Business Analysis: Lufthansa Airline

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1. Describe the type of international strategy the company has chosen. Lufthansa, one of the world’s biggest airliners, has divisions handing maintenance, catering and air cargo. Since the World War II the airline industry has never earned its cost of capital over the business cycle (Hitt, 2010). Most of the airline companies have either filed for bankruptcy or are being bailed out by their government. Lufthansa had also gone through these tough times, but had resurfaced to become one of the worlds most profitable airline company. The company adapted a transnational strategy, seeking to achieve both global efficiency and local responsiveness. Lufthansa’s monopoly in Germany came to a halt with the creating of the European Union. All the EU member countries become one regional and therefore the European competition became, an increasingly a local competition. Lufthansa created its regional Hubs, to cater for its domestic market. But the availability of substitutes such as bullet trains and the Euro tunnel, made is necessary for Lufthansa to create short traveling time, customizations and quality standards in the region to achieve a competitive advantage. But outside the EU there are no substitute to air travels as such all the flag carriers are competing in the market, the international airline industry is a highly competitive environment. A new force has also emerged in the world of air travel, in the form of three Gulf airlines with jumbo ambitions. Within a decade Dubai’s Emirates, Qatar Airways and Eithad from Abu Dhabi have between them carried the capacity of two hundred million passengers (Micheal, 2010). The company had to go global and therefore adopted the international corporate-level strategy, where Lufthansa will ope... ... middle of paper ... ...xperience (Thomas, 2010). Finally Lufthansa may have a flat management structure and a kind of flexible, highly productive workforce, not the likes of rival British Airways’ strike-torn employees union. It could also recruit cabin crew and ancillary staff on low wages from the south-east Asia and Africa who will work right up to regulatory limits to cut down labor cost. Works Cited Clark, P. (2010, June 8).Europe airlines struggle for take-off as rivals gain speed. Financial Times, p.15. Hitt, M., Ireland, R. & Hoskisson, R. (2010).Strategic Management: Competitive and Globalization, Concept and Cases. Mason, Ohio: Cengage Learning Michael, D. (2010, June 9).Emirate Airline Orders More Airbus Planes, Challenging Germany’s Lufthansa. The Wall Street Journal, p.B1. Thomas, B. (2010, May 12).Briefing Aviation: Rulers of the new silk road. Financial Times, p.16

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