Lufthansa Airline: PESTLE, SWOT, Leadership, and CSR Analysis

This report provides a comprehensive analysis of Lufthansa Airline, examining its business context through PESTLE and SWOT analyses. It explores the impact of political, economic, social, technological, legal, and environmental factors on the airline's performance, as well as its internal strengths and weaknesses, and external opportunities and threats. The report evaluates how changes in these factors influence Lufthansa's position and assesses the effectiveness of its strategies. It also delves into different leadership styles, recommending a suitable approach for Lufthansa, and critically evaluates the company's Corporate Social Responsibility (CSR) practices. The report concludes with a summary of key findings and recommendations for the airline's strategic development.

CONTEXT OF BUSINESS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
PESTLE analysis of Lufthansa Airline........................................................................................3
SWOT analysis of Lufthansa Airline..........................................................................................4
Evaluation of changes in PESTLE factors has influence over Lufthansa opportunity and threat
.....................................................................................................................................................5
Critical evaluation of how Lufthansa strength negates their weakness and threats affecting
their opportunities........................................................................................................................6
Different leadership styles along with management and leadership at Lufthansa airlines..........6
Recommendation of suitable leadership style for Lufthansa airlines..........................................9
Critical evaluation on Corporate Social Responsibility of Lufthansa.......................................10
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1

INTRODUCTION
In order to run a business smoothly and efficiently the company have to analyse the changes
take place in internal and external factors. So, in this context, this report will describe the SWOT
and PESTLE analysis of the Lufthansa Airline. Basically, Lufthansa is the second largest airline
in Europe having around 700 aircraft and provide best services to the passengers during sky fly.
The report will also state the best and appropriate leadership style along with the CSR practices.
MAIN BODY
PESTLE analysis of Lufthansa Airline
This model is used to identify and analyse the impact of changes in political, economy, social,
technological, legal and environmental factors over the performance of the business.
 Political: Because of the deterioration in the security situation along with the instable
politics all over the globe this create economic uncertainty for the airline company. Not
only that because of uncertain situation over Brexit also impose challenge for the
European aviation sector (Velásquez and Meunier, 2017).
 Economic: Because of the Brexit agreement and UK departure from the EU the economy
recovery rate of the Europe is getting slow. The airline industry facing losses because of
the cancellation of flight tickets from and to UK. Along with that the continuous
increment in prices of the fuel because of the pandemic also create challenge for the
company.
 Social: Because of the high-speed airlines at reasonable cost the customers are attracting
towards company is act as an opportunity. But on the other hand, as the increase in high-
speed rail on short haul routes the passengers are preferring more rail travel rather than
air travel is one of the threats for the company (Maria, 2017).
 Technological: The digital transformation is act as an opportunity for the company
because it opens up the new revenue stream for the Lufthansa. By keeping the company
and their employees up-to-date regarding technology innovation the company is grasping
this as an opportunity.
 Legal: The airline industry needs to address all the regulations which is imposed by the
administrative authorities on air traffics. It is because if the company does not follow this
regulation than the company have been charge and fined by authority.

 Environmental: The company uses the green technologies and launches various
sustainable campaigns in order to reduce the environmental pollution. The company in
order to enjoy this opportunity also uses strategy to address natural calamity issue (Ali,
2019).
SWOT analysis of Lufthansa Airline
This is a model with the help of which the company can analyse their internal strength and
weakness and identify external opportunities and threats.
 Strength: Lufthansa is one of the largest airline company in Europe which include more
than 550 subsidiaries and investment company in their portfolio. Along with that the
company is receiving 5 stars by Skytrax in the year 2018 was a biggest strength of the
company. The company offers the excellent in-flight services to their passengers such as
music, games, internet access on board, pre-flight shopping, foods, beverages etc. The
company have strong customer relationship and also have trust of the passengers towards
the flights and safe journey (Dierbunova, 2020).
 Weakness: Because of the Covid situation the company’s financial situation in the year
2019 was not great. All the flights get stop temporary for some period which lead to huge
losses to the Lufthansa. The relation of the airline with the pilots are not good enough
which create challenge for the company such as industrial strikes non-retention of pilots
and cancellation of many flights. The impact of this is that the company is slow towards
solving their industrial disputes but despite it is also identified that Lufthansa may sign an
agreement with its pilots in order to resolve disputes (Rajee Olaganathan, Miller and
Mrusek, 2020).
 Opportunities: Expanding the business to more and more countries are a best opportunity
for the company. It is because the passengers will get the benefits of exploring the new
and best destination and this improves the overall performance of the Lufthansa. Because
of the increase in the purchasing power of the consumers they would like to spend money
on travelling. So, this is also one of the opportunities for the company because Europe
has great tourist destination which basically attracts tourist from all over the world.
 Threat: The large number of competitors in Europe and all over the world is one of the
threats for the company. High labour cost is also challenging for the company because it

