Lufthansa Airlines Strategic Management Analysis

The assignment analyzes the strengths, weaknesses, opportunities, and threats (SWOT) of Lufthansa Airlines. It also examines the political, economic, social, technological, legal, and environmental (PESTLE) factors affecting the company. The report concludes that strategic management is crucial for any organization's growth and that understanding strengths and weaknesses can help companies achieve profitability. The assignment uses relevant references from academic sources to support its analysis.

Strategic Management
Coursework

Table of Contents
INTRODUCTION ..........................................................................................................................3
(A) Overview - ..........................................................................................................................3
(B) Macro factors(PEST) - ........................................................................................................3
(c) Porter five force model - .......................................................................................................4
D) VRIO framework -.................................................................................................................5
E) SWOT analysis for the evaluation of strategic position - ....................................................6
CONCLUSION ...............................................................................................................................7
RFERENCES ..................................................................................................................................8

INTRODUCTION
It is the field of management studies which involves formulation and implementation for
the purpose of achieving the specific goals or target's initiative taken by the organisation. This
report will carried on the “Lufthansa” airline which is the leading German airlines which
provides premium and luxuries air transportation services to their customers. This report will
discussed about the macro factors which will effect and influence the business of the airlines. It
will also discuss the various kinds of the framework which will tells about the strength and
weakness of the airlines industry and their market attractiveness(Marshall, 2014).
(A) Overview -
“Lufthansa” is the leading German airline which offers premium and luxuries air
transportation facility to their customer with the services involved economy, premium economy
and business class etc. at the most affordable cost. It has various subsidiaries such as German-
wings, Brussels airlines and star alliance. Their main headquarters are located in the Frankfurt
and Munich(Barney, 2018).
Financial status - It has 129424 employee working for them with the operating revenue
of 35.579 billion Euro in the year 2017.
Operation - Lufthansa airlines involves providing premium and best quality of air
services to their customer which involves business class, first class, premium economy etc. It
operates over 136 nations with their customer at everywhere in the world.
Proposed strategy - They regularly review their market attractiveness for the individual
market segment, it current position in the competition and potential for the future success.
Key competitors - The key competitors of the Lufthansa are Emirates, Etihad, Singapore
airlines , Qantas etc. Lufthansa is ranked as the fifth largest airlines with the core focus on the
serving almost complete services to their customers. Their main competitor is Emirates airways
which is Ranked at first position for the best and premium services.
(B) Macro factors(PEST) -
These factors would help in understanding the current economic and political around the
globe. It will help “Lufthansa” to realize their positives and weakness for the future success of
the company. PEST factors are as follows:

Political - Different political condition of the nations can affect the perception and
behaviour of the customer of any industry. In context with “Lufthansa”, political situation such
as Saudi Arabia strict regulation would affect the customer scope for the Lufthansa airlines.
Economical - Economical factors such as rise in prices of the Aviation fuel, high pricing
of the services can affect the customer base for the Airliner. In context with Lufthansa, all such
factors would lead to the rise in the price of tickets.
Social - Social factors such as culture of particular nation, ethics and norms etc. can
influence the behaviour and idea of passenger in an aviation industry. In context with
“Lufthansa”, they follows the cultural of various other nations such as India, Chinese, Japan etc.
It will surely encourage the passengers to be part of that socio-cultural.
Technology - Lufthansa use modern and updated technology in their services such as
automated chair, e-ticket over the smartphone, tech-updated first class facility. It would
definitely increase the customer attractiveness towards such services(Hesterly, 2017).
(c) Porter five force model -
In context with “Lufthansa”, it is important to understand the industry attractiveness for
the aviation sector. Porter model includes various factors which would provide the insight about
the potential and abilities of the aviation industry to grow and rise. These forces are as follow:
Bargaining power of supplies - Power is very high in “Lufthansa”. They used to
fluctuate the price of their tickets. As a reason, less focus is lies on the suppliers because of the
high bargaining power. They mostly focuses on the diversified nature and atmosphere.
Bargaining power of buyers - The power of the buyer' bargaining is relatively high as
result of sensitivity in the prices and low switching costs. In context with Lufthansa, airline
needs to regulate their movement of the prices of services and their offerings.
Threat of the new competitor - In context with Lufthansa, competition is high because
of low cost carrier airlines with the affordable services. Airlines industry requires new economies
of scale to earn profitability and productivity(White Jr, 2011).
Industry rivalry - Entry of the rivalry is high because of commoditized products in an
Europe. As a result of strict airspace regulation, it could effect the status and operation of the
airlines to operate and working in the different nation.

