In today's environment, which is more important to organizations, efficiency or effectiveness? 

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pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

There is no way to say that one of these is more important than the other.  No organization can succeed in today's highly competitive world unless it is both efficient and effective.

An efficient organization is one that produces a good or service using the least possible amount of inputs.  This is vitally important in today's world.  If a firm cannot produce efficiently, it cannot compete because other companies will be able to produce at lower prices.  

An effective organization is one that does the right things.  It is an organization that gives the customers what they want.  This is just as vital in today's world.  A firm that is really good at making things well and at low costs will still fail if it is making things that people no longer want.  The most efficient firm making film cameras is not going to prosper in today's world of digital cameras.

No firm can prosper if it is not both efficient and effective.  A company that makes popular goods cannot compete if others can produce the good more cheaply.  A company that produces goods at a low price cannot compete if no one wants its product.  Therefore, both are equally important.

mkoren's profile pic

mkoren | Middle School Teacher | (Level 3) Senior Educator

Posted on

In today’s business world, a business must be both effective and efficient. It would be very difficult to be successful if only one of these conditions was present.

In order to maximize profits, a business must avoid additional costs due to inefficiencies. By doing its work in the most efficient manner, businesses are able to keep costs down. This helps allow the business to be more profitable.

A business must also be effective at what it does. If a business isn’t effective, it will have a difficult time selling its products at a competitive price. If a business isn’t competitive, it will lose customers and see its sales drop. Ineffective businesses struggle in many areas of business operations. This could include reaching consumers, marketing the business, and manufacturing the products that its customers demand. Ineffective businesses will find it more difficult to achieve their goals.

Successful businesses are both efficient and effective at what they do.


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