Q.Nisha had given some old dresses of her own to her house-helper Beenu. After a few days, Nisha was happily surprised when she saw Beenu wearing one of the dresses beautifully refurbished. On enquiry, Beenu told Nisha that this was done by her daughter who had just completed her Class 12th studies. Beenu also told Nisha that she was a little concerned as her daughter did not want to study further. Nisha was very much impressed by the creativity of Beenu's daughter, so she decided to setup a small business for her. Nisha bought 15 sewing machines and appointed 15 girls to refurbish the old dresses. Nisha also arranged old dresses from various sources and employed a person who will sell these dresses at a very low cost for the one's who could not purchase news dresses due to their low income. Nisha divided the girls in three equal groups, each having five sewing machines. Each group was given a target of refurbishing 150 old dresses in a fortnight with a cost of Rs. 30 per dress. After a fortnight, Nisha who was supervising this business with Beenu was informed that Group I was able to meet the target by refurbishing 150 old dresses at a cost of Rs. 30 per dress. Group II was able to refurbish 150 old dresses at a cost of Rs. 35 per dress, whereas Group III could refurbish only 140 old dresses but at a cost of Rs. 27 per dress.
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Start your 14-day free trial to unlock the full solution →The three groups demonstrate different combinations of efficiency (doing things right, minimizing cost) and effectiveness (doing the right things, achieving targets). Group I achieved both; Group II was effective but inefficient; Group III was efficient but ineffective. Both concepts matter, but effectiveness takes priority because meeting objectives is the foundation of organizational success.
Understanding the Performance of the Three Groups
When Nisha set up this small enterprise to refurbish old dresses, she established clear targets for each group: 150 dresses in a fortnight at Rs. 30 per dress. The way each group performed against these twin benchmarks reveals two fundamental concepts that lie at the heart of management.
Group I met the target of 150 dresses and did so at exactly the planned cost of Rs. 30 per dress. This group did what was expected and used resources as planned.
Group II also completed 150 dresses, hitting the quantity target, but spent Rs. 35 per dress instead of Rs. 30. They achieved the goal but consumed more resources than intended.
Group III refurbished only 140 dresses, falling short of the 150-dress target, but managed to do so at Rs. 27 per dress, below the planned cost.
These outcomes illustrate the difference between two critical management concepts: effectiveness and efficiency.
(i) Identifying the Concepts for Each Group
Group I: Both Efficient and Effective
This group demonstrates both effectiveness and efficiency. Effectiveness means accomplishing the stated objective — in this case, refurbishing 150 dresses. Efficiency means achieving that objective with optimal use of resources, minimizing waste and cost. Group I hit the target number of dresses (effective) and did so at the planned cost of Rs. 30 per dress (efficient). They did the right thing in the right way.
Group II: Effective but Inefficient
Group II was effective because it met the target of 150 dresses. The objective was achieved. However, the group was inefficient because it spent Rs. 35 per dress instead of Rs. 30, meaning resources were not used optimally. There was wastage — perhaps in terms of materials, time, or effort — that drove up the cost. They did the right thing, but not in the right way.
Group III: Efficient but Ineffective
Group III was efficient in the sense that it kept costs low at Rs. 27 per dress, below the target cost. Resources were used economically. However, the group was ineffective because it failed to meet the target, completing only 140 dresses instead of 150. The objective was not fully achieved. They did things right, but did not do enough of the right thing.
Efficiency is often described as "doing things right" — minimizing waste, optimizing resource use, keeping costs down. Effectiveness is "doing the right things" — achieving the goals and objectives that have been set. A manager must balance both, but they do not always move in the same direction.
(ii) Meaning of the Concepts and Their Relative Importance
Effectiveness refers to the achievement of organizational goals and objectives. It is about results, about whether the intended outcome has been reached. In Nisha's business, effectiveness means meeting the target of 150 refurbished dresses. An effective manager ensures that the organization's purpose is fulfilled, that targets are met, and that the desired end is achieved. Without effectiveness, the organization drifts away from its mission.
Efficiency refers to the optimal use of resources in achieving those goals. It is about the relationship between inputs and outputs, about minimizing cost, time, and effort while maximizing results. In this case, efficiency means refurbishing dresses at or below the cost of Rs. 30 per dress. An efficient manager ensures that resources — money, materials, labor, time — are not wasted, that the organization operates economically.
Both concepts are essential to good management, but if one had to be prioritized, effectiveness is more important. …
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