Commercialization Toolkit

Glossary

Acronym: a word formed from the initial letters or groups of letters of words in a set phrase or series of words, such as SHG from Self-Help Group or MFI, from Microfinance Institution.

Balance sheet: a condensed statement that shows the financial position of an entity on a specified date (usually the last day of an accounting period). Among other items of information, a balance sheet states what assets the entity owns, how it paid for them, what it owes (its liabilities), and what is the amount left after satisfying the liabilities.

Baseline study: a baseline study is one that looks at study characteristics at a particular time or under a particular set of conditions to establish a “base line” or starting point. This could be the incidence rate of a particular health condition, the airborne concentration of a contaminant, or any of a number of other items. Subsequent studies (midline or endline) of the same or similar places at different times or under different circumstances will be conducted to see if there are changes as compared to the baseline. Then the researcher will attempt to determine whether the changes were related to any of the differing circumstances.

Batch processing: non-continuous (non-real time) processing of data, instructions, or materials.

Board of directors: a board of directors is made up of individuals from inside and outside an organization and is tasked with making the big, strategic decisions that guide the company. The board has the ultimate decision-making authority and, in general, is empowered to (1) set the company’s policy, objectives, and overall direction, (2) adopt bylaws, (3) name members of the advisory, executive, finance, and other committees, (4) hire, monitor, evaluate, and fire the managing director and senior executives, (5) determine and pay any dividends, and (6) issue additional shares.

Bottleneck: a phenomenon where the performance or capacity of an entire system is limited by a single or limited number of components or resources. In operations, it is the place where the process slows down or gets stuck. The term comes from the example of pouring water out of a bottle—the neck, being the narrowest part of the bottle, is where the water flows most slowly. Widen the neck of the bottle and the water flows more freely.

Business plan: a set of documents prepared by an organization’s management to summarize its operational and financial objectives for the near future (usually one to three years) and to show how they will be achieved. It serves as a blueprint to guide the organization’s policies and strategies, and is continually modified as conditions change and new opportunities and/or threats emerge. When prepared for an external audience (lenders, prospective investors) it details the past, present, and forecasted performance of the firm and usually also contains a pro-forma balance sheet, income statement, and cash flow statement, to illustrate how the financing being sought will affect the firm’s financial position.

Capacity: The quantitative ability to fulfill demand for goods services including the operations required.

Cash basis: an accounting method in which income is recorded when cash is received, and expenses are recorded when cash is paid out. Cash basis accounting does not conform with more sophisticated methods of accounting because it leaves a time gap between recording the cause of an action and its result. It is, however, simpler than the accrual basis accounting and quite suitable for small organizations that transact business mainly in cash. Also called cash accounting.

Category campaign: marketing activities that promote an entire category of products rather than a specific brand.

Ceramic water pot (CWP): a water filter that uses ceramic material to filter dirt, debris, and bacteria out of water.

Collateral: specific asset (such as land or building) pledged as a security by a borrower against a loan. If the borrower fails to repay the loan, the lender can seize the asset in lieu of payment.

Demographic: Statistical data of a population, especially those showing average age, income, education, etc.

Design for manufacturing (DFM): the general engineering art of designing products in a way that they are easy to manufacture. This design practice not only focuses on the design aspect of a part but also on the producibility. In simple language it means relative ease to manufacture a product, part, or assembly.

Direct or retail sales channel: Producer supplies to or directly serves an ultimate user or consumer, or uses one or more middlemen (agent, distributor, wholesaler, retailer).

Dividend: a share of the after-tax profit of a company, distributed to its shareholders according to the number and class of shares held by them.

Due diligence: research and analysis of a company or organization done in preparation for a business transaction, alliance or partnership.

Durable goods: products that can be used for several years after purchase and are not consumed or disposed of in a single use.

Endline studies: Collection of data that identify changes in conditions compared to initial “baseline” data.

Efficient: describes the extent to which time or effort is well-used for the intended task or purpose. It is often used to describe the amount of effort to produce a specific outcome effectively with a minimum amount or quantity of waste, expense, or unnecessary effort.

Effective: the capability of producing a desired result. In the context of Operations, “effectiveness” can often be thought of as “is it working and how well?”

Effect size:  The magnitude or size of an effect. Statistical significance (e.g., p < .05) tells us that there was a difference among two or more groups based on some treatment or sorting variable.

