M
Ms The different types of money in the FEDERAL RESERVE SYSTEM, classified in a range from M0 (narrowest) to M3 (broadest). For example, M1 is money held in banks; M1-A is cash held in bank accounts excluding deposits by foreign-owned banks and nonbank depositories; M1+ is the basic money supply; M1-B is M1-A money plus other checkable deposits at all depository institutions; M2 is M1-B money plus savings and time deposits under $100,000 and money market funds; M3 is M2 money plus savings and time deposits over $10,000 and institutional money market funds.
Maastricht treaty Legislation signed in 1992 that created the EUROPEAN UNION. It led eventually to the creation of the ECONOMIC AND MONETARY UNION.
Machiavellian From The Prince by Niccolo Machiavelli, used to describe political actions whereby the ends justify the means, however immoral they may be.
Machine bureaucracy Organizational structure that places a premium on punctuality, standardization, and efficiency.
Macho management Style of management that is aggressive in protecting its rights and is dismissive of the rights of employees and unions.
Macroeconomics Branch of economics that studies large functioning economic structures and trends rather than the behavior of particular economic agents or phenomena. It is largely concerned with such factors as money supply, employment, interest rates, government spending, investment, and consumption. See MICROECONOMICS.
Macroenvironment Large national and international forces that indirectly influence corporate decisions and affect their profitability and viability. These forces include political violence and unrest, environmental disasters, social anomie, political instability, demographics, labor force composition, and legislative and regulatory actions. See MICROENVIRONMENT.
Macrorisk Potential harm associated with major economic changes that affect an entire economy.
Magnuson-Moss Warranty Act 1975 U.S. law requiring written guarantees and warranties to be made available to buyers at the time of purchase, specifying in clear language the who, what, when, and how of the warranty.
Mail order Direct sale to a customer by the producer through catalogs sent by mail, with orders received either by phone or mail. The Internet has supplanted mail order in many cases.
Makework Work devised to kill time and keep workers busy, or superfluous work engaging more workers than needed. See FEATHERBEDDING.
Managed currency Money supply that is controlled by a CENTRAL BANK as part of an overall monetary policy with political overtones.
Managed float System of floating exchange rates with CENTRAL BANK intervention to reduce currency fluctuations. Also dirty float.
Management 1. Control of a company or organization with the goal of making it profitable and sustainable. The operation requires organizational and human relations skills that are different from entrepreneurial skills. Management is responsible for setting goals, overseeing change and growth, measuring performance, planning, cost control, pricing, conflict resolution, and quality control. 2. People involved in the operation of a company or organization, especially the higher echelons, known as TOP MANAGEMENT. Managers are accountable to the owners or shareholders for the conduct of business affairs. 3. Academic discipline dealing with the study of management as a science and the ways and means of administering an institution or corporation.
Management audit Systematic assessment of a management’s methods and policies and the use of its resources. It involves an analysis of the management performance and effectiveness in the light of their strategic objectives.
Management buy-in Acquisition of a company from a group of outside managers, backed by a team of VENTURE CAPITALISTS.
Management buyout (MBO) Acquisition of a company or subsidiary by the existing management, usually following divestment of noncore operations by the owner.
Management by crisis Approach to management that looks on crises as opportunities, but only provides short-term, ad hoc solutions. This style deals with symptoms rather than root problems, but achieves quick successes.
Management by exception Approach to management by which a decision that cannot be made or a problem that cannot be solved at one level is passed on to the next higher one.
Management by objectives (MBO) Approach to management by which managers are encouraged to specify quantitative and qualitative objectives to be achieved within a given time period and they are judged on the basis of their success in achieving those objectives.
Management by walking around (MBWA) Approach to management that entails maintaining a constant presence on the floor, meeting regularly subordinates and associates, and engaging in candid discussions of problems.
Management capitalism Form of operation in which the dominant administrative role falls on the salaried executives rather than on the owner or owner’s immediate family.
Management consultant Professional adviser engaged by a company to guide management in improving efficiency and profitability. These consultants generally are outsiders who study existing work practices, and their reports generally span decision making, policies and planning, use of resources, division of labor, and critical assessment of industrial relations, production, marketing, and sales.
