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What Is the Difference between Effectiveness and Efficiency?

A principle of business administration describes the difference between two elementary attributes that increase productivity. Decisions should be made in such a way that they are both effective and efficient. But what is the difference between these two terms?

For this purpose, we want to focus on any activity within a project: If the right activity, i.e. an activity that brings the project closer to the previously defined project goal, is completed, it is effective. However, we do not yet pay attention to how the activity takes place. The view on the efficiency of an activity thus evaluates whether the activity is completed correctly. However, this can also deviate from the defined project goal without looking at the effectiveness.

Accordingly, an interplay of effectiveness and efficiency is elementary in order to act both goal-oriented and productive. The principle of business administration therefore consists of 2 aspects: Do the right things (effectiveness) and do the things right (efficiency).

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