But we should not think of it as the failure of this theory because the steps taken above did not involve proper assessment and planning and if we take proper measures before implementing this theory we would obtain desired results. Cost reduction method is great but it works in certain kinds of businesses (Nachum, 1999). Businesses which are more closed or where there is very little customer interaction seem to prefer cost reduction techniques as they allow them to cut costs at certain places without disturbing their customer satisfaction rates however businesses which have more direct interaction of customer and provider (such as hospitality businesses) avoid such techniques as they reduce overall efficiency and render the business to greater losses and lower customer satisfaction rates (Anderson, 1997) (Stephens, 2004).
However, we see that if cost reduction is done through proper strategies we can then assure better business growth and higher profits. As we talk about cost reduction we see that a great technique has applied banks. Banks used to attend their clients and customers through employees and they were to conduct their transactions, figure our problems, etc. This was quiet satisfactory for the people as they were getting great treatment and higher values. But it was getting difficult for banks to handle such a large number of employees and their salaries. So, the banks sought to a price reduction technique and introduced ATMs, credit cards, etc. The benefits were twofold; First people would need not to go the bank for mere transactions, they could instead go to their nearest ATM and withdraw money (easy for the customers). Second, banks would now save huge amount money which would be used for employee salaries (time and cost effective) (Suzue, 2002). So, we see a situation where both parties i.e. the service provider and the customer are happy. Although this might not provide people with same type of attention they used to get before but it has definitely expedited daily tasks and at the same time proved cost effective too. So, we see this also a situation where cost reduction resulted in a better outcome and the provider and customers are both happy with the idea.