Discuss the differences between efficiency and effectiveness.

Before reading about this topic, the writer thought that efficiency was concretely defined as reaching maximum productivity with little to no waste, and effectiveness was just how well an effort produced. After reading this chapter, the writer has a new understanding of how these words are defined as it relates to running a business. Whether or not a company’s management control is a success or failure depends on its efficiency and effectiveness. It is often thought that effectiveness and efficiency are one and the same when in reality they are mutually exclusive. At any rate, it is ideal for a company to be effective as well as efficient. By definition, efficiency is a relationship between inputs and outputs. According to the text, efficiency is the easiest to measure. Many companies measure efficiency by comparing data to some sort of standard. It is important to understand that when measuring efficiency that outputs aren’t always readily comparable. Also, specific decision making may not always be relevant to cost measures. Effectiveness is defined as being concerned with the relationship between an organization’s outputs and its objectives or goals. Measuring effectiveness is more difficult than measuring efficiency for two reasons. The first reason is that a company’s goals may not always be quantifiable, therefore difficult to measure. Next, the outputs need to be related to more than one goal or objective. It is no doubt that efficiency and effectiveness are crucial measures to consider when attempting to run a successful business. Without them, financial managers will have a hard row to plow to remedy the company’s financial situations.

Cleverley, W. O., Song, P. H., & Cleverley, J. O. (2011). Essentials of healthcare finance (7thed.). Sudbury, MA: Jones and Bartlett Learning

100 word reply either agreeing disagreeing or relating to