Channels: Lufthansa uses multiple channels to reach customers, such as direct sales through its website and app, travel agencies, and online travel booking platforms. Lufthansa is known for being the largest German airline and one of the leading airlines in Europe, offering extensive flight connections, high-quality service, and being a founding member of the Star Alliance network. The Lufthansa Groups successful joint ventures are therefore being developed and partnerships expanded in all key markets. According to Michael Porter If a strategy is to have real meaning then it should reflect directly into a companys financial performance. The national airlines in the Lufthansa group continue to operate as distinct brands, each with its own fleet, operations and labour structures. Finally, customer loyalty and personal interaction are to have a special status. Human resource management affects competitive advantage in any firm, but in some industries it is defining factor. An instinct to complain about new competitive business models as unfair (see below) suggests that it is not yet sufficiently focused on putting its own house in order, but the establishment of its new lower cost vehicles has at least given it some options in fighting this competition. Passengers can upgrade their seats or book additional services like extra baggage, in-flight entertainment, or special meals through the Lufthansa website or mobile app, as well as via phone or on-site at the airport. 2- Key building blocks for this development are continuous investment in quality, as well as products and services tailored even more closely to WebIn terms of competitive advantage, Lufthansa is the quintessential legacy carrier, providing excellent service while also emphasizing safety (Oqubay and Tesfachew, 2019) Lufthansa is to be made more competitive in relation to other European airlines and prepared for a worldwide trade war. In contrast with the more proactive approach taken by the IAG group, this tends to preclude exploring partnership and other options that would prepare a platform for future expansion. It is used to analyse traffic to determine if it is automated traffic generated by bots or a human user. WebTo serve as a basis for sustainable competitive advantage, resources must be -- valuable -- meaning that they must be a source of greater value, in terms of relative costs and benefits, than similar resources in competing firms 1. Although this is arguably inefficient from a financial theory point of view, pushing up its weighted average cost of capital (because the cost of debt is typically less than the cost of equity), this provides it with a welcome cushion in a downturn. Having more destinations in the world helps Lufthansa to be in competitive Our immersive learning methodology from case study discussions to simulations tools help MBA and EMBