CEO Michael O'Leary of Ryanair (an accountant, by the way) grew the company into one of the world's largest airlines by cutting frills from one product (aircraft journeys) and passing the savings on to passengers. His success demonstrates that in the long run, the most important performance metric is

Question

BlackTom AI · Accepted Answer

Let’s break down the question and each option to explore what they mean in a business performance context.
Option 1: Effectiveness. This choice centers on doing the right things and achieving the desired outcomes or goals. In the Ryanair example, cutting frills and passing savings to customers aligns with delivering what customers value and achieving the airline’s strategic objectives (lower price, broader market reach). Proponents of effectiveness argue that long-run success hinges on whether you achieve the intended results, not just how efficiently you operate. This is why the statement can be seen as pointing to effectiveness as the key metric: it focuses on outcomes and market impact rather than merely costs or processes.
Option 2: Economy. Economy emphasizes minimizing cost and using fewer resources. While Ryanair’s strategy includes reducing frills to lower costs, choosing economy as the most important long-run metric would overlook whether the company is still delivering the promised value and outcomes to customers and shareholders. In other words, cost alone doesn’t guarantee success if the product does not meet customer needs or strategic goals.
Option 3: Efficiency. Efficiency is about doing things right—maximizing output from given inputs or minimizing resources for a given output. The Ryanair example illustrates cost-cutting to pass savings to passengers, which is about efficiency in resource use. However, the prompt’s framing about the long-run performance metric shifts attention toward outcomes and value delivery, which is more aligned with effectiveness than efficiency alone. 
Putting these together, the reasoning hinges on whether the focus is on outcomes (effectiveness), costs (economy), or process/resource optimization (efficiency). The example’s emphasis on delivering value to passengers via lower fares aligns with the outcome-oriented perspective. That said, the provided answer indicates that Effectiveness is deemed correct in this context, suggesting the emphasis is on achieving strategic goals and market impact rather than solely cost or process metrics.
Note: If one disagrees with the premise, it’s useful to examine how each metric by itself can be insufficient: effectiveness without efficiency can waste resources; efficiency without effectiveness may optimize the wrong goals; economy without effectiveness can strip value. The best strategic stance typically blends all three, with effectiveness as the overarching aim to ensure the right outcomes are achieved through efficient and economical means.

BUSI_V 335 972 2025SS BUSI 335 MT1 Practice Exam

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