What is the difference between efficiency and effectiveness?

Answer

The main difference between efficiency and effectiveness is that efficiency is related to a process and effectiveness is related to an end result. Efficiency is a measure of the amount of energy required to produce a result, while effectiveness is the degree to which a desired result is achieved.

In economics, efficiency refers to how much money a business must spend to produce every dollar it makes. Efficiency rates will show the ability to turn resources into profits. The fewer resources that are required to produce revenue, the more efficient a company is, but efficiency is not the only measure of success. A less efficient company that uses more resources to produce revenue can still be very effective at producing more profit because of other factors, such as customer service or an expensive, temporary marketing campaign.

In economic terms, effectiveness is a measurement of the extent to which a company's specific goals are met, whether the goal is a large profit margin or holding a majority of the market share in a company's industry. Effectiveness is measured without reference to the cost required to produce the desired result. Effectiveness focuses on results without consideration of the process, while efficiency focuses on the process used to achieve the end result.

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