In the United States, companies generally respond to economic downturns by reducing spending on capital projects. A frequently observed strategy is to delay investment in new capital projects and products and to cut spending on research and development activities, advertising, and customer-service activities.

a. In economic downturns how can companies cut costs and activities without affecting quality or service?

b. What are the likely effects of short-term cost cutting strategies such as those outlined above on long-term profitability and quality control?