Cost Efficiency
Business objective minimizing costs while maintaining quality.
Formula
Cost Efficiency = Output ÷ Total Costs
Real World
Ryanair built its entire business model around cost efficiency — using a single aircraft type to reduce maintenance costs and flying to secondary airports to cut fees, enabling its low-price strategy.
Exam Focus
For 'evaluate' questions, always weigh cost efficiency against potential trade-offs such as quality reduction or employee morale.
How well did you know this?