Management development Program by which managers are trained to hone their skills in real-life situations. The program often includes mentoring, team-building, work studies, systems analysis, and role-play.
Management grid Tool to evaluate management styles, based on concern for people and concern for production; original five styles were identified by ROBERT BLAKE and JANE MOUTON; model was revised in 1999 to reflect nine styles, with optimum being THEORY Y.
Management information system (MIS) Comprehensive computer system for providing financial and quantitative information to all levels of management. Access to the data is by need to know and is restricted to areas regarded as useful for particular managers; confidential information is restricted to top management.
Management letter Correspondence from an auditor to the management of a client company at the end of an annual audit, usually suggesting improvements that could be made to the accounting system and internal controls.
Management philosophy Guiding principles of good management that forms the framework for decisions.
Management science Application of scientific methods and quantitative methodology to the practice of management.
Management services Department in a company concerned with improving overall quality and productivity, usually through work studies and systems analysis.
Management style Approach to management generally based on the individual’s personality traits. It varies from democratic to authoritarian.
Management succession planning Strategy to ensure that there is a pool of talented junior managers trained and ready to fill senior positions as they become vacant.
Manager Senior executive, usually the chief of a department or agency, who is responsible for planning and decision making and who heads one or more project teams.
Managerial psychology Branch of industrial psychology dealing with the role of managers in human relations and decision making.
Managing director Title of the principal executive or operational head, just below the chairman. Equivalent to the CEO.
Mandate Order or commission given to a specific person, a department, or an organization to carry out the wishes of the grantor; a higher authority issues a mandate to a lesser agent.
Manual Document explaining the workings of a machine or procedures for completing a process.
Manual labor Work done by hand, such as ditch digging, vegetable harvesting, or construction.
Manufacturing management Branch of management that deals with manufacturing processes and machinery.
Maquiladora Mexican name for a factory operating in a free trade zone in Mexico, near the U.S.–Mexican border; used by U.S. companies to take advantage of lower manufacturing costs and looser regulatory compliance.
March, James Gardner (1928–) Professor emeritus at the Stanford University School of Education best known for his research on organizations and organizational decision making. He worked on the systemic-anarchic perspective of organizational decision making known as the garbage can model.
Margerison, Charles Professor of Management at the University of Queensland in Australia and Cranfield University School of Management in the United Kingdom. Along with DICK MCCANN, he developed the Team Management System.
Margin 1. Difference between production costs and income from sales constituting profit, often expressed as net margin or gross margin 2. Difference between the buying and selling price or between rates of interest.
Margin call Broker’s demand for additional money or securities in a margin account. It occurs when the value of the stock is depressed.
Marginal costing Approach to costing that separates expenses into two categories: fixed and variable or adjustable. Also termed direct costing, incremental costing, variable costing.
Marginal pricing System of pricing products based on MARGINAL COSTING, which allows future cost variations.
Marginal revenue Additional revenue derived from the sale of one additional unit of production.
Marginality In management, state of being excluded from the mainstream because of a lack of influence on other individuals or groups.
Margin of safety Extent to which revenues exceed the breakeven point.
Markdown Reduction in the price of goods in response to poor demand or to create more shelf space.
Market 1. Arena in which traders, buyers, and sellers gather to exchange goods and services, with money as the medium of exchange. 2. Demand for a particular product, measured by the number of buyers.
Market challenger Company whose goal is to supplant the market leaders by increasing its market share.
Market development Actions to enlarge the market territory or constituency by actively soliciting new customers and introducing new products.
Market entry strategy Deliberate plan to enter a foreign market and establish a presence in manufacturing or selling based on factors such as amount of capital, degree of risk, ease of entry, cultural penetration, infrastructure, and profitability. The most common strategies are (1) assembly operations that use low-cost labor; (2) contract manufacturing using domestic facilities and marketing channels; (3) exports, which present less risk than other strategies; (4) joint ventures with a host-country partner with different levels of equity participation; (5) franchising the trademark, product, or process; (6) licensing, a variant of franchising; (7) manufacturing based on the host country’s capabilities and the availability of skilled labor; (8) piggyback exporting, whereby one company markets through the distribution channels of another; (9) wholly owned subsidiaries, where considerable investment is required and company employees are subject to frequent transfers.
