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CSEET · Business Laws and Management · Management Knowledge for Company Secretaries

Ravi manages a chemical firm. He sets a target of 10% cost reduction, but pursues it by buying poor-quality raw material, which spoils the product and loses customers. Which pair of concepts is most clearly in conflict in his approach?

Ravi achieved efficiency but not effectiveness. He lowered costs, which is doing the task with fewer inputs, but the poor raw material damaged quality and lost customers, so the real business objective was not met. Effectiveness requires completing the right task and achieving the intended goal.

  1. AEfficiency achieved but effectiveness not achievedCorrect
  2. BEffectiveness achieved but efficiency not achieved
  3. CBoth efficiency and effectiveness achieved
  4. DPlanning achieved but goal-setting absent

Explanation

Efficiency means doing the task with minimum cost, and Ravi cut costs. Effectiveness means achieving the real objective of sustained business and customer satisfaction, which failed as customers were lost. So efficiency without effectiveness. The reverse option ignores the cost cut.

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