Question

As you continued your discussion with Maia and Bram, you explain that even small, start-up companies should operate both efficiently and effectively. Although these terms sound similar, each has a different and precise meaning. You walk through a few examples with Maia and Bram to ensure that they have a solid understanding of the concepts. For the following examples, select the word or phrase that best completes the sentence.

Example : You deliver pizzas for a local restaurant. At least once or twice per evening, the person taking phone orders writes down the delivery address incorrectly. Frequently, you are sent to make just one delivery, even on busy days. Last night, after arriving more than an hour late, a customer told you to "take the pizza back" because it was no longer hot. The pizza restaurant is:

Answer 1

Efficiency refers to the optimal use of resources, while effectiveness is about goal achievement and customer satisfaction. A messenger company that benefits from lower gas prices can become more efficient by reducing delivery costs, potentially increasing supply.

Step-by-step explanation:

When operating a business, it's essential to understand the concepts of efficiency and effectiveness. Efficiency refers to how well a company uses its resources to produce goods or provide services, while effectiveness is about achieving the desired goals and fulfilling the customers' needs.

For a messenger company that delivers packages, gas expenses are a significant factor. If gas prices decrease, the company can operate more efficiently, as it reduces the cost of deliveries.

This efficiency doesn't automatically imply effectiveness, which would mean successfully delivering packages on time and meeting customer expectations. When gas prices fall, the company could potentially increase its supply, serving a wider area or offering more competitive prices.

However, being effective means that these savings translate into better service, like faster deliveries or new services that meet customer demand.

Turning to capital, in the pizza restaurant example, efficiency might involve optimizing the use of the oven, tables, and chairs to serve more customers. Effectiveness, however, would involve ensuring the pizza is still hot and arrives within the expected delivery time regardless of operational efficiency.