Market failure Loss of purchasing power by consumers, leading to a loss of business and inefficiencies and caused by any number of disfunctions.
Market follower Company that is content to take its cues from trendsetting market leaders, following in their wake.
Market forces Events, factors, and trends that influence business activities in a FREE MARKET economy, especially the laws of SUPPLY AND DEMAND.
Market niche Small, specialized segment of a market suitable for exploitation.
Market leader Company with the largest market share, or the bellwether in innovation and distribution.
Market maker In finance, an intermediary who creates a market for a financial obligation.
Market overhang Situation in which sellers, worried by falling prices, postpone their sales until there is a market recovery.
Market penetration 1. Extent to which a company’s product satisfies a demand or felt need, as determined by its share of that market. 2. Process of entering a market to establish a new brand or product, often supported by a low pricing strategy and extensive promotion.
Market power Ability of a company to influence the prices in a market on the basis of its large market share.
Market research Systematic collection and analysis of data on the size of a market, consumer behavior and preferences, the extent to which current products meet consumer expectations, and social trends that might impact sales.
Market risk Chance of failure in a market subject to wide price fluctuations, often moderated by HEDGE trading.
Market segmentation Breakdown of market demand by homogeneous groups of consumers, each of which responds best to a different marketing approach. The traditional segmentation is by age, sex, income, family size, ethnic group, occupation, social class, and lifestyle.
Market share Portion of the total sale of all brands of a product competing in one market captured by one product, usually expressed as a percentage. It is a critical factor in determining competitive position and profitability. Market share may denote absolute share or relative share. ABSOLUTE MARKET SHARE is per capital income. RELATIVE SHARE is the share of business divided by the sum of the shares of its three leading competitors. Market share also is subject to definition because it may pertain to a global market, national market, or local market.
Market shares may be described as high, medium, or low, and the strategies in regard to each are different. For high-share competitors, the three most effective strategies are (1) building barriers against entry by raising the cost of entry; (2) introducing alternative brands; (3) maximizing price range offering; (4) broadening the product line; and (5) increasing production volume. For medium-share competitors, the strategies are different because they do not have the resources to take on larger companies; instead, they focus on customer segments ignored by the leader, supplying the needs of specialized markets, catering to customers who demand and can pay for superior quality, and maintaining a sufficient speed to keep pace with the leader.
Market skimming Setting the price at a level that maximizes sales, irrespective of the costs of production, targeting those consumers who are willing to pay a higher price.
Market value Dollar worth of a company obtained by multiplying the number of its issued ordinary shares by their market price.
Marketability Extent to which a product is suitable for commercial sale and the extent to which it can be easily bought and sold.
Marketing 1. Planning and implementing innovation, pricing, promotion, and the distribution of goods and services to the widest possible clientele. It consists of anticipating demand, supplying felt needs, conducting research and promotion, and ensuring quality and availability. 2. Distribution of goods to consumers through a wide variety of channels.
Marketing environment External climate in which MARKETING takes place, including social, ethnic, and cultural ethos; technology; depth of competition; political stability and its pro-business policies; distribution facilities; infrastructure; and transportation.
Marketing information system (MIS) Organized and focused collection of information and its timely dissemination and transmission to the personnel of evaluation and analysis. The information covers the business environment, customer base, suppliers and distributors, government agencies, and competition.
Marketing management Planning and oversight of a company’s marketing operations and the efficient implementation of a marketing plan.
Marketing mix Four factors (called the FOUR PS) that together influence sales: product, pricing, promotion, and place. This is based on findings of the company’s own market research.
Marketing objectives Elements of a marketing plan that specify the targets to be achieved within a given time frame and the resources needed.
Marking to market In accounting, valuing financial obligations and products according to their current market prices, considered controversial in some contexts.
Marketing warfare Aggressive marketing plan based on military strategies and tactics, where marketing terms are borrowed from the military lexicon and are designed to overpower or outwit the competitor, though direct confrontation is avoided in favor of guerrilla-style campaigns.
Marketization Introduction of markets and marketing into developing economic systems or into the public sector.
