Lufthansa: Going Global Essay

Lufthansa Aviation group has arrest a worldwide leader in the flight path intentness with some(prenominal) personnelful contrast instalments, inclusive of a passenger airline component, stemma component, logistics, MRO catering and IT services. The aviation success has been largely cod to their focus on quality, innovation, safety and reliability. Head quartered in Germany, Lufthansa has lead the pack with regard to internationalist airline melodic line. The Aviation sorts International Business Strategy has evolved to that of a collective level transnational dodging, whereas there is a shared vision to master spheric efficiency yet effort to streng then its local responsiveness in Germany (Hitt, 2009). Evident with the strategic coalescency with Star Alliance, the development of Lufthansa regional serves as a local response provision of a low- speak to carrier, in amplification to the modernizations of various traveler hubs and welcome lounges through prohibited t he study key traffic hubs located in Germany.This international trading dodging is construeed a combination of multi domestic and global strategies (Hitt, 2009). A transnational outline uniquely proposes the benefits inherent in both global and multi-domestic strategies under this outline distri justively agate line component of Lufthansa cigaret successfully exercise breakaway innovation given its decentralized hearty system.Lufthansa understood early, the benefits and advantages of international expansion obvious through post WWII with travels to various countries (Lufthansa, 2010) later the formation of an strategic alliance with Star Alliance, which serves a global airline network. Star Alliance was ceremonious in 1997 with Lufthansa being one of its core founding members. Despite sedulousness ups and downs related to international travel through the early 1980s with the Iraq war, and then the frightening threat of terrorism post September 11, 2001, Lufthansa re mained optimistic as did the rest of the airline constancy, and responded to globalization appropriately. The majority responded in a deal manner forming alliances in an effort to compete with the newly entered No-frills and get off cost competitive airline flights offerings.Competition of this kind, along with slow convalescence of international travelers, increase in gas prices the constant pressure to curb pricing order to remain competitive has give birthn a price on the entire manufacture over the last decade. Lufthansas withal crafted Lufthansa Regional which accounts for 50 percent of the Aviation groups German and European flights. This Wholly owned subsidiary is entirely owned and controlled by Lufthansa the parent company, and was established to meet the need of low-cost carriers. Within Lufthansa Regional, cost Eurrowings and the partly owned City line. Through this development Lufthansa terminate offer a lower cost airline and reap the benefits of passengers opt ing for this Intercontinental airline versus going to a larger hub. Lufthansa used an acquisition strategy with the collection of SWISS AIR in 2005, a strategic move to nix the competition British Airways and One World Alliance to seize the opportunity.The strategic alliance with Star Alliance was a concerted cooperative strategy to provide nodes worldwide reach and a smooth travel interpret (StarAlliance,2010). This remains as a shared objective for Star Alliance, Lufthansa and the former(a) members of this alliance. It is understood that it is relatively impossible to survive in a global network extracurricular of an alliance. This cooperative strategy serves as a mechanism for the Aviation Group to enter the market swiftly, and with massiveer impact with the life of the alliance. The airline industry has historically been a standard cycle market, the analogous is true with this alliance thus allowing for savings and benefits to extend across its members (Hitt, 2009). The addition of Air China and Shanghai Airlines added as members, serves as a warm example of Star Alliances capability to assist in global expansion for all its members and a unique opportunity to water faucet into a market that would be quite challenging if attempted independently.This strategic network serves as a valuable cooperative arrangement to take place between the 18 members within the Star Alliance. This alliance allows for the manduction of cooperative relationships with stakeh of age(predicate)ers, customers, suppliers and competitors (Hitt, 2009). Air carriers commonly participate in multiple level complementary alliances this is demonstrated with the relationship between Star Alliance and Lufthansa. However, these reference of business-level cooperative strategies present challenges with perception of loyalty, and speculation of illegal collusive activities this feeds into the discourseof other risks.Lufthansa has faced some friction with regard to make compromis es forbid to its horticulture. However the use of the cooperative strategies such(prenominal) as the alliance form with Star Alliance move ups reasonable given the high uncertainty of the industry and risk associated with pursing growth opportunities independently. It is considerably important to evaluate these uncertainties and challenges when pursing business outside of the national boundaries. The risk of a network cooperative alliance such as Star Alliance carries the risk of opportunistic doings. What may throw initially been viewed as a partnership, could become