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CMA Foundation · Fundamentals of Business Economics and Management · Introduction to Management

Ramesh, a production manager at a Pune auto-parts firm, reduces wastage of raw material by 10% while meeting the monthly output target of 5,000 units. In management terms, this shows:

The case shows both efficiency and effectiveness. Meeting the 5,000-unit target is effectiveness, because the goal was achieved, while cutting material wastage by 10% is efficiency, because fewer resources were used per unit of output. Good management aims at both together.

  1. AEffectiveness only, because the target was met
  2. BEfficiency only, because wastage was cut
  3. CBoth efficiency and effectiveness, because the target was met with lower resource useCorrect
  4. DNeither, because management concerns only profit figures

Explanation

Effectiveness means achieving the goal (5,000 units met). Efficiency means using minimum resources for the output (wastage reduced). Ramesh achieved both. Saying effectiveness only ignores the saving in inputs, while saying efficiency only ignores the target being met.

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