Markowitz, Harry Max (1927–) American economist and winner of the Nobel Prize in Economic Sciences in 1990 and the John von Neumann Theory Prize in 1989. He was Professor of Finance at the Rady School of Management at the University of California, San Diego. He is best known for his pioneering work in modern portfolio theory studying the effects of asset risk and return.
Markowitz model Method of selecting the optimum investment portfolio, devised by Nobel economist HARRY MAX MARKOWITZ. It assumes that investors are risk-averse and should diversify by mixing the proportions of their portfolio.
Markup Dollar amount by which the production costs of a product or service are hiked to arrive at the selling price.
Maslow, Abraham (1908–1970) American psychologist whose contributions to management science include the concepts of hierarchy of needs (see below), PEAK EXPERIENCE, and SELF-ACTUALIZATION.
Maslow’s motivational hierarchy Model of human motivation developed by ABRAHAM MASLOW. The model posits a hierarchy of human motives and needs, with five levels: physiological (food and sleep), security, love and affection, esteem and recognition, and meta needs (fulfillment, aesthetics, and intellectual achievement). Of these, the physiological make up the primary and the other four constitute the secondary.
Mass marketing Marketing of products with the same pricing, customer base, and packaging so as to bring down prices.
Mass production See LINE PRODUCTION.
Massify Produce a good for the mass market.
Master of business administration (MBA) Postgraduate degree in business and management, awarded after four years of training in a business school.
Material fact Information that influences a decision and the suppression of which in a legal document constitutes a crime.
Materiality Extent to which any piece of information is crucial in decision making and affects the veracity of the statements attested to in a document.
Materials management Optimum utilization of materials for the efficient flow of production without loss of manpower or time.
Matrix departmentation Hybrid management structure that combines product departmentation and functional departmentation leading to employees reporting to two supervisors.
Matrix management Organizational structure in which vertical and horizontal links between managers are active at the same time.
Matrix organization Task-oriented management structure in which an employee reports to more than one manager in different departments.
Matrix structure Organizational structure based on vertical and horizontal relationships, found mostly among multinationals. The production facilities are localized but industrial policies are set by the global office. Each country is treated as a profit center, but the management of taxes is important and profitability is calculated globally. Executives report to more than one central unit; below the country manager level, operations are divided by product group, which takes precedence over country managers. The headquarters, managed primarily by home-country nationals, sets the strategies for overseas subsidiaries and in doing so may impose its own values. For example, the Japanese coordinate their matrix structure by product, geography, and function, thus cutting across divisional boundaries and eliminating rivalries.
Mature economy Developed economy that has reached a high level of sophistication and stability, and in which growth is accompanied by accountability and transparency.
Maturity grid Organizational structure conceived by Philip B. Crosby with five levels of maturity: Uncertainty, Awakening, Enlightenment, Wisdom, and Certainty.
Maturity stage Longest period in the life cycle of a firm, industry, or product during which sales peak and start to decline. In macroeconomics, the final stage of economic growth characterized by a high level of mass consumption.
Maximax criterion Positive approach to financial decision making under conditions of uncertainty.
Maximin criterion Pessimistic approach to financial decision making under conditions of uncertainty.
Maximum slippage Period between the date when a new company’s venture capital runs out and the date it starts receiving earnings from sales.
Mayo, Elton (1880–1949) Austrian psychologist and management expert whose seminal contributions to the field of industrial psychology bore fruit in the HAWTHORNE STUDY. He stressed the importance of human relations and interpersonal relations, and encouraged management to meet one-on-one with workers on the shop floor.
MBA MASTER OF BUSINESS ADMINISTRATION
MBO 1. MANAGEMENT BUYOUT 2. MANAGEMENT BY OBJECTIVES
MBWA MANAGEMENT BY WALKING AROUND
McCallum, Daniel (1815–1878) As general superintendent of the Erie Railroad, McCallum developed principles of management that included discipline, division of labor, detailed job descriptions, and merit-based promotions. He also developed organizational charts and sophisticated information-management systems using the telegraph.
McCann, Dick Australian management expert who, with CHARLES MARGERISON, developed the TEAM MANAGEMENT WHEEL.
