Austro-Italian ironclad arms race
Austria's defeat in the Seven Weeks War forced Austria to determine a new set of foreign and domestic policies for the future, as Austria's interests since the days of the Holy Roman Empire had primarily been found in Italy and Germany. The Empire thus reformed itself into the Austria-Hungarian Empire following the adoption of the Austro-Hungarian Compromise of 1867 (German: "Ausgleich"), which re-established the sovereignty of the Kingdom of Hungary and placed Hungarians within the Empire on an equal footing with Austrians. Under the "Ausgleich", Emperor Franz Joseph I would be crowned as King of Hungary, while a separate parliament at Pest with powers to enact laws for the lands of the Holy Crown of Hungary would be established.
Seven Years' War
Not only that, Austria now found herself estranged with the new developments within the empire itself. Beside the rise of Prussia, Augustus III, although ineffective, could muster an army not only from Saxony, but also Poland, since he was also the King of Poland as well as Elector of Saxony. Bavaria's growing power and independence was also apparent as it asserted more control on the deployment of its army, and managed to disengage from the war at its own will. Most importantly, with the now belligerent Hanover united personally under George III of Great Britain, It amassed a considerable power, and even brought Britain in, on future conflicts. This power dynamic was important to the future and the latter conflicts of the "Reich". The war also proved that Maria Theresa's reforms were still insufficient to compete with Prussia: unlike its enemy, the Austrians were almost bankrupt at the end of war. Hence, she dedicated the next two decades to the consolidation of her administration.