CHAPTER ONE: INTRODUCTION
Peter F. Drucker’s ‘Management: Tasks, Responsibilities and Practices’ book explained clearly the important of the firm’s efficiency as important as the effectiveness. If the effectiveness is the route to the success, then the efficiency is the best vehicle to the profit. Fail to maintain the efficiency may lead to bankruptcy even though that firm is adopting the highest level of best practices (Drucker, 1993). According to Drucker, small changes into the product, technology, process, market and other activities within the business would significantly bring the business closer to the full realization of its potential. Kodak, Motorola and recently Nokia were the examples of fail to realize their potentials.
The concept of evaluating efficiency has been with us for many decades. Starting from the nonprofit sectors such as education and healthcare to the financial institution and now even the sports and entertainment sectors do also been measured their efficiency. It is become an alternative to a company’s performance management (Sowlati, 2005) as whole and individual unit (Borenstein, Becker, & Prado, 2004). Besides, it’s also measure the reputation, benchmark within the industry (Brønn & Brønn, 2005) and even stabilize the company’s finance better (GÖKGÖZ & ÇANDARLI, 2011).
There wasn’t any doubt about the importance of measuring the efficiency of the company. But does all industry make use this tool as their premier performance measurement?