McClelland, David American psychologist and leading contributor to the study of motivation. He elaborated on the concept of the NEED FOR ACHIEVEMENT as a driver of human performance, especially in entrepreneurs. He also stressed the NEED FOR POWER as an essential ingredient of management.
MCDM MULTIPLE-CRITERIA DECISION MAKING
McGregor, Douglas (1906–1964) American psychologist and leading contributor to ORGANIZATIONAL THEORY. He rejected THEORY X in favor of his own more hopeful THEORY Y.
McKinsey 7S Model Framework developed by management gurus ROBERT WATERMAN and TOM PETERS, linking shared values (all starting with S): structure, systems, style, staff, skills, strategy, and shared values. These broad areas are integrated to achieve overall successful strategy implementation. At the core of the model are superordinate goals and shared values around which the firm pivots, and which define corporate culture. Transformation of a company requires a change in these values.
McLuhan, Herbert Marshall (1911–1980) Canadian philosopher of communication theory and one of the most influential thinkers in the 20th century. He coined the terms medium is the message and GLOBAL VILLAGE and predicted the World Wide Web 30 years before it was invented. His major works include The Mechanical Bride (1951), The Gutenberg Galaxy (1962), Understanding Media (1964), The Medium is in the Message (1967), and War and Peace in the Global Village (1968).
Mechanistic organization Company characterized by rigid hierarchies, largely vertical command modes and interactions, and clearly defined roles and boundaries. Term coined by management consultants TOM BURNS and George Stalker.
Media analysis Investigation into the relative effectiveness and costs of mixing various formats and media in an advertising campaign to achieve maximum impact.
Mediation Intervention by a neutral state-sponsored agency or person to settle an industrial dispute. This generally results in a compromise solution that is acceptable to both sides. If the mediation results in a binding award, it is known as ARBITRATION and if it is a nonbinding award, it is known as CONCILIATION.
Medium-size Relating to a second-tier company based on its net worth, turnover, and number of employees.
Medium-term Relating to the period of time when liabilities or maturities become due and are payable, varying according to the nature of the obligation.
Megacorporation Large corporation with multinational offices and thousands of workers.
Megatrend General and widespread current thinking or paradigm affecting large countries and markets.
Meltdown From nuclear energy, a fatal disaster that cannot be repaired and that causes enormous losses.
Membership group In social psychology, a group in which people are enrolled as members, as distinguished from a REFERENCE GROUP.
Memorandum 1. Document providing essential information on the structure and purposes of an association or organization, its rationale, and officers. 2. Brief office communication.
Mensualization Of French origin, term describing the transition of BLUE-COLLAR workers to STAFF status, with monthly salary.
Mentor Senior employee who is training a junior employee and providing guidance and encouragement, especially with the intricacies of corporate culture and protocols.
MEPT Managerial, executive, professional, and technical (staff).
Mercantile law Commercial law as it applies to banking, contracts, copyrights, insolvency, insurance, patents, sale of goods, shipping, trademarks, transport, and warehousing.
Merchandising Promotion of goods being sold by a retailer or merchant, especially through discounts, rebates, and free samples, so as to persuade customers to patronize the establishment.
Merchant Trader in goods and services or a middleman.
Merchant bank Bank dealing in derivatives, hedge funds, venture capital, takeover bids, credit cards, new initial public offerings, investment portfolios, and unit trusts. Formerly specialized in lending to merchants engaged in foreign trade. Because of its access to large amounts of capital, it is willing to take more risks than a COMMERCIAL BANK. Also INVESTMENT BANK.
Merger Combination of two or more businesses with equal standing, resulting in the creation of a new company. Unlike in an ACQUISITION, no one party acquires the other, and the management of the new company has representatives from both entities. Only equity shares are exchanged, rather than a sale. True mergers are rare where the resulting union is not lopsided, however.
Merit rating Calibrated system of rewards based on performance, used cumulatively to assess an employee’s contribution to an organization.
Meritocracy Social system in which advancement is based on ability and skills, rather than on birth and privilege.
Metcalfe, Henry (1847–1917) Management expert who, as manager of the Frankford Arsenal, developed a system of controls. His book, The Cost of Manufactures and the Administration of Workshops, Public and Private, was published in 1885.