directly puts impact over the ticket prices of the Lufthansa. Along with that the instable
global politics and various uncertainties is playing big role in Lufthansa financial losses
(Redpath, O'Connell and Warnock-Smith, 2017).
Evaluation of changes in PESTLE factors has influence over Lufthansa opportunity and threat
Any changes in the external environment have huge influence over business such as:
 Because of the Brexit, it creates threat for the company in the term of restriction of the
services in UK which lead to decrease in customer base and financial losses. But in case
if UK and EU make an agreement of providing relaxation to the businesses than this
changes act as an opportunity for the company (Velásquez and Meunier, 2017).
 In case if the fuel prices are decreases than it is an opportunity for the company but as
because of covid the price of the fuel is increasing is a threat for the company because it
directly increases the ticket prices of the company.
 The buying pattern of the consumer also provide both opportunity and threat to the
company. If the inflation rate increases the spending pattern of the consumer decreases
which is a threat for the company and if the consumer spending behaviour increases that
it is an opportunity for the Lufthansa.
 If the Lufthansa company adopt the technological changes via training and development
than it is an opportunity for the company and if they are unable to retain its pilots because
of any dispute and misunderstanding than it become threat for the company.
 Adoption of green technologies and launching campaigns is an opportunity for the
Lufthansa. But it increases the investment on research and development which further
increases the flights prices is a threat for the company (Maria, 2017).
 Because of pandemic and lockdown, the flights are temporary stopped is a threat for the
company but after the lockdown the customer will travel more to relax themselves is an
opportunity because it increases Lufthansa sales.
Critical evaluation of how Lufthansa strength negates their weakness and threats affecting their
opportunities
Despite of increase in the labour cost and fuel prices, the Lufthansa is having an ability to
manage their strong image in the market because of the strategy to manage the other financial

and non-financial cost. Because of this, the company have an ability to provide best in-flight
service to the passengers at low cost. The large workforce of the company is doing their targets
on daily basis without compromising their quality because of the proper training and
development provided to them by the company. Not only that, but because of the member of star
alliance the Lufthansa is an able to manage the funds from the market easily even after restriction
because of Brexit. The company uses this fund to manage the financial losses they bear due to
Brexit and Pandemic (Dierbunova, 2020).
Because of the best business class services such as lounge etc the company is able to attract
more businessman that travel on daily basis due to meeting and conference etc. Because of the
unique and high-quality travel services such as foods and fresh beverages and pre-shopping
services the company also able to expand their business to new countries and increase their
customer base even though the competitors are increasing in the sector. The income and
spending pattern of the customers are decreasing but the Lufthansa is providing various discount
schemes on ticket prices to retain its existing customers and attracting new customers (Redpath,
O'Connell and Warnock-Smith, 2017).
Different leadership styles along with management and leadership at Lufthansa airlines
From various researches, it has been identified that great leaders follow particular
leadership styles in order to complete their tasks and while providing directions, motivating
employees as well as implementing the decided plans in order to achieve pre defined objectives
of the firm. The leadership styles have been categorized into 5 major types such as:
 Authoritarian leadership style: Under this leadership style the directions are given only
by the leader and they just impose their expectations on the employees or their followers
along with just define final result. This style is completely dependent upon one person
and generally such kind of leaders is highly efficient in regards to knowledge. This style
is efficient where the time is limited in order to complete specific task within proper time
duration. However, the creativity within the task has been sacrificed as the input from the
teams end is very limited. This style also has been utilized where the team members
require clear guidelines or instructions to complete specific task (Al Khajeh, E.H., 2018).
The advantages of this kind of leadership style includes that this style is less time
consuming while making crucial decisions, chain of command is in the hands of leader