Endline studies: Collection of data that identify changes in conditions compared to initial “baseline” data.

Fast-moving consumer good (FMCG): products that need to be continuously or frequently purchased, such as food.

If-then approach: Development and trial of hypothetical solutions to evaluate their potential success in achieving desired effects.

If-then logical relationship: The conditional relationship between a hypothesis and a conclusion, often relating to cause and effect.

If-then relationship: The conditional relationship between a hypothesis and a conclusion, often relating to cause and effect.

Joint liability lending: a program of lending used by MFIs and SHGs to spread the risk of borrowing over multiple individuals. If one person in the group fails to repay, the other members have agreed to be held responsible for making the repayment between the group.

Key opinion leader (KOL): a key opinion leader is someone who is held in high esteem by those who accept his or her opinions and is often (but not always) seen to be an expert in a certain subject. Other people either respect this person’s opinion on a certain subject or look to this individual for general leadership and guidance. Key opinion leaders could be, for example, health workers (if the subject matter is health-related), local leaders (such as a village chief or member of a commune council), or members of community groups (such as a women’s self-help group).

Landscape module: One portion of a structured overview of market opportunities and barriers. A holistic view of the marketplace that enables companies to optimize brand positioning and to pinpoint opportunities.

Line of credit: loan arrangement under which a bank extends credit up to a maximum amount, against which a customer make withdrawals. A line of credit is a type of revolving loan where deposits (credits) are available for re-borrowing, and interest is charged only on the daily overdraft (debit) balance. It is, however, also a demand loan: the line of credit can be cancelled (and entire outstanding amount ‘called’) at any time by the lender at its discretion, without any warning notice or explanation.

Management reporting: The results of tracking and recording internal business data to improve business efficiency and effectiveness. Meeting the information needs of an organization’s management at every level in making operational, tactical, and strategic decisions. Its objective is to design and implement procedures, processes, and routines that provide suitably detailed reports in an accurate, consistent, and timely manner.
In a management information system, modern computerized systems continuously gather relevant data, both from inside and outside an organization. These data are then processed, integrated, and stored in a centralized database (or data warehouse) where they are constantly updated and made available to all who have the authority to access them, in a form that suits their purpose.

Marketing medium: a marketing medium is the channel being used to contact the targeted audience. Examples of media include postal mail, email, telephone, fax, the internet, radio, television, and store banners.

Marketing message: a marketing strategy developed by a business to promote a product or service. A promotional message can come in many forms, such as a television or magazine advertisement, or a slogan on a product package. Whatever form it takes, the promotional message is meant to communicate a certain message about the product or service the company is promoting.

Metrics: standards of measurement by which efficiency, performance, progress, or quality of a plan, process, or product can be assessed.

Microfinance: a method that allows underserved, low-income populations access to financial services such as loans and savings. This population cannot access traditional bank lending typically because they lack collateral or consistent income, and tend to pay higher interest rates than traditional bank loans. Organizations who make these loans are often referred to as microfinance institutions (MFI).

Nongovernmental organization (NGO): a legally constituted organization that operates independently from any government. The term originated from the United Nations (UN), and is normally used to refer to organizations that do not form part of the government and are not conventional for-profit businesses. The term is usually applied only to organizations that pursue some wider social aim that has political aspects, but that are not overtly political organizations such as political parties.

Payments in arrears (PAR): an overdue debt, liability, or obligation. An account is said to be “in arrears” if one or more payments have been missed in transactions where regular payments are contractually required, such as in an MFI installment payment program.

Postsale: Services, follow up, and customer satisfaction after a sales transaction.

Psychographic: Market research or statistics classifying population groups according to psychological variables (as attitudes, values, or fears).

Quality control: A system for verifying and maintaining a desired level of quality in an existing product or service by careful planning, use of proper equipment, continual inspection, and corrective action as required.

Records and inventory management or stock record: Manual or computer-based record of the quantity and kind of inventory (1) at hand, (2) committed (allocated) to firm-orders or to work-in-process, and (3) on order. It often also includes history of the recent transactions in each inventory item.

