http://finance.yahoo.com/news/lufthansa-targets-operational-efficiency-efb-150449403.html;_ylt=A2KJjajDO1JSk0YAY7PQtDMD

Lufthansa adoption of the new EFB tool which helps pilots actively manage the operational efficiency of their flights is an example of how advancements in technology can increase efficiency in firms, reduce costs and thus increase profits. In the industry of air travel, one of the major costs is jet fuel. This new EFB  software is able to pinpoint the available cost savings potential for every instant of the flight and display it to pilots in easy-to-read charts, giving concise information about fuel burn, overall cost and delay. This technology will likely result in more fuel efficient flights resulting in both a benefit to the airline in profits and to the environment in less carbon emissions.

This is a good example of how investments in research and development although expensive can yield beneficial outcomes and are worthwhile investment for firms who can afford it. Although investing in technology can be undesirable in the eyes of the firms for several reasons including: high costs and high risks. Costs of investing in research and development for greater technologies is expensive because you are devoting a large portion of your firm to do research and experimentation. This is expensive because you are paying the salaries and capital for the research to be made but you do not make any revenue during the time of the research, only after a break through has been made can you make and financial gains. This leads to the second undesirable characteristic of R&D – high risk. As just previously mentioned, conducting R&D is expensive however it is also risky as there is no guarantee that the research results in any useful benefit. It is for these two reasons why only established firms with high savings or profits can conduct R&D, and it is because of R&D that allows these large firms to remain as the dominant competitor of the market because they tend to have technological advantages that allow them to be more effective and efficient and therefore providing cheaper prices then smaller firms who can’t afford to conduct R&D and make any efficiency advancements.

Tool that allows for pilots to calculate more fuel efficient routes