CMAT – Innovation and Entrepreneurship Notes – Part 4

Hi! In this series of posts, I will share with you a compilation of concepts, theories, models, books, and anything that’s related to Innovation and Entrepreneurship. The compilation will be useful to CMAT aspirants and MBA aspirants in general. Innovation and Entrepreneurship is a new section that’s been introduced in CMAT this year. I hope this series saves some crucial time and helps in last minute push-ups! 🙂


76. Participative Leadership – Participative leadership is a style of leadership in which all members of the organization work together to make decisions. Participative leadership is also known as democratic leadership, as everyone is encouraged to participate.

77. Competitive advantage – A competitive advantage is the attribute that allows an organization to outperform its competitors. A competitive advantage may include access to natural resources, such as high-grade ores or a low-cost power source, highly skilled labor, geographic location, high entry barriers, and access to new technology.

78. Innovation – It is the process of entrepreneurship which involves the translation of a useful idea into an application which has commercial value.

79. Collective bargaining – It is a process of negotiation between employers and a group of employees aimed at agreements to regulate working salaries, working conditions, benefits, and other aspects of workers’ compensation and rights for workers. The term “collective bargaining” was first used in 1891 by Beatrice Webb, a founder of the field of industrial relations in Britain.

80. The break-even point (BEP) – The point at which total cost and total revenue are equal, i.e. “even”. There is no net loss or gain, and one has “broken even”, though opportunity costs have been paid and capital has received the risk-adjusted, expected return. In short, all costs that must be paid are paid, and there is neither profit or loss.

81. Opportunity cost – Opportunity cost is the loss or the benefit that could have been enjoyed if the best alternative choice was chosen.

82. Angel investor – An individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. Angel investors usually give support to start-ups at the initial moments (where risks of the start-ups failing are relatively high) and when most investors are not prepared to back them.

83. Dumping – A kind of pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price below the normal price with an injuring effect.

84. 5 functions of managementHenri Fayol identified 5 functions of management, which he labelled: planning, organizing, commanding, coordinating and controlling.

85. Brainstorming – Brainstorming is a group creativity technique by which efforts are made to find a conclusion for a specific problem by gathering a list of ideas spontaneously contributed by its members.

86. Free-trade area – A free-trade area is the region encompassing a trade bloc whose member countries have signed a free trade agreement. Such agreements involve cooperation between at least two countries to reduce trade barriers, import quotas and tariffs, and to increase trade of goods and services with each other.

87. Special Economic Zone – A special economic zone is an area in which the business and trade laws are different from the rest of the country. SEZs are located within a country’s national borders, and their aims include increased trade balance, employment, increased investment, job creation and effective administration.

88. Likert’s management systems – Management styles developed by Rensis Likert in the 1960s. The management systems, established by Likert, include “Exploitative Authoritative (System I), Benevolent Authoritative (System II), Consultative (System III), and Participative (System IV).”

89. Planned obsolescence – A policy of planning or designing a product with an artificially limited useful life or a purposely frail design, so that it becomes obsolete after a certain pre-determined period of time upon which it decrementally functions or suddenly ceases to function, or might be perceived as unfashionable.

90. TRIPS Agreement – The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international legal agreement between all the member nations of the World Trade Organization (WTO).

91. The South Asian Association for Regional Cooperation (SAARC) – Regional intergovernmental organization and geopolitical union of states in South Asia. Its member states are Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka.

92. The Pac-Man defense – A defensive business strategy used to stave off a hostile takeover, in which a company that is threatened with a hostile takeover “turns the tables” by attempting to acquire its would-be buyer.

93. The Organisation for Economic Co-operation and Development (OECD) : An intergovernmental economic organisation with 37 member countries, founded in 1961 to stimulate economic progress and world trade.

94. The International Monetary Fund (IMF) – An international financial institution, headquartered in Washington, D.C., consisting of 190 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 while periodically depending on the World Bank for its resources. It was formed in July 1944, at the Bretton Woods Conference primarily by the ideas of Harry Dexter White and John Maynard Keynes.

95. Kano model – A theory for product development and customer satisfaction developed in the 1980s by Professor Noriaki Kano, which classifies customer preferences into five categories: Must-be Quality, One-dimensional Quality, Attractive Quality, Indifferent Quality, and Reverse Quality.

96. Cartel – A group of independent market participants who collude with each other in order to improve their profits and dominate the market. Cartels are usually associations in the same sphere of business, and thus an alliance of rivals. Most jurisdictions consider it anti-competitive behavior. Cartel behavior includes price fixing, bid rigging, and reductions in output.

97. Tax haven – A tax haven is a country or place with very low “effective” rates of taxation for foreign investors. In some traditional definitions, a tax haven also offers financial secrecy.

98. Too big to fail – The “too big to fail” (TBTF) theory asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the greater economic system, and that they therefore must be supported by governments when they face potential failure.

99. Disruptive innovation – In business theory, a disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances.

100. Sweat equity – Sweat equity is a non-monetary benefit that a company’s stakeholders give in labor and time, rather than a monetary contribution, that benefit the company. Sweat equity is rewarded in the form of sweat equity shares. These are shares given out by a company in exchange for labor and time rather than a monetary amount.

To read the next part, click here: CMAT – Innovation and Entrepreneurship – Part 5


Hope this helps! The new post will be up in a few hours and the entire series will be available by Sunday (March 28th EOD). Please give your feedback in the comments section. Do share with your friends and co-aspirants. Happy prepping! 🙂

One thought on “CMAT – Innovation and Entrepreneurship Notes – Part 4

  1. Pingback: CMAT – Innovation and Entrepreneurship Notes – Part 3 – Cracking MBA CET

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