Ashita and Lakshita are employees working in Dazzling enterprises dealing in costume jewellery. The firm secured an urgent order for 1,000 bracelets that were to be delivered within 4 days. They were assigned the responsibility of producing 500 bracelets each at a cost of ₹100 per bracelet. Ashita was able to produce the required number within the stipulated time at the cost of ₹55,000 whereas, Lakshita was able to produce only 450 units at a cost of ₹90 per unit.

Which of the statement is incorrect in the context of the above?

1. Ashita is effective

2. Ashita is efficient

3. Lakshita is effective

4. Lakshita is efficient

2 and 3

The correct answer is option 2- 2 and 3.

Statement 2: "Ashita is efficient" – This is incorrect because although Ashita completed the required 500 bracelets on time (which means she was effective), she spent ₹55,000 instead of the target ₹50,000. This means she exceeded the cost, so she was not efficient.

Statement 3: "Lakshita is effective" – This is also incorrect because Lakshita was supposed to make 500 bracelets but could only make 450. This means she did not achieve the target, so she was not effective.

Why other statements are correct?

Statement 1: Ashita is effective – This is correct because she completed the required 500 bracelets within the given time. Since effectiveness is about achieving the set goal, Ashita is effective.

Statement 4: Lakshita is efficient – This is correct because she produced each bracelet at a lower cost than the target cost. Efficiency means doing the work with minimum cost and wastage. So, Lakshita is efficient even though she didn’t complete the full target.

"Efficiency means doing the task correctly and with minimum cost. There is a kind of cost-benefit analysis involved and the relationship between inputs and outputs. If by using less resources (i.e., the inputs) more benefits are derived (i.e., the outputs) then efficiency has increased. Efficiency is also increased when for the same benefit or outputs, fewer resources are used and less costs are incurred. 

Effectiveness in management is concerned with doing the right task, completing activities and achieving goals. In other words, it is concerned with the end result.

**Effectiveness and efficiency 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. For example, 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.