Metcalfe’s law Principle that the value of a network of people using the same Internet sites increases with the square of the number of participants. Attributed to Robert Metcalfe in 1980.
Method study Critical examination of work practices and protocols in an effort to single out employees who are more efficient, productive, and cheaper.
Metrocorporation Corporation with responsibilities that transcend those to the shareholders and extend to several other social sectors.
Metropolitan statistical area (MSA) Geographic unit of the U.S. Census Bureau, marking either a city with 50,000 or more inhabitants or an urbanized area with at least 100,000 inhabitants.
Mezzanine finance Funding provided by specialized institutions, constituting a mix of equity and secured or unsecured loans and with varying interest rates. This is a tool used in MANAGEMENT BUYOUTS.
M-form Organizational structure, known also as multidimensional structure, consisting of a relatively large number of relatively small semi-autonomous units, each with its own budget and financial target set by the main office.
Microcredit In the developing world, the lending of small amounts of money at noncommercial rates to encourage initiatives such as cottage industries and rudimentary capitalism.
Microeconomics Analysis of economic behavior at the detail level, consisting of individual households or small businesses, often reacting to MACROECONOMIC forces such as taxation and cost of living.
Microenvironment Situation where a local company flourishes, affecting the health and well-being of its employees and its immediate customers.
Micromanagement Form of over-management characterized by excessive controls and intensive attention to details, usually translating to constant interference in the work of subordinates.
Micromarketing Marketing focused on the needs and behavior of a small segment of the population.
Midcareer plateau Dead-end stage in a career, where opportunities for further promotion do not exist.
Middle management Level of management below senior management but above junior management. Middle managers exercise very little decision-making power but have significant supervisory functions.
Middleman Intermediary in the flow of goods and services who makes a profit by facilitating or reselling the goods.
Miles, Lawrence Delos (1904–1985) American engineer. He created the concept of VALUE ENGINEERING in his book Techniques of Value Analysis and Engineering (1961).
Milestone scheduling Use of set markers to monitor progress.
Milgram, Stanley (1933–1984) American psychologist noted for his contributions to social psychology, especially his concept of conformity to authority by passive subordinates.
Milk round Annual visit to universities at graduation time by personnel managers, using job fairs to find new employees.
Mindmap Graphical tool for visualizing and clarifying ideas; it resembles a tree, with a central trunk and spreading branches.
Minimax strategy In GAME THEORY, a strategy of minimizing loss rather than maximizing gain.
Minimum wage Legal floor for wages for workers on the bottom rung of the employment ladder. It is revised upward periodically based on the cost of living.
Minority interest Small proportion of shareholders in a company where control of more than 50% is held by a dominant group or holding company.
Minority protection Legal protections, including audit and inspection of accounts, afforded to minority shareholders against abuses by majority rule, such as STEAMROLLER TACTICS during annual meetings.
Mintzberg, Henry Canadian management theorist known for his empirical observations on managers at work, especially the differences between what they are supposed to do, what they actually do, and what they think they are doing.
MIS MANAGEMENT INFORMATION SYSTEM
MIS MARKETING INFORMATION SYSTEM
Misery index Measure of economic distress, calculated by adding the unemployment rate to the inflation rate. Sometimes the index also incorporates the number of bankruptcies and annual gross domestic product.
Misperceptions theory In economics, the concept that business cycles are caused by imperfect information rather than structural flaws.
Mission creep Expansion of a project beyond its original scope, often without planning or an exit strategy.
Mission statement A simple and direct expression of a company’s goals and objectives, as well as the vision animating its products and activities. Mission statements define what a company stands for.
Missionary sales Information by salespersons who tout the company products to prospective customers but do not take orders.
Mixed capitalism Imperfect capitalist system with both FREE MARKET and state-run sectors.
Mixed economy Economy in which the private and public sectors coexist and in which the state has no overriding commercial interests to protect. It is an intermediate economic status, between a COMMAND ECONOMY and a LAISSEZ-FAIRE economy.
Mobility Freedom to move upward, downward, or horizontally in a profession or industry (occupational mobility) or from one geographical location to another (geographical mobility). In stratified societies and in command economies, there is little or no mobility.