only, mistakes within the plan implementation has been reduced and thus able to provide
constant results. While on the other hand few disadvantages includes it is very strict kind
of style and thus kill employees innovation and creativity, reduces group efforts and
increases employee turnover rate.
 Participative leadership style: As the name suggests, this leadership style give great
emphasis on the involvement of each and every employee while making any decision
regarding task or assignment. In this style, team members also feel included, motivated
and fully engaged within the task. Here, the leader will generally provide the last words
in the decision making procedure and if there are any kind of disagreements among the
employees in the group. The advantages of this kind of leadership style includes that it
enhances the employees motivation and job satisfaction level within them, able to create
strong team or group of employees, high level of efficiency can be accomplished and it
also encourages employees in order to utilize their own creative minds within the
assignments. However, certain shortcomings are that it is quite time consuming
procedure, chances of communication failure has been increased, security related to
confidential data has been arises sometimes, making of poor decisions with unskilled
employees has also been increased and thus leaders have high probability of being
remorseful to employees.
 Delegate leadership style: This style depend upon giving delegation to the team members
at first glance. This strategy is successful if the group members are highly efficient,
competent and able to take responsibilities while doing their assignments. However,
disagreement upon certain topics may divide the whole group and leads to poor
motivation and low morale of employees within the organisation. Few advantages of this
kind of style includes in such kind of leadership style experienced employees can take
advantages rather than others, innovation and creativity of employees are highly
recognized by leaders and thus it helps in order to create positive environment within the
establishment. On the other hand certain weakness involves that here command of
responsibility is not clearly or pre defined and hence creates difficulty in adapting to any
kind of changes within the plan.
 Transactional leadership style: Such leaders include transactions between a leader and
their followers in the form of rewards, bonuses, punishments and other kind of exchanges

in order to get the task done by them appropriately. The leaders set clear goals and the
other followers or team members know very well how they will be rewarded for their
actions. This kind of give and take leadership style is majorly followed a disciplined
routine and procedure in efficient manner. The advantages of such leadership style are
leaders are the one who create achievable, specific, time bounded and measurable goals
for their employees in order to accomplish them, enhance motivation and productivity
among employees, eliminated or minimizes any kind of confusion, it helps to create a
system which is easy for leader to implement and easy for their followers as well and
employees are free to choose their reward system (Saqib, A., 2017). While certain
limitations includes this style creates more followers rather than leaders with their
working.
 Transformational leadership style: In this type of style, leaders inspire their followers
with a vision and then encourage them in order to achieve it in proper manner. Here,
leaders serve their role as a role model for the team members. Certain advantages
includes it leads to lower employee turnover rate, places high amount of attention on
corporate vision, employees feel high amount of morale value, leaders utilize motivation
technique on order inspire employees and places high value to relationship with
employees. On the other hand few disadvantages include, this style wants constant
feedback and motivation to employees, and task cannot push forward without agreement
of employees and thus sometimes leads towards the divergence of rules and regulations.
In context of Lufthansa airlines, the leader of the airline follows Authoritarian kind of leadership
style in order to lead their team members within the organization. Carsten Spohr creates various
quick decisions regarding new management at first while enter into the Lufthansa airline. The
leader is able to complete various outstanding tasks in efficient manner and make the brand
highly popular for passengers as well as their employees. The leader is highly efficient in order
to make their employees as well as their passengers completely satisfied with their working and
efficient decisions which improve their working within the market space in front of their
competitors (Rocha, Á., 2019).

Recommendation of suitable leadership style for Lufthansa airlines
Lufthansa airlines are controlling company of Technik Group which represents 55 other
companies as well. The airline company is highly competent in nature and able to provide
premium kind of services to their passengers and also fulfil the desires of employees as well.
According to the Shabaz, M., (2018), the employees feel some type of problems and thus the
employees have been terminated from the system. It arise a great issue and this demand high
level of study in order to find the reason behind such actions. After complete evaluation of
problems it has been identified that employees are not satisfied with the leadership styles and
they have different perception towards doing specific tasks. They feel that they have reduced in
their personal as well as professional development skills, they feel lack of motivation due to lack
of appreciation within the organization and lack of care or interest of superiors in their
subordinates will provoke them to leave the organization.
However, Anderson, M., (2017) denotes that the leadership style that has been followed by
the leader within the organization changes a lot of drastic situations into opportunities because of
the leader’s authoritative kind of behaviour. Carsten Spohr provides clear and specific decisions
and set measurable goals in front of their employees which helps them to achieve their
organizational goals along with their career goals. The leader is efficient enough to work under
the pressure of competitive environment.
However, it has been analysed that the participative kind of leadership approach of the
leader will help the organization as well as their employees to grow their future further. As the
leaders main job is to formulate the vision and mission of the firm and thus provide guidance to
the employees to fulfil it completely. But the participation from employees end are also highly
recognizable by the employees and thus make them feel motivated and improves their morale in
order to complete their assignments effectively. At first, Lufthansa leaders have to change their
strategy of making the task done by employees and collect reviews from the as well in order to
complete the whole task in proper manner with the innovation and creative ideas of employees
so that they also feel highly motivated and important for the firm. Furthermore, leaders should
know the way to stimulate their employees with the usage of rewards programs which motivates
them to achieve their business goals because motivation is the only factor which determine the
level of individual performance at work place. The procedure of getting feedbacks from team
members improves their morale and thus provokes them to work in more efficient manner. Thus

it has been evaluated that with the transformation of styles of leadership, the leaders are able to
achieve and get advantages from their employees in most appropriate manner (Borini, F.M.,
2018).
Critical evaluation on Corporate Social Responsibility of Lufthansa
The following sustainable and responsible business practices followed by the Lufthansa
airline in order to fulfil their responsibility towards the employees, climate and environment,
society and corporate governance and compliances.
 Responsibility for employees: For Lufthansa, their employees are their valuable asset and
they provide them proper training for the staffs personal and professional growth. Though
various disputes arise between the company and pilots but in order to resolve this the
company make a mutual agreement with pilots. The company provide flexible working
hours to their employees so that they can manage work life balance. As many accidents
are caused because of the non-attentiveness of pilots so the company make sure that their
pilots before starting journey get a small and quick nap in order to protect the passenger’s
life (Wang and et.al., 2021).
 Responsibility for climate and environment: For this, the company avoid plastics use in
their offices, separate the garbage and also uses the practices to reduce paper usage. The
company take decisive role in the protection of environment campaigns. Not only have
that, the Lufthansa Company also contributed in climate protective with their business
model which they used while developing intelligent IT solutions (Havlovic, 2020).
 Responsibility to society: In order to support the society, the company have to take
certain initiatives in areas of development which will provide benefits to the society
people. Such as enhanced the employment rate will help the people to enhance their
lifestyle and thus the society also able to grow economically. The focus of teh firm
should be provide education to the young people and giving them efficient opportunities
in order to grow further. Company should provide employment to people from different
region as well as country in order to promote innovation and entrepreneurship in
emerging markets which serves the purpose of sustainable growth of the firm as well.
This initiative supports various international firms to provide their contribution towards
the development of the whole airline industry along with their brand image.

 Corporate governance and compliances: In order to fulfil this, the company have to
conduct their business activities according to proper rules and regulations. Combination
of preventing the business from any kind of corruption and bribery or malfunctioning
practices will help the company to create an ethical brand image within the outer market.
Protection of employees is the primal responsibility of each and every organization. But
fulfilment of organizations expectations with regard to accepting principles of the
organization in appropriate manner is also responsibility of each and every employee’s
first responsibility. The principles which are based on compliance culture, compliance
objectives, compliance risks identification, compliance program, organization as well as
monitoring. The compliance management system also should be implemented within the
organization which enhances the overall figure of the establishment (Islam, J.U., 2020).
CONCLUSION
From the above report it has been concluded that in order to run business efficiently and
smoothly, certain measures and steps that has been taken by the firm in order to maintain their
image as well as their employees motivated to complete their assignments in more proper and
appropriate manner. The study describes the SWOT and PESTLE analysis of Lufthansa airlines
through which they analyse the whole market conditions and according to that make their
strategies which will help them to become successful in front of their competitive firms. Apart
from this leadership style that has been followed by them and certain changes within them that
will help to achieve the establishment to reach at greater heights also had been discussed in
detail.

REFERENCES
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