics, to pursue long-term goals that are good for society.

-The classical view holds that management's only social responsibility is to maximize profits.

- The socioeconomic view is the view that management's social responsibility goes beyond making profits to include protecting and improving society's welfare.

Span of control is important because, to a large degree, it determines the number of levels and managers an organization has.

Simplification is the process of exhibiting the same orientation toward different cultural groups.

Situational Leadership Theory (SLT) : Paul Hersey and Ken Blanchard have developed a leadership theory that has gained a strong following among management development specialists. This model called situational leadership theory (SLT) is a contingency theory that focuses on followers' readiness. 

Hersey and Blanchard argue that successful leadership is achieved by selecting the right leadership style, which is contingent on the level of the followers' readiness.

Staff authority- an advisory authority in which a person studies a situation and makes recommendations but has no authority to take actions.

Stakeholders are any constituencies in the organization's external environment that are affected by the organization's decisions and actions

Statistical Quality Control (SQC)- a set of specific statistical techniques that can be used to monitor quality includes acceptance sampling and in-process sampling.

Statistical Process Control (SPC) is a technique for checking whether or not a product or service is conforming to its design specification, by means of sampling during production or delivery.

Status is a prestige grading, position, or rank within a group.

Statutory Liquidity Ratio: Amount of liquid assets such as cash, precious metals or other approved securities that a financial institution must maintain as reserves other than cash with the central bank. SLR 19%.

Stereotyping- When we judge someone on the basis of our perception of a group he or she is part of.

Strategy is a comprehensive plan for accomplishing an organization’s goal.

Strategic business units (SBU) single businesses of an organization in several different businesses that are independent and that formulate their own strategies are often called.

Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.

Strategic management Process:

1: Identifying the Organization's Current Mission, Objectives, and Strategies Step

2: Analyzing the Environment Step

3: Identifying Opportunities and Threats Step

4: Analyzing the Organization's Resources and Capabilities Step

5: Identifying Strengths and Weaknesses Step

6: Formulating Strategies Step

7: Implementing Strategies

8: Evaluating result

Strategic alliances are partnerships between an organization and a foreign company in which both share resources and knowledge in developing new products or building production facilities. The partners also share the risks and rewards of this alliance. For example, IBM of the United States, Toshiba of Japan, and Siemens of Germany formed a partnership to develop new generations of computer chips.

Stress is a dynamic condition a person faces when confronted with an opportunity, constraint, or demand related to what he or she desires and for which the outcome is perceived to be both uncertain and important.

Supply Chain Management- The design and management of seamless, value-added process across organizational boundaries to meet the real needs of the end customer .

Statistics is a science that deals with the methods of collecting, classifying, presenting, comparing and interpreting numerical data collected to throw some light on any sphere of enquiry

Stereotyping- When we judge someone on the basis of our perception of a group he or she is part of. Subsidy is a “financial contribution provided directly or indirectly by a government and which confers a benefit.”.

Supply means the goods offered for sale at a price during a specific period of time.

Supply Chain- The supply chain denotes the process by which components are moved and produced from raw material to the ultimate consumer.

SWAP is an agreement between two companies to exchange cash flows in the future. It defines the date when cash flows are to be paid and the way of calculation of cash flows.

- Interest rate SWAP involves the exchange of interest payments.

- Currency SWAP involves two different currencies, where two currencies are exchanged in the beginning , again, at maturity , two currencies are re-exchanged.

- Equity SWAP is used when the return from investment in equity is highly volatile.

SWOT analysis - An examination of the internal factors of a company to identify strengths and weaknesses, and the external environment to identify opportunities and threats.

SWIFT- Society For Worldwide Inter-bank Financial Telecommunication- a member owned cooperative through which financial world conducts its business operation with speed.

Syndicate is an association of two or more businesses joined together to accomplish specific business goals.

Synergy - two or more subsystems working together to produce more than the total of what they might produce working individually.

System is a set of interrelated and interdependent parts arranged in a manner that produces a unified whole. The two basic types of systems are closed and open. Closed systems are not influenced by and do not interact with their environment. In contrast, open systems dynamically interact with their environment.


Tactics are the action plans by which strategies are implemented.