Return on investment (ROI): how to measure the efficiency of an investment, expressed as a percentage. This can help your company decide between different investments.The formula is as follows: gain from investment – cost of investment ÷ cost of investment. In the context of a marketing campaign, the “gain” would be the incremental profit (sales minus costs) generated by the “investment” (or costs) of the marketing campaign.

Request for proposals (RFP): if you have determined that your company needs a particular service or supplies, RFPs can be created to outline your exact needs such that vendors can provide quotes and samples of their applicable work.

Revenue: the income generated from sale of goods or services, or any other use of capital or assets, associated with the main operations of an organization before any costs or expenses are deducted. Revenue is shown usually as the top item in an income (profit and loss) statement from which all charges, costs, and expenses are subtracted to arrive at net income.

Sample: A subset or a small part of anything, or one of a number. A sample is intended to show the quality, style, or nature of the whole. Samples must be selected carefully to reflect the whole.

Segment: a group of customers that share similar characteristics, such as demographics (age, gender, education level), geography (reside in the same or similar areas), etc. Determining the targeted segment for your product or service will help you craft marketing messages and promotions that will appeal to them, which distribution channels will reach them, and the price they’re willing to pay.

Segmentation (Market): Aggregation of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action.

Self-help group (SHG) or savings and lending group (SHG): a village-based financial intermediary usually composed of 10–20 local people (often women). Members make small regular savings contributions over a few months until there is enough capital in the group to begin lending. Funds may then be loaned back to the members or to others in the village for any purpose.

Small and medium sized enterprises (SME): the definition varies country-by-country, with the primary criteria for a company being determined either “small” or “medium” being the number of employees (headcount) or annual turnover (revenues). In general, SMEs are small businesses that are often early in their lifecycle and have yet to reach a certain level of scale.

Social investor or impact investor: there is no one common definition for this type of organization, but in general it is an organization that seeks to fund social entrepreneurs and organizations and generate both a financial and social return on this investment. It is modeled after the long-standing and more formal venture capital industry that exists in the developed world to fund start-up entrepreneurial organizations.

Statement of cash flow: summary of the actual or anticipated incomings and outgoings of cash in a firm over an accounting period (month, quarter, year).

Term loan: asset-based short-term (usually for one to five years) loan payable in a fixed number of equal installments over the term of the loan. Term loans are generally provided as working capital for acquiring income-producing assets (machinery, equipment, inventory) that generate the cash flows for repayment of the loan.

Throughput: the quantity or amount of raw material processed within a given time.

Triangulation: A technique that facilitates validation of data through cross-verification from two or more sources. In particular, it refers to the application and combination of several research methods in the study of the same phenomenon.

Triple bottom line: An accounting framework with three parts: social, environmental (or ecological), and financial. These three divisions are also called the “three Ps”: people, planet, and profit, or the “three pillars of sustainability.”

User-centered design (UCD): a design philosophy and a process in which the needs, wants, and limitations of end users of a product are given extensive attention at each stage of the design process. User-centered design can be characterized as a multi-stage problem-solving process that not only requires designers to analyze and foresee how users are likely to use a product, but also to test the validity of their assumptions with regard to user behavior in real-world tests with actual users. Such testing is necessary, as it is often very difficult for the designers of a product to understand intuitively what a first-time user of their design experiences, and what each user’s learning curve may look like.

Validation: The process of research, examination, etc. that is required to prove that a product or service fulfills its desired purpose, usually in actual use.

Value banks: operate like traditional banks, focused on the social sector. They take deposits from savers and make loans to borrowers, just like traditional banks.

Value chain: The interdependent sequence of transactions from the developer or producer to the customer. The whole series of activities that create and build value at every step. The total value delivered by the company is the sum total of the value built up throughout the company.

Verification: The process of research, examination, etc. that is required to prove or establish that a product or service meets desired performance objectives or specifications.

Work plan: A set of goals and the processes by which a team and/or person can accomplish those goals.  Processes are broken down into small, achievable tasks bound by time and budget constraints to accomplish clearly defined goals and objectives.

Working capital: the capital of a business that is used in its day-to-day operations, calculated as the current assets minus the current liabilities. Essentially, this goes to immediate needs, such as inventory, personnel salaries, and such.

Write off: to remove an asset from the books of the company because it no longer has any value. In the case of our example in the Consumer Financing section, it is the recognition by the lender that the borrower is not going to repay and the remaining amount owed is lost forever.