Effectiveness and efficiency
Effectiveness is company’s ability to achieve set objectives.
Effectiveness is measured with degree of objectives’ achievement.
There are three types of effectiveness:
1. Technical (adaptation of new systems)
2. Utility (optimization)
3. Economic (success of the company, its growth)
Efficiency is company’s ability to maximize return on the unit of the used resource.
Efficiency is measured with ratio of inputs to outputs.
The main rule of every company is to be effective and efficient.
The criterion of effectiveness-efficiency:
Minimum principle: The company has to achieve set targets with minimum resources.
Resources=const; $ ? max
Maximum principle: The company has to maximize effectiveness with limited resources.
$=const; Resources ? max