Tariff, derived from a French word meaning rate, price, or list of charges, is a customs duty or a tax on products that move across borders.

Tax is a compulsory contribution from the person to the State to defray the expenditure incurred in the common interest of all without any reference to the special benefits conferred.

Taylor's Four Principles of Management

1. Develop a science for each element of an individual's work, which will replace the old rule-of-thumb method.

2. Scientifically select and then train, teach, and develop the worker. (Previously, workers chose their own work and trained themselves as best they could.)

3. Heartily cooperate with the workers so as to ensure that all work is done in accordance with the principles of the science that has been developed.

4. Divide work and responsibility almost equally between management and workers.

Management takes over all work for which it is better fitted than the workers

Team is a group of people whose members work intensely on a specific, common goal using their positive synergy, individual and mutual accountability and complementary skills. Types

o Process improvement teams

o Cross functional teams

o Natural work teams

o Self- managed teams

Team-based structure is the entire organization is made up of work groups or teams that perform the organization's work.

Techniques for Assessing The Environment: Environmental Scanning, Forecasting, Benchmarking

Techniques For Allocating Resources: Budgeting, Scheduling, Breakeven Analysis, Linear Programming

Terms of trade (TOT) of a nation are defined as the ratio of the price of its export commodity to the price of its import.

Three sixty (360) degree feedback- a performance appraisal system in which managers are evaluated by everyone around them- their boss, peers, and subordinates.

Theory X presents an essentially negative view of people. It assumes that workers have little ambition, dislike work, want to avoid responsibility, and need to be closely controlled to work effectively.

Theory Y offers a positive view. It assumes that workers can exercise self-direction.

Theory Z - refers to selected Japanese managerial practices adapted to the environment of USA as suggested by William Ouchi.

Time Series- A series of observations, on a variable, recorded after successive intervals of time The successive intervals are usually equal time intervals, e.g., it can be 10 years, a year, a quarter, a month, a week, a day, and an hour, etc. Components of time series: trend, cycle, irregular and seasonal.

Total quality tools:

Top managers are responsible for making organization-wide decisions and establishing the plans and goals that affect the entire organization.

TQM refers to long term commitment to continuously quality improvement throughout the organization and with the active participation of all members at all levels and all types to meet and exceed the customer expectation.

TQM gurus are (i) Walter A Shewhart (ii) W. Edwards Demings (iii) Joseph M. Juran (iv) Armand V. Feigenbum (v) Philip B Crosby (vi) Kaoru Ishikawa (vii) Genichi Taguchi (viii) Shiego Shingo

Traditional Goal Setting is that goals are set at the top and then broken down into sub goals for each level of the organization

Trait Theory: This theory derives this belief from the philosophy of ancient Greeks and Romans that leaders are born and not made . Six traits associated with effective leadership included drive, the desire to lead, honesty and integrity, self-confidence, intelligence, and job-relevant knowledge.

Training is a learning experience in that it seeks a relatively permanent change in an individual that will improve the ability to perform on the job.

Transnational corporation (TNC)—a company that maintains significant operations in more than one country but decentralizes management to the local country. NestlĂ©.

Transnational Strategy- Multinational firms following a transnational strategy strive to optimize the tradeoffs associated with efficiency, local adaptation, and learning. It seeks efficiency not for its own sake, but as a means to achieve global competitiveness.

Transactional leaders who guide or motivate their followers in the direction of established goals by clarifying role and task requirements.

Transfer price is the price that one unit of an organization charges another unit of the same organization for a product or service. 

Methods of transfer pricing includes: variable cost/ incremental cost, full cost, cost plus a mark up, external market price, negotiable price.

Transformational leaders inspire followers to transcend their own self-interests for the good of the organization and is capable of having a profound and extraordinary effect on his or her followers. These are transformational leaders.

Transportation model deals with the situation in which a particular commodity shipped from sources to destinations in a such a way that the transportation cost is minimum, while satisfying both the supply limits and the demand requirements.

Transshipment problem deals with how to transship a commodity from source to source, or source to destination or destination to destination.

Treasury bill: A short term non coupon bearing instrument issued by the government to finance its debt. Maturity is less than one year from its issue date.

