Cost Reduction Approaches in Service Bussinesses

Proceedings of The 12th International Conference on New Ideas in Management, Economics and Accounting

Year: 2023

DOI: https://www.doi.org/10.33422/12th.imeaconf.2023.08.110

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Cost Reduction Approaches in Service Bussinesses

Sirijin Wongjarupun,Preeyanuch Apibunyopas

 

ABSTRACT: 

In the highly competitive service industry, effective cost reduction is crucial for the success of service businesses. Properly managing costs not only ensure operational efficiency but also boosts profitability, competitive advantages, and customer satisfaction. This study aims to investigate the various cost reduction approaches adopted by service businesses. Data gathered from magazines, business news sources, and company websites from years 2020 to 2022 were analyzed to explore the cost reduction strategies implemented by various service providers, specifically excluding layoffs. The focus is on extracting information regarding service types and their corresponding cost reduction approaches, which will then be organized into a contingency table. Correspondence analysis will be utilized to identify the relationship between service types and cost reduction approaches. The results of this study reveal three main cost reduction approaches: process improvement, strategic approaches, and collaboration and creativity. Typically, various-service-oriented businesses tend to apply distinct approaches for cost reduction. Professional service prioritizes collaboration and creativity, service shop emphasizes strategic approaches, and mass service and service factory opt for process improvement. The findings have significant implications as they serve as a guidance for service businesses, enabling them to apply effective cost reduction methods, minimize expenses, and prevent wastage. Implementing these strategies will optimize operations, reduce costs, and escalate overall financial performance.

keywords: cost reduction approaches, correspondence analysis, service types, service process matrix