Influence of Macro Environment on Business Strategies

Business
Strategy
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Applying frameworks which can have a influence and impact on macro environment on a
organisation and its strategies......................................................................................................3
TASK 2 ...........................................................................................................................................7
Internal environment and capabilities on a organisation using appropriate frameworks............7
VRIO ANALYSIS:..........................................................................................................................8
TASK 3..........................................................................................................................................10
P3 Applying porter's five force model to evaluate various competitive forces in a given market
sector..........................................................................................................................................10
TASK 4..........................................................................................................................................13
P4 Applying theories, concepts, models and strategic planning for a particular organisation. 13
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18
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INTRODUCTION
Business strategy is one of most important used by the organisation to gain the
competitive edge to enchant potential consumers. It is very much significant for an organisation
to build strategies and tactics to ensure about the survival of the organisation by evaluating each
and every aspect related to the organisation and its business environment. Before building
strategies organisation have to evaluate the scenario of the business by accessing their internal as
well as external factors which affect on their business activities in both positive and negative
way. This report is based on the Deutsche Lufthansa AG, which known as Lufthansa is the
largest German airline industry by combining their subsidiaries. It is the largest airline in the
European marketplace in regards of passengers carried out. This report is based on the
significance of business strategies by evaluating the Micro environment to combat in effective
manner for achieving effective results. Further it elaborates internal factors with the help of
VRIO and SWOT analysis in order to acknowledge their areas of strength and weaknesses. It
also includes the Porter five force model and Ans-off matrix in order to evaluate the competitors
strategies to remain always competitive in marketplace.
About Lufthansa
Respective company is founded in year 1953 they are operating their business operations
and function at aviation industry. It is one of the largest German Airline and second largest
airline in Europe location in respect of carried passengers. Lufthansa have numbers of
subsidiaries firm such as Air Dolomiti, Brussels Airlines, Lufthansa Cargo, Lufthansa City Line
and many more. Its head office is located at Cologne, Germany.
TASK 1
Applying frameworks which can have a influence and impact on macro environment on a
organisation and its strategies.
External factors:
External business environment affects the business activities in both positive and
negative manner, it is very much potential for an organisation to examine each and every factor
before building strategies and tactics to gain important insights with the help of PESTEL analysis
which examine surroundings of the business in proper manner that are as follows:
Political factors:
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Lufthansa which is a leading organisation in the aviation sector which regulated in
highly regulated political environment in which consumers favoured the airlines. The safety and
comfortability is one of most significant factor and political establishments one of the weary
factor and strict regulations on their operations (Akter and et.al ., 2016). In the 21st century
marked as an high losses and consolidation so that industry highly rely on the external business
environment in order to build policies and strategies accordingly. The terrorist attack on the
September 11th 2011 poor economic conditions in the most countries that directly affect on the
business of respective organisation adversely so it can be said that as an international country the
political instability affect business activities on their business (Albers and et. al., 2017) . Due to
earlier implications of various kinds of inclinations and regulations passengers are in position to
influence for lower prices and amenities which hinders the interest area of respective
organisation. So with the help of analysis of whole environment organisation can gain potential
outcomes.
Economic factors:
In economic factors consist of the bank rates, inflation, credit terms and conditions and
many other factors. In context of Lufthansa 9/11 attacks affect on their profitability and
sustainability in order to remain competitive in business environment as they are yet to recover
from it (Evans and et.al ., 2017). The long recession in the economy and fluctuations in prices of
oil and sluggishly slow down in the economy are one of most deliberating factor which directly
affect on their profitability level. They have to build strategies and tactics to cope up with
reduction in the interest of consumers, hike in prices of fuel and fierce competition in between
low cost airline industry, high labour demand and maintenance cost of infrastructure affects on
their activities. Hence it is very much potential for a business to evaluate each factor in proper
way to plan in strategic manner to combat with emerging challenges.
Social factors:
Over the years, the consumer taste and preferences are changes at rapid pace majorly in
terms of services as they demands innovation in products and services to remain competitive in
the marketplace (Wagner and Walton, 2016). The social perception of air travel has changed
previously it being seen as safer and convenient. Due to change in taste and preference people
become more aware about technological advancement drawn towards air travel in large numbers.
The no. of professional travellers increased which needed strong relationship in between the
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society and industry. In context of respective organisation they spend lot of money and time on
the improvement in the services for enhancing consumers experiences positively.
Technological factors:
Technological factors is one of most important factor for the aviation industry from the
heavy uses of technology as technology does not mean speed but also convenience and safety.
Whether it is air traffic or safety of passengers the role of technology is very much critical. The
world wide web also been successful in capturing the higher profits and revenues as most of the
bookings take place by online mode. In context of Lufthansa, they by providing services by
using both online and offline able to reach at large no. of consumer base. With the fierce
competition in the aviation sector as more and more fleets come into market that are provide
advance services at relatively low cost (Grayson and Hodges, 2017).
Legal factors:
In the beginning, many nations work on the bilateral agreements to share the air
technology, expertise and services. In the year 1980 which is the era of deregulation in context
of airline industry with the deregulations of airline laws in market of UK. Subsequently the
route specific, regional and global alliances helps to enjoy the yields of industry by counterparts
in order to harmonise by regulating and sharing time and space (Johnson, 2016). The health
and safety hazards brings new regulation for the aviation industry such as changes occurs in the
regulations of quality of airlines with crashing and Boeing aircraft.
Environmental factors:
It is one of the most significant factors for safe air travel by providing climate and
conditions of atmosphere. There are some key hazards in aviation industry that are lightening,
hailing and altitude of the cloud (Higgins, Omer and Phillips, 2015). Some unavoidable and
unpredictable components such as metrological and geographical complexities majorly in hilly
areas. The safety hazards one of the most challenging aspect for airline industries, despite of
reason it seriously hamper the demand side of the consumers that discourage brand value and
proposition of respective organisation. Air planes generate the 43 Gigatonnes of planet warming
pollution through the 2050 that is 5% of the world's remaining carbon budget that is one of fierce
problem in front of the whole world. In that regards it is very much potential for Lufthansa to
take care of the pollution and ozone omission by using best quality of fuel and pay attention on
the protection of environment.
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