compromised with potential for failure due in part to a false perception of trustworthiness amongst members. (Hitt, 2008) additional risk, may also include misrepresentation full disclosure of what each member can bring to table and im difference of alliance-specific investments as enlarge with the example partnership of Disney and Pixar within the text. With regard to Lufthansa and its compromises counter to st andards, these challenges were revealed in the deterrent example study and make mention of compromises made end-to-end the years streak counter to the culture of Lufthansa. An important example of this was the mention of the IT component, and the belief that the customer interfacing with electronic check in completion was less than desirable, and not in alignment with the Lufthansa standard with response to customers. However, collaboration of Star Alliance IT groundwork would rob Lufthansa IT systems of their customers (Hitt, 2009).Consideration of current globalization trends and future efforts of the airline industry must be evaluated operating outside of national boundaries. An analysis of the change friendly culture and institutional attributes of global markets require evaluation. strategical leaders involves the analyzing of the environment in order to identify and an anticipate changes and trends that are in all probability to occur. An analysis focusing on strengths, weaknesses, threat, and opportunities (SWOT), should be conducted in order to right evaluate the industry environment. The risks associated with operating beyond national boundaries or Germany as in the case with Lufthansa would benefit from evaluating a competitive model such as the fiveforces competitive model as a mode of gaining knowledge slightly the industry inclusive of Threats of new entrants, Bargaining power of suppliers, Rivalry among competing firms, Threat of substitute product, and Bargaining power of buyers (Hit, 2009)The evaluation of the presidential terms structure and controls of Lufthansa indicate a great deal of complexity that requires extensive focussing. tending(p) that the makeupal structure is the foundational support for the organization and specifies the organizations globe reporting relationships, procedures controls, authority and decisions making out hearts it is imperative that the structure is solid but with room for flexibility as changes arise.The case study touches upon the six business lines within Lufthansa and the strategic mission of the organization to unite every aspect of the organization under one strategy roof. The Aviation Group has streamlined much of its endeavors inclusive of the dissolving of the once integrated cooperation. Strategic controls of this nature include improving the flow of communication between bring offment and front line employees and translating the over arching values of the organization into leadership values. Providing a degree of accountability, to every employee with targets, and dialogue with worry about their endeavors through an annual evaluation. there is an aggressive effort to restructure the business model focusing on cost cutting and streamlining anything that may be impacting the cash in flow significantly. Strategic and financial controls are necessary to celebrate a balance within the organization, thus the use of a balance score card would be ideal.This score card would serve as a check and balance system between what the organization has throttle out to accomplish and strategic and fiscal controls used to assess their performance. The old adage if you cant footfall it, you cant manage it lends to the legitimacy of using such controls. An example of such a financial control for Lufthansa was the elimination of discounted tickets used by independent travel agencies and packaging of direct booking using the internet or call centers. Financial operating goals have become a high priority with a direct focus on intervening in areas which impact the cash flow. Lufthansa has demonstratedgreat resiliency given its financial crises during the 1990s, now retentiveness a positive investment grade rating. Given that experience the organization is prepared to implement controls in order to concord financial set in avoidance of succumbing to financial failure.Improving the organisational structure requires making a significant investment in its Human Capital this federal agency developing the leadership skills of individuals within the organization. Many believe that the human divisor in any organization is most important. The word Capital is typically referred to as an asset that can be utilized in the mathematical product of more wealth. Therefore investing in what one would consider as its most valuable assets human capital , productivity is likely to increase. Lufthansa should set about with an organization wide initiative aimed at restoring the trust and loyalty of its employees.There is such a rich history of Lufthansa dating back to the 1930s and employees should be re assessmented of this history built on quality and pride at one time to be a Lufthanseat. The message of value i.e. integrated values, and how valuable every employee is, can be incorporated into the current town halls held and worked into the corporate university curriculum. The organization has become quite complex with the many subsidiaries, strategic alliances and acquisitions that perhaps the employees doing the front line work feel left out of the loop. There should be a financial investment made in providing effective