Cost Efficiency
Business objective minimizing costs while maintaining quality.
Formula
Cost Efficiency = Output / Total Costs
Real World
Ryanair achieved cost efficiency by using a single aircraft type (Boeing 737), reducing pilot training and maintenance costs, allowing it to undercut rivals on ticket prices.
Exam Focus
Distinguish cost efficiency from cost cutting — examiners penalise answers that ignore the 'maintaining quality' condition.
How well did you know this?