Treasury bond: A long term coupon bearing instrument issued by the government to finance its debt. Maturity is more than 10 years from its issue date which promise investors a fixed rate of return

Treasury note: A long term coupon bearing instrument issued by the government to finance its debt. Maturity is 1-10 year from its issue date which promises investors a fixed rate of return.

Type A’s

1. are always moving, walking, and eating rapidly;

2. feel impatient with the rate at which most events take place;

3. strive to think or do two or more things at once;

4. cannot cope with leisure time;

5. are obsessed with numbers, measuring their success in terms of how many or how much of everything they acquire.

Type B’s

1. never suffer from a sense of time urgency with its accompanying impatience;

2. feel no need to display or discuss either their achievements or accomplishments;

3. play for fun and relaxation, rather than to exhibit their superiority at any cost;

4. can relax without guilt.


Unit production, described the production of items in units or small batches.

Unity of command: Each worker should have only one boss with no other conflicting lines of


Unity of direction: People engaged in the same kind of activities must have the same objectives in a single plan.

Uncertainty is a situation in which a decision maker has neither certainty nor reasonable probability estimates available.

Unrelated diversification is when a company grows by merging with or acquiring firms in different and unrelated industries.

Utility is defined as the power of a commodity or a service to satisfy a human want.

Utility or preference theory states that individual attitudes toward risk vary. Some people are willing to take smaller amount of risk (risk avoiders) and some others are willing to take greater risks (gamblers)


Values are basic convictions that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence.

Terminal Values- Desirable end-states of existence; the goals that a person would like to achieve during his or her lifetime.

Instrumental Values- Preferable modes of behavior or means of achieving one’s terminal values.

Value is the performance characteristics, features and attributes, and any other aspects of goods and services for which customers are willing to give up resources (usually money).

Values-based management is an approach to managing in which managers establish, promote, and practice an organization's shared values.

Value chain is the entire series of organizational work activities that add value at each step beginning with the processing of raw materials and ending with finished product in the hands of end users.

Value Chain Analysis views the organization as a sequential process of value-creating activities.

Value chain management is the process of managing the entire sequence of integrated activities and information about product flows along the entire value chain.

Vertical Integration represents an expansion or extension of the firm by integrating preceding or successive productive processes.

Visionary leadership goes beyond charisma since it's the ability to create and articulate a realistic, credible, and attractive vision of the future that improves on the present situation.


Window Dressing- Techniques employed by firms to make their financial statements look better than they really are.

Whistle - Blower is an employee who informs superiors, media or the government regulatory agency about unethical behaviour within an organization.

WB: The World Bank is actually comprised of five separate arms. These are IBRD, IDA, IFC, and MIGA & ICSID. The two arms IBRD & IDA work primarily with government and together are commonly known as World Bank. Two other arms IFC & MIGA directly support private business investing in developing countries. The fifth arm ICSID which arbitrates disagreement between foreign investor & governments.

Difference between WB & IMF:

1.IMF concerns itself with macroeconomic issue such as balance of payment issues, international trade policy and exchange rates, The WB is to deal with issues more related to structure within a country as how and what the government spends money on financial institution labor market and trade policy. WB concern itself more with development projects such as dam construction, building roads, schools and hospital etc.

2. IMF provides short term loans to develop the cyclical disturbance in economy where as WB provides a long term loan for distressed economy.

3. IMF oversees the monetary system of the world and adds to the currency reserve of its member countries through allocation of SDR. Assists all its members that are in temporary balance of payment difficulties by providing short term credit.

Working Capital- the part of the capital of a company that is employed in its day-to-day trading operation. It consists of current assets ( trading stock, debtors and cash) minus current liabilities (trade creditors)

Workforce Diversity a workforce that's more heterogeneous in terms of gender, race, ethnicity, age, and other characteristics that reflect differences.

Work specialization describe the degree to which tasks in an organization are divided into separate jobs.

Work Teams are formal groups made up of interdependent individuals who are responsible for the attainment of a goal. The four most common types of teams are functional teams, selfmanaged teams, virtual teams, and cross-functional teams.

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Important HRM terms / HRM Glossary

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What is HRM? importance of HRM.

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