Threat of substitutes - Low cost carrier is the major threat in the aviation industry. In
context with Lufthansa, if the customer would get availability of the substitution easily mean
good quality of the services in an affordable prices, it would lead the Lufthansa to cut down their
prices and it can the profitability of the airliner(Gayle, 2015).
D) VRIO framework -
It is a strategic framework and tool which is helpful in designing fro the protection of the
resources and long term capabilities for the gaining the competitive advantages. In context with
“Lufthansa”, this will help achieving the vision and mission of the airliner. It will lead to the
effective decision making process of an organisation. It is an acronym of a four important
framework of value, rarity, Imitability and organized. These are as follow:
Value - It tells that how adding the resources would helpful in satisfying the needs of the
consumers. In context with the Lufthansa, it is important for the airlines to add services or value
addition in their existing services and offerings to gain the customer's belief and trust. Airline is
focusing on upgrading their both economy class as well as business class for consumer
satisfaction(Stark, 2015).
Rarity - Currently, Lufthansa is providing Spa and massage parlour services in their
flight for both business and first class. They also added some paid services for the economy class
to order meal from the menu other than regular meal. This is really a rare thing found in their
flight. There have to be some value but it would be rare to gain the advantage of the competition.
Imitability - This stage comes after the rarity, it tells that is it difficult to find the
substitute for what you are offering or it be expensive to copy or duplicate the original services.
In context with Lufthansa, if the resources of an airlines is rare and have some value, but simply
affordable and easy to copy, then in that case, organisation would have temporary competitive
advantage. If resources are hard to imitate, rivalry will now focus on the other part of the
organisation.
Organize - For Lufthansa, it tells about the management system, processes, culture and
structure to raise or capitalize resources or capabilities etc. In context with Lufthansa, it is crucial
and significant to have implement and formulate an effective structure for the better management
in an organisation. Without the help of internal organisation and support, it would be difficult to
realize the potential of previous three framework such as value, rare and imitate etc.

E) SWOT analysis for the evaluation of strategic position -
In context with Lufthansa, Evaluation of the strategic position is determined by the
understanding the concept and theory of SWOT analysis for the Lufthansa. This analysis would
help in the knowing the strength and weakness of the Lufthansa and its resources for the purpose
of profitability are as follow:
Strength - The main strength of this airliner is the top five position in the world leading
airlines. It is considered as the leading aviation group comprises of German-wings, star alliance,
Euro-wings, Brussels airways etc. Strong financial performance and stability is the strongest
point of the “Lufthansa”.
Weakness - From last few years, Lufthansa is suffering with the issue employee disputes
and strikes regarding the less payment of wages and salary. Employee adaptation has led
challenge to the current business evolution(Holodynski, 2015).
Opportunities – The rising and Growing scenario of increment of human traffic has
created the opportunity for the Lufthansa to capture the excessive market of the passengers to
take advantage of the competition.
Threat - Cut throat competition with the low cost carrier airlines is the major for
Lufthansa airlines. Sudden fluctuation in the prices of oil would led to decrease in the prices per
ticket, which will definitely affect the profitability of the Lufthansa(Gold, 2016).

CONCLUSION
From the above report, it is concluded that strategic management is important and crucial
for the developing any organisation. Strength and weakness analysis has become important for
the company to understand their potential growth for the profitability purpose. Macro factors has
become significant for analysing the any shortcoming and demerits running in the structure of
the company.

RFERENCES
Hesterly, B. and Barney, J., 2018. Strategic management and competitive advantage. England:
Pearson Prentice Hall.
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service teachers’ perceived preparedness or confidence. Teaching and teacher
education. 28(8). pp.1131-1143.
Gayle, D. J., Tewarie, B. and White Jr, A. Q., 2011. Governance in the twenty-first-century
university: Approaches to effective leadership and strategic management: ASHE-ERIC
higher education report. 9(3). John Wiley & Sons.
Lepak, D.P. and Snell, S.A., 1998. Virtual HR: Strategic human resource management in the 21st
century. Human resource management review. 8(3). pp.215-234.
Stark, J., 2015. Product lifecycle management. In Product Lifecycle Management (Volume 1)
(pp. 1-29). Springer, Cham.
Vieira Jr, E.T. and Grantham, S., 2015. Determining factors leading to strategic management PR
practitioner roles. Public Relations Review. 41(4). pp.544-550.
Gold, B. and Holodynski, M., 2015. Development and construct validation of a situational
judgment test of strategic knowledge of classroom management in elementary schools.
Educational Assessment. 20(3). pp.226-248.
Online
PESTLE &SWOT analysis, 2018. [Online] Available through
<https://www.swotandpestle.com/lufthansa>

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