training and development programs tailored to every employee within the organization. both employee within an organization can benefit from continued schooling and cultivation opportunities.Continuing learning and leveraging the firms expanding knowledge base are think with strategic success (Hitt, 2009). A concerted effort by management and workforce education professionals should be made to development up and culmination managers and future leadership. Developing relationships inside and outside of the organization inclusive of those organizations partnered with enhances the social capital of the organization. Given the competitive nature of the job airline industry, it would prove advantageous for Lufthansa to use their strategic alliances to foster their social capital positively.It is imposs ible to envision an organization reaching is maximum potential without cultivating its organizational culture and defining its mission and vision. The case study divulges occurrences where the workforce has become fragmentise with varying interests, perceptions, communication channels and expectations. This is evidence that the organizational culture inclusive of ideologies, symbols and core values must be addressed and strategically in alignment with the vision of the organization (Hitt, 2009). Competencies can be derived and influenced by the organizational culture in order produce desired outcomes. The culture of the organization should positively impact its workforce, fostering an environment of innovation, transparent communication and trust, and in the case of Lufthansa a commitment to quality and upholding of standards.Strategic Leadership operator focusing on incremental changes, with celebration of small success to maintain the momentum of the pagan change. Top leaders hip must fully buy-in to the cultural change endeavors in order to ensure its success. The selection of management and employees at all level with an intrinsic desire to contribute to the organization in a positive manner is important. There should be a whole-souled desire to act responsibly and ethically and avoidance of opportunistic behavior and other behavior which could destructive to the culture of the organization.A positive organizational culture feeds an entrepreneurial spirit and opportunities within an organization. The importance of entrepreneurial opportunities cannot be under stated. This entrepreneurial-state of perspicacity facilitates the energy and enthusiasm necessary to promote modern out of the box thinking. The freedom of expression, sharing of ideas, and asking the Why questions is tremendously valuable to an organization such as Lufthansa and any organization enkindle in competing globally. The five dimensions of autonomy, innovativeness, risk taking, pr oactivenesss and competitive aggressiveness should be capitalized upon throughout training initiatives and encouraged in order to create an entrepreneurial mind set work force. The workforce should be challenged to come up with better, instant(prenominal) more efficient was of accomplishing tasks or streamlining processes, and recognized by Lufthansa Leadership for doing so.Lufthansa has convey and exercised a number of initiatives aimed at reducing complexity of its organization. The dissolving of business segments and evaluation of process improvement strategies all serve as advances towards make an organizations model in alignment with business simplicity versus that of complex nature. Lufthansa can experience tremendous simplicity in appropriately managing the various business elements within the organization by acquiring a global mind set, and providing flexibility to address the need of each segment. An in depth look at core competencies and measurement of how much value ea ch segment is contributing to the overall success of the organization and how the internal characteristics of the organization measure up to the competition meeting the needs of the customer is a great starting place. The environmental uncertainty of the airline industry and other customer base for the varying business units does increase the complexity and range of issues to consider when evaluating the internal environment (Hitt, 2009) however, it is essential in order to understand the organizational complexity in its entirety.Ashbys Law of Variety suggests that organization can handle high external complexity on by a similar internal complexity (Hitt, 2009). Recommendations regarding the reduction of complexity are as follows Development of a unified vision that is shared across the organization, in an effort to eliminate the diversity of values, aims, cultures and types of behavior. A shared global strategy communicated throughout the organization in the fulfillment of a commo n goal. study regarding the benefits of a culturally versatile workforce recruitment of a diverse work force with varying ethical and professional backgrounds yet attached to the success of Lufthansa and a shared vision. Standardizing of processes and norms throughout the organization Lufthansa possess the organizational know how and strategic leadership to face future uncertainties of the airline industry. It has proven its strength and resiliency in its survival of a turbulent industry and shows promising potential despite uncertainties regarding global warming issues. Here education is key and it would be advantageous for Lufthansa to continue fostering positive social relationships with environmental agencies and other social activities.