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In today's environment, which is more important to organizations-efficiency or...

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sbridges | Student, Undergraduate | Salutatorian

Posted May 23, 2012 at 3:06 AM via web

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

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted May 23, 2012 at 3:17 AM (Answer #1)

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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.

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