Efficiency and Effectiveness:How these two similar looking but actually different words are connected to each other and also to Profits.

Efficiency and Effectiveness are very similar looking but actually very different words used in the context of Performance. Efficiency is cost effectiveness; cost in terms of materials labour energy or anything consuming resources. Here the idea is to improve output for the same input or reducing input for same output. Effectiveness is a measure of result orientation. Here, consumption of resources is not that important but the Result is. When we combine these two words we are interested in both the cost and result. That is, we want to optimise both the cost and the result ultimately improving profits.

Here one thing must be kept in mind; cost of finding out cost should not be so high to so as to eat away profits significantly.