There are certain terms that are often used in different ways. Three of them are efficiency,
effectiveness and productivity. Therefore it is necessary to start with giving their definition.
An installation produces outputs by transforming inputs. An installation is a certain
well-chosen level of corporate assets where a transformation process takes place. For instance, in the
welding line of a car factory, steel (input) is transformed into car doors (output). However steel is
not the only input. Labor and energy are other examples of
an input.
Productivity is defined as the actual output over the actual input (e.g. number of cars per employee).
The effectiveness of the installation is the actual output over the reference output. Productivity can
be influenced not only by changing the effectiveness but also by altering the efficiency, this is the
actual input over the reference input.