IT

When cost-cutting backfires: How smart companies save without falling behind

2 min read
April 16, 2025

When executives talk about cutting costs, many think of short-term sacrifices - like skipping vacations or dining out. But in business, these cuts can backfire. Freezing investments may seem smart now, but it can cost companies their future. Without continued investment, businesses risk losing market share and falling behind the competition.

Cutting too much can cost market position

Big names like BASF, Volkswagen, SAP, and Bayer are under pressure to cut costs. But focusing only on quick fixes puts long-term success at risk. Apple took a smarter path. During the 2008 financial crisis, it maintained its research and development budget. The payoff? In 2010, Apple launched the iPad, transforming the tech landscape. Innovation during tough times gave Apple a powerful edge.

Smarter ways to save

Sustainable cost-cutting doesn’t mean stopping progress. Companies like BASF, Covestro, and Mercedes-Benz show how strategic savings drive performance.

BASF: Strengthening what works

BASF is staying focused by:

  • Scaling back less profitable location
  • Simplifying its company structure
  • Pushing high-margin business units

It’s a clear plan for stability and growth.

Covestro: Evolving without harsh cuts

Covestro avoids deep cuts by:

  • Offering voluntary exits instead of forced layoffs
  • Using flexible work schedules to match market shifts
  • Continuing to invest in innovation-ready locations

Mercedes-Benz: Predictive maintenance in action

Mercedes-Benz is saving money with smart tech. A cloud-based system monitors machines in real time, spotting issues before they cause problems. The result:

  • More than 80% of breakdowns prevented
  • Less unplanned downtime
  • Higher machine availability

A prime example of how digital tools reduce costs and improve operations.

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Efficiency beats across-the-board cuts

Cost-cutting is necessary, but not at the expense of innovation. Long-term success comes from investing in the right areas - especially technology, research, development, and branding. Even in tough times, innovation creates a competitive edge.

Research from the ifo Institute shows that in 2009, German equipment investments dropped over 20%. But the companies that kept investing emerged stronger, with better business models and improved market standing.

The answer lies in improving inefficient processes. Automation and digitalization create major savings without hurting quality or innovation. Winning companies focus on getting better - not just cheaper.

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Smarter office work saves more

Office work offers huge room for improvement. Many teams still spend hours making manual changes to slides and documents - time that could be used more productively.

empower® changes that. It gives teams many automation features and a central library of ready-to-use templates and designs that meet brand standards. That means faster results, lower costs, and more time for meaningful work.

Cutting alone isn’t enough - efficiency makes the difference. Companies that streamline processes gain a lasting competitive edge. The real question isn’t if your business can be more efficient - but how.

Discover how empower® helps drive performance. Download the free Economic Impact Report to learn how the Document Generation Suite for Microsoft 365 boosts productivity, profitability, and brand consistency.

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