Efficiency and Effectiveness

Efficiency is being able to create products or offer services at a competitive price.

Effectiveness is creating and offering the right products and services, the products and services that consumers desire and will buy.

An inefficient, ineffective business won’t be in business very long. If you can’t make or offer products that people want to buy and you can’t make or buy them at a price people will pay then business death is clearly imminent.

An inefficient, effective business will survive but probably won’t prosper. The business will survive as it’s meeting customers’ needs, however it may not be making healthy profits as it is doing so in a way that is inefficient. As soon as a competing business is able to meet the customers’ needs more efficiently the business will die.

An efficient but ineffective business will die slowly. The business may be meeting a few customers’ needs and as it’s doing so efficiently there will be sufficient cashflow to stay in business a while, however eventually the lack of customers will force the business into decline.

An effective and efficient business will thrive. A business that can meet customer needs whilst making a healthy profit is a successful business.

Is your business both efficient and effective?

Based on the information above, what improvements can you make to your business?

If you believe your business is innefficient, how can you create products at a more competitive price?

If you believe your business is ineffective then are you targeting the wrong market for your product? Or conversely are the products you’re creating wrong for your target market, do your target market require something different?