Which of the following statement (s) is/are true?

Both of 1 and 2 are correct

OPTION 1- Efficiency and effectiveness are different terms but are interrelated.
OPTION 2- But these two aspects need to be balanced and management at times, has to compromise with efficiency.

Both are true as these two terms are different but they are interrelated. For management, it is important to be both effective and efficient. Effectiveness and efficiency are two sides of the same coin. But these two aspects need to be balanced and management at times, has to compromise with efficiency. It is easier to be effective and ignore efficiency i.e., complete the given task but at a high cost. Suppose, a company’s target production is 5000 units in a year. To achieve this target the manager has to operate on double shifts due to power failure most of the time. The manager is able to produce 5000 units but at a higher production cost. In this case, the manager was effective but not so efficient, since for the same output, more inputs (labour cost, electricity costs) were used.