Running Head: BUSINESS POLICY AND STRATEGY
Business Policy and Strategy
BUSINESS POLICY AND STRATEGY
Q1. Strategy formulation focuses on effectiveness, whereas strategy implementation
focuses on efficiency. Which is more important—effectiveness or efficiency? Give an
example of each concept, and explain your answer.
Effectiveness can be defined as producing the expected results or reaching the company’s
goals. Effectiveness is measured in terms of employee performance and profits realized by the
company. It is an abstract concept that depends on business theory for example in measuring
employee work input value against production output. Organizational efficiency, on the other
hand, is measurable as it directly relates the company’s expenditure. Efficiency is measured
mathematically through examining costs incurred, sales and profits.
It would be impossible to determine between the two which one is more important than
the other since no business can prosper unless efficiency and effectiveness are combined.
Efficiency involves producing using minimal resources as possible that is money and time
whereas Effectiveness encompasses making of the right product (Stapenhurst, 2009, p. 164). A
business cannot thrive if it is not effective for example it cannot prosper if it produces products
that have no demand. Equally, it is paramount for a firm to make its products efficiently. It can
make a popular product but if it...
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