Model Representation of a process or program that includes all the necessary elements in the proper order, which can be used as a template or to extrapolate data. Models may be physical, mathematical, descriptive, solution-driven, or deterministic.
Model-embedded decision-support system Method of decision making based on mathematical models.
Modus vivendi Arrangement whereby two parties in a dispute settle on the terms of engagement and work out a compromise.
Mojo Slang for magical or special powers to achieve a desired goal or to influence people to act in a certain way.
Moller, Claus Danish management consultant and advocate of effective customer relations to promote products; he originated the concept of putting people first.
Monetary policy Procedures available in a regulatory toolbox to control and affect MACROECONOMIC conditions by adjusting the flow of money. There are four main tools in the toolbox: (1) using open-market operations to buy or sell government debt; (2) raising or lowering the reserve requirements of banks; (3) through short-term funds; and (4) lowering or raising interest rates or rates on Treasury bills. Generally a tight monetary policy is used as a means of controlling inflation. KEYNESIAN ECONOMIC theory holds that monetary policy is a blunt instrument with indifferent results.
Monetary system Network of mechanisms and institutions governing the supply of money and exchange of currencies.
Money Medium of exchange that serves as a unit of account, a store of value, and a means of deferred payments. Currencies replaced barter in the early stages of economic history.
Money laundering See LAUNDERING.
Money market Wholesale exchange for short-term loans and debt instruments, consisting of money brokers, discount houses, and banks. The main vehicles are bills of exchange, Treasury bills, and trade bills. Money market funds generally earn higher rates of interest than bank deposits.
Money supply Total amount of money in the MONETARY SYSTEM, under the authority of the CENTRAL BANK. The types of money are as follows: (1) MO notes and coins in circulation; (2) M1 notes and coins in circulation plus private-sector current accounts and deposit accounts that can be transferred by check; (3) M2 notes and coins in circulation plus non-interest-bearing deposits; (4) M3, M1, plus all other private-sector bank deposits plus certificates of deposit; (5) M3C, M3, plus foreign currency bank deposits; (6) M4, M1, plus most private-sector bank deposits, plus holdings of money market instruments as T-bills; and (7) M5, M4, plus bank deposits.
Moneyness Relationship between the strike price of an option and the current trading price. When the settlement is financial, the difference between the strike price and spot price determines the moneyness.
Monochronic culture Organizational culture where the norm is to divide time sequentially into segments and dedicate each segment to a particular task. The main instruments of such a culture are timetables and the main emphasis is on punctuality. Distinguished from POLYCHRONIC CULTURE.
Monopolistic competition Market for a particular product or service in which there are many competing sellers offering similar but nonidentical goods. There are few barriers to entry, and there is a multiplicity of buyers and sellers as in PERFECT COMPETITION, but each product is unique and can be obtained from only one producer. In effect, each product is a MONOPOLY on its own.
Monopoly Market in which there are multiple buyers but only one seller, who is thus able to control the terms of trade, especially pricing. There are natural monopolies, as for example public electric utilities and water supply.
Monopsony Market in which there are many sellers but only a single buyer, who thus is able to control the price and availability of the goods offered.
Monte Carlo simulation Generation of random data from specified distributions that are then used as input into predictive models. In finance, such simulations are used to price complicated derivatives and portfolios and to calibrate risks.
Moonlighting Holding down a second job in addition to a primary day job.
Moore, Gordon (1929–) American cofounder and chairman emeritus of Intel Corporation. He is the author of MOORE’S LAW, which governs the rate of innovation in computers.
Moore’s law Named after GORDON MOORE, cofounder of Intel, law that computing power will increase every two years exponentially through the production of new microchips.
Moral hazard Situation in which a person has no incentive to act honestly or with diligence or prudence.
Moral suasion Regulatory body’s appeal to morality and the use of persuasion rather than legislative authority to induce a company to act in conformity with legal requirements.
Morale Collective motivational energy of a group; known in French as esprit de corps. It determines the sense of well-being and satisfaction that employees demonstrate, and it is the basis for auditing the ability of a company’s leadership to provide employees with comfort regarding company activities and policies.
