Businesses often study their own operations to determine whether they are doing the right things and doing the right things well. Two terms are used to describe the best business practices. First, effectiveness means making the right decisions about what products or services to offer customers and the best ways to produce and deliver them. Second, efficiency means producing products and services quickly, at low cost, without wasting time and materials. Firms that provide products at the lowest cost while maintaining the quality customers expect will usually succeed.
Some companies are extremely efficient but very ineffective, whereas others are effective but inefficient. Good managers focus on both effectiveness and efficiency and are able to achieve both.
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