WHICH IS THE DIFFERENCE?
ECONOMY
EFFICIENCY vs EFFECTIVENESS
The controversy regarding the meaning of these words is quite noticeable, especially if we follow the definition provided by the RAE (Royal Spanish Academy):
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Efficiency: "Ability to have someone or something to achieve a particular effect."
Effectiveness: "Ability to achieve the desired or expected effect."
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As we can see there is a minimal difference between both words. Therefore, how can we distinguish them? It is always useful to use the examples or apply the definitions to practice.
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In economics, a subject is efficient when it achieves its mission with the lowest cost possible, whether monetary or relative to effort, while effectiveness consists in fulfilling our objective in accordance with the previously developed plan, without deviations from it, without taking into account the resources and expenses involved in using them.
BENEFIT vs PROFIT
In economics, we can define the economic benefit as the result of the activity of a company, therefore it is an indicator of the efficiency of a company. The benefit can be determined as the difference between profits and costs, therefore, it can be positive, when the profits are greater than the costs, or negative, otherwise.
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On the other hand, profit is the positive result of the previous benefit function, that is, the money we earn after subtracting costs. Therefore, this should always be positive, since otherwise, we would be referring to the "losses".
MANAGER vs BUSINESS PERSON
In a company, there are many functions and there are many people working in different departments. So, which is the difference between manager and businessman?
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The manager in economics is the person who moves the money and the resources in order to achieve some economic proposes or to accomplish his tasks in the company. However, he does not own the money, he manages it as he works by and for the company.
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The businessman/businesswoman is the person who invests the money or does business, but in this case, owning that money. What is more, he also develops managing activities, so:
Businessman = owner + manager
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Thus, the main difference between these two actors is that the businessman necessarily owns the money he is using for economic activities.