Morgenstern, Oskar (1902–1977) German-born economist who, in collaboration with JOHN VON NEUMANN, founded the mathematical field of GAME THEORY and its application to economics in the Neumann-Morgenstern Utility Theorem. His major works include On the Accuracy of Economic Observations (1950), Predictability of Stock Market Prizes (1970), and Mathematical Theory of Expanding and Contracting Economies (1976).
Mortgage Loan extended for purchase of real estate, with the real estate serving as security, for a specified number of years and on mutually agreed-upon interest terms and conditions.
Most-favored-nation clause Portion of a trade agreement between two or more nations under which each party gives the other the same favorable conditions as regards tariffs and quotas.
Motion study Business efficiency technique combing the time-study work of F. W. TAYLOR and the motion study of FRANK and LILLIAN GILBRETH. It is a part of Taylorism. It has evolved into a technique for improving work methods. Also TIME AND MOTION STUDY.
Motivation The drive in human beings that causes them to act in a certain way; in business, this is often in the form of inducements and appeals to self-interest. Motivation is related to other drivers, such as purpose, desire, need, preference, perception, attitude, recognition, and sense of achievement. Sometimes motivation is expressed in monetary terms and sometimes as psychic income. It is one of the key elements in understanding consumer behavior, and it also plays a role in human resources. Autonomy and responsibility add to the motivational menu of employees, while discounts, low prices, and perquisites add to the motivational menu of consumers. Dissatisfaction stifles motivation and thus inhibits ability to respond appropriately.
Motivation-hygiene theory Developed by theorist FREDERICK HERZBERG, a principle that identifies working conditions as leading to either employee dissatisfaction or satisfaction.
Motivational research Inquiry designed to discover the psychological drivers of human actions, especially in the consumer world.
Mousetrap, build a better To build a better and more efficient product; presumably, build a better mousetrap and the world will beat a path to your door.
Mouton, Jane Srygley (1930–1987) American management theorist who developed the MANAGEMENT GRID MODEL with ROBERT R. BLAKE.
MRP Manufacturing resource planning.
MSA METROPOLITAN STATISTICAL AREA
Multidimensional scaling Technique used by marketers to assess consumer perceptions of competing brands.
Multidomestic company Company where each division operates independently.
Multilateral netting Centralization of international payments and receipts in different currencies, so as to reduce the cost of processing.
Multinational company (MNC) Conglomerate operating in more than one country and having plants and offices in countries outside its home base. Multinational enterprises have a different setup from national companies, with efficient, cost-effective operational networks and the ability to exploit the cheapest labor, take advantage of tax loopholes, and bypass protectionist barriers. They are also the agents of technology transfers across borders. Because they are more concerned with the bottom line than with the welfare of the countries in which they operate, they are often guilty of corrupting local officials, contributing to high pollution levels, and flouting employment safety regulations. Also termed transnational enterprise.
Multiple-criteria decision making (MCDM) Polygonal approach to decision making and problem solving that takes into account all the factors that have impacted the problem directly or tangentially. It is an advanced field of operations research devoted to the development and implementation of decision support tools and methodologies when confronted by needs and goals of conflicting natures. VILFREDO PARETO was the first to place the aggregation of such conflicting data into a single evaluation index.
Multiple niching Marketing strategy in which several offers of sale are made for a product, each designed to appeal to a particular segment of the consumer public.
Munsterberg, Hugo (1863–1916) Father of INDUSTRIAL PSYCHOLOGY. In 1893, he established the Harvard Psychological Laboratory, which became the center of the industrial psychology movement. He studied telephone operators, trolley drivers, and naval officers to find out how to match people with the right kind of work, where they could function effectively. In 1913, he wrote Psychology and Industrial Efficiency.
Muth, John Fraser (1930–2005) American economist, considered the father of the rational expectations revolution. He was a professor at the Graduate School of Industrial Administration at Carnegie Mellon University.
Mutual Company owned by its members or depositors, where all profits are distributed to the stakeholders.
Myers-Briggs type indicator Psychometric questionnaire of personality, in which the subject answers personal questions.
Myopia Cognitive bias that screens out undesirable information that contradicts previously held biases. From nearsightedness, extended to imply a lack of foresight.