Glossary & formula sheet

Part A — Glossary (plain-English definitions)

Ansoff Matrix — a 2×2 grid of growth strategies: market penetration, market development, product development, diversification.

Autocratic leadership — the leader decides alone and gives orders.

Batch production — making groups of identical products, then switching.

BCG (Boston) Matrix — a grid classifying products by market share and market growth: stars, cash cows, question marks, dogs.

Break-even point — the output where total revenue equals total cost (zero profit).

Budget — a financial plan for future income and spending.

Buffer (minimum) inventory — safety stock held for emergencies.

Capacity utilisation — actual output ÷ maximum capacity × 100.

Capital-intensive — using more machines than people.

Cash flow forecast — an estimate of future cash inflows and outflows.

Centralisation — decisions made at the top of the organisation.

Competitive advantage — anything that lets a business outperform rivals.

Contribution per unit — selling price minus variable cost per unit.

Core competency — something the business does better than rivals.

Corporate governance — the rules and systems by which a company is directed and controlled.

Corporate social responsibility (CSR) — acting responsibly toward society and the environment.

Cost leadership — being the lowest-cost producer.

Decentralisation — decisions pushed down to lower levels.

Delegation — passing authority down while staying accountable.

Democratic leadership — the leader consults the team and shares decisions.

Differentiation — making a product different and more valuable.

Diseconomies of scale — rising unit costs when a firm grows too big.

Diversification — expanding into new products, industries or regions.

Economies of scale — lower unit costs from producing on a larger scale.

Equity theory — people compare their effort–reward ratio with others; unfairness demotivates.

Expectancy theory — motivation depends on believing effort → performance → reward, and valuing the reward.

External growth — growing by joining another business (merger, takeover, JV, alliance).

Extrinsic rewards — rewards from outside, like money.

Fixed costs — costs that do not change with output.

Flow production — continuous production on a line.

Full costing — allocating all costs (fixed and variable) to the product.

Gearing — how much a business relies on debt (debt-to-equity ratio).

Grapevine — informal word-of-mouth communication.

Hygiene factors (Herzberg) — factors whose absence causes dissatisfaction (e.g. pay, conditions).

Integrated marketing communications (IMC) — using all promotion tools with one consistent message.

Intrinsic rewards — rewards from inside, like satisfaction and pride.

Job production — making one-off custom products.

Joint venture — two firms create a new separate business together.

Just-In-Time (JIT) — holding minimal stock, with supplies arriving just in time.

Labour-intensive — using more people than machines.

Laissez-faire leadership — the leader gives freedom and little direction.

Lead time — time between ordering and receiving stock.

Limited liability — owners only lose what they invested.

Margin of safety — actual output minus break-even output.

Marginal (contribution) costing — charging only variable costs to the product.

Market development — selling existing products in new markets.

Market penetration — selling more of existing products in existing markets.

Market share — firm’s sales ÷ total market sales × 100.

Marketing concept — find out customer needs first, then make and sell to satisfy them.

Mechanistic structure — rigid, tall, centralised, rule-based.

Mission — why the business exists. Vision — where it wants to be. Values — what it stands for.

Motivators (Herzberg) — factors that genuinely motivate (achievement, recognition, responsibility).

Multinational (MNC) — a business operating in more than one country.

Net Present Value (NPV) — present value of future cash flows minus initial investment.

Organic growth — growing using the business’s own resources.

Organic structure — flexible, flat, decentralised, informal.

Outsourcing — contracting another firm to do work you did yourself.

Off-shoring — moving business activities to another country.

Paternalistic leadership — the leader acts like a caring parent.

Payback — time taken to recover the initial investment.

PDCA (Plan-Do-Check-Act) — a continuous quality-improvement cycle.

Penetration pricing — a low launch price to win share.

Perceptual map — a diagram plotting products on two axes (e.g. price vs quality).

PESTLE — external factors: Political, Economic, Socio-cultural, Technological, Legal, Ecological.

Porter’s Five Forces — rivalry, new entrants, substitutes, buyer power, supplier power.

Price skimming — a high launch price to recover costs early.

Primary research — new data collected first-hand.

Product life cycle (PLC) — introduction, growth, maturity, decline.

Productivity — output per input.

Profit satisficing — earning “enough” profit, not the maximum.

Quality assurance (QA) — preventing defects during production.

Quality control (QC) — inspecting output and rejecting defects.

Reorder level — the stock level at which a new order is placed.

Retained earnings — profits kept in the business.

Secondary research — data that already exists, collected by others.

Segmentation — dividing a market into groups with similar needs.

Situational leadership — adapting the style to the situation.

Span of control — how many subordinates report to one manager.

Stakeholder — an individual or group with an interest in the business.

Strategic alliance — two firms cooperate on a project but stay separate.

SWOT — Strengths, Weaknesses, Opportunities, Threats.

Takeover — one firm buys another.

Tripartite relationship — Singapore’s government–employer–union partnership.

Unlimited liability — owners are personally responsible for business debts.

USP (unique selling proposition) — the one thing that makes a product different.

Value-added — the increase in value created at each stage of production.

Variable costs — costs that change directly with output.

Variance — actual result minus budget (favourable or adverse).

Vertical integration — owning suppliers (backward) or distributors (forward).

Working capital — current assets minus current liabilities.

Part B — Formula sheet

Self-test checklist

• Can I define any term from the glossary in plain English?
• Can I reproduce every formula from memory?
• Do I know which formulas are “calculate” vs “interpret only”?