MBA AMP cheat sheet

Management functions cycle: planning (goals and resource allocation), organizing (structure and authority), leading (motivation and direction), controlling (measurement and corrective action).

Span of control: narrow spans suit complex, high-variability work; wide spans require standardized, routine tasks and strong subordinate autonomy.

Porter's five forces: supplier power, buyer power, threat of new entrants, threat of substitutes, rivalry; high combined force intensity compresses industry profitability.

Value chain split: primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) versus support activities (firm infrastructure, HR, technology, procurement).

Economies of scale lower unit cost as volume rises; diseconomies of scale raise unit cost beyond an optimal output level due to coordination and complexity costs.

SMART goals are specific, measurable, achievable, relevant, time-bound; ambiguous goals weaken control because variance cannot be measured against a standard.

Centralization concentrates decision rights at the top for consistency; decentralization pushes them down for speed and local information, at the cost of coordination.

BCG matrix axes: market growth rate and relative market share; cells are star, cash cow, question mark, and dog, each implying a different cash-flow posture.

Percentage change = (new − old) / old × 100; a rise then equal-percentage fall does not return to the original value (e.g., +20% then −20% nets −4%).

Compound growth: FV = PV × (1 + r)^n; doubling time is approximately 70 / r when r is expressed as a percent per period.

Weighted average = Σ(w_i × x_i) / Σw_i; a simple average of subgroup averages is wrong unless subgroup sizes are equal.

Break-even units = fixed costs / (price − variable cost per unit); the denominator is the unit contribution margin.

Expected value = Σ(probability × outcome); it summarizes a risky distribution but ignores risk aversion and variance.

Correlation does not establish causation; a lurking variable or reverse causation can produce the same coefficient, and r near 0 permits strong nonlinear association.

Base-rate neglect: P(A|B) depends on P(B|A), P(A), and P(B) (Bayes); rare conditions yield many false positives even with accurate tests.

Rate problems: distance = rate × time; for combined work, 1/T = 1/a + 1/b gives the time working together.

Argument anatomy: premises (evidence offered) support a conclusion (the claim); the conclusion is what the author wants accepted, not merely the last sentence.

Necessary assumption: must be true for the argument to hold; negating it destroys the argument. Sufficient assumption: if true, guarantees the conclusion.

Weaken/strengthen answers target the link between evidence and conclusion; an alternative cause or a reversed causal direction typically weakens.

Scope shifts, percentage-versus-absolute confusion, and part-whole errors are the most common flaw types in data-based arguments.

Boldface and method-of-reasoning questions require labeling each statement as evidence, intermediate conclusion, or main conclusion, and mapping the inferential direction.

Sampling flaws: nonrandom selection, small samples, and self-selection bias undermine generalization from a survey to a population.

Sufficient versus necessary condition language: "if A then B" means A suffices for B and B is necessary for A; "only if" introduces a necessary condition.

Inference questions accept only what must be true; answers that are merely plausible or likely are incorrect.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves it (double-entry).

Income statement flows into retained earnings: ending RE = beginning RE + net income − dividends; net income = revenues − expenses.

Cash flow statement sections: operating (net income adjusted for noncash items and working capital), investing (long-term assets), financing (debt and equity).

Accrual basis recognizes revenue when earned and expenses when incurred; cash basis recognizes on receipt or payment, so profit and cash differ.

Contribution margin ratio = (sales − variable costs) / sales; operating leverage rises with fixed cost share, amplifying profit sensitivity to sales.

Relevant costs for a decision are future and differ between alternatives; sunk costs and allocated fixed costs are irrelevant.

Absorption costing includes fixed manufacturing overhead in product cost; variable costing expenses it as incurred, changing reported profit with inventory levels.

Standard costing variance: material price variance = (standard price − actual price) × actual quantity; usage variance = (standard quantity − actual quantity) × standard price.

Price elasticity of demand = %Δ quantity / %Δ price; |E| > 1 elastic, |E| < 1 inelastic, |E| = 1 unit elastic.

Revenue rises with a price cut only when demand is elastic; with inelastic demand, a price increase raises total revenue.

Profit maximization occurs where marginal revenue = marginal cost; in perfect competition price = marginal revenue.

Opportunity cost is the value of the best forgone alternative; economic profit subtracts it, accounting profit does not.

Diminishing marginal returns: adding variable input to a fixed input raises output at a decreasing rate, eventually raising marginal cost.

A price ceiling below equilibrium creates shortage; a price floor above equilibrium creates surplus; both reduce total surplus.

Monopoly restricts output below the competitive level and prices above marginal cost, producing deadweight loss.

GDP = C + I + G + (X − M); nominal GDP uses current prices, real GDP uses base-year prices to isolate quantity change.

STP sequence: segmentation (group by needs or behavior), targeting (choose segments by attractiveness and fit), positioning (own a distinct place in the customer's mind).

4Ps: product, price, place, promotion; in services add people, process, and physical evidence.

Pricing anchors: cost-plus (cost + markup), value-based (willingness to pay), and competitive (reference price); each yields different margins.

Customer lifetime value = average margin per period × retention multiple; acquisition cost must be compared with CLV, not first-purchase profit.

Differentiation requires a trade-off; a firm claiming low cost and premium differentiation simultaneously risks being stuck in the middle.

Product life cycle: introduction, growth, maturity, decline; promotion shifts from awareness to persuasion to retention as the cycle advances.

Marketing funnel: awareness, consideration, conversion, retention, advocacy; conversion rate = conversions / qualified visitors.

VRIO test for sustainable advantage: valuable, rare, costly to imitate, and organizationally exploited; failure on any criterion limits durability.

Maslow's hierarchy (physiological, safety, social, esteem, self-actualization) is ordered, but empirical support for strict sequencing is weak.

Herzberg two-factor theory: hygiene factors (pay, policy, conditions) prevent dissatisfaction; motivators (achievement, recognition, growth) create satisfaction.

Expectancy theory: motivation = expectancy × instrumentality × valence; a zero in any factor yields zero motivation.

Equity theory: employees compare their outcome/input ratio with referents; perceived inequity motivates reduced effort or exit.

Tuckman stages: forming, storming, norming, performing, adjourning; conflict peaks in storming and must be surfaced, not suppressed.

Transactional leadership exchanges rewards for performance; transformational leadership uses idealized influence, inspiration, intellectual stimulation, individualized consideration.

Groupthink symptoms include illusion of unanimity, self-censorship, and pressure on dissenters; assigning a devil's advocate is a standard countermeasure.

Situational leadership matches directive versus supportive behavior to follower readiness; high-readiness followers need delegation, not close direction.

Argument essay structure: restate the claim, state a thesis of evaluation, then develop body paragraphs each addressing one flaw or assumption with a concrete alternative explanation.

Assumption-hunting questions: what must be true for the evidence to support the conclusion, and what alternative cause would produce the same data?

A paragraph needs one controlling idea, evidence, and an explicit link back to the thesis; unlinked evidence reads as summary, not argument.

Hedging language (may, suggests, likely) is appropriate for uncertain claims; absolute terms (always, never, proves) invite refutation.

Concision: replace nominalizations with verbs and delete redundant pairs; wordiness dilutes the argument's force.

Parallel structure in lists and comparisons prevents faulty comparisons, the most common sentence-correction error.

Counterargument handling: concede a limited point, then explain why the main thesis still holds; ignoring the strongest objection weakens credibility.

Quantitative claims in prose need units, base, and time frame (e.g., "revenue rose 12% year over year"), otherwise the comparison is ambiguous.