ACCA Financial Management (F9) Certification Practice Exam

How is effectiveness defined in a business context?

1. The organization's resource allocation strategy

2. The extent to which goals are achieved

3. The number of employees meeting their targets

4. The profitability of each product

The correct answer is: The extent to which goals are achieved

Effectiveness in a business context refers to the extent to which an organization meets its goals and objectives. It emphasizes the results achieved and how well the organization accomplishes its intended outcomes. While resource allocation, employee performance, and profitability are all important aspects of business operations, they are more closely related to the efficiency and operational aspects rather than the overarching concept of effectiveness. When an organization is deemed effective, it means that it is successfully realizing its strategic aims, which could include increasing market share, improving customer satisfaction, or achieving sustainable growth. Thus, evaluating effectiveness focuses on the end results and the degree to which the organization can fulfill its mission and objectives, making this definition particularly pivotal in assessing overall organizational performance.