Efficiency - Business Studies (GCSE Revision BBC Bitesize)

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Business Studies

Efficiency

Efficiency, productivity and competitiveness are linked. Better productivity means increased efficiency which results in a higher level of competitiveness.

Efficiency and productivity

Efficiency is about making the best possible use of resources. Efficient firms maximise outputs from given inputs, and so minimise their costs. By improving efficiency a business can reduce its costs and improve its competitiveness.

There is a difference between production and productivity. Production is the total amount made by a business in a given time period. Productivity measures how much each employee makes over a period of time. It is calculated by dividing total output by the number of workers. If a factory employing 50 staff produces 1000 tables a day, then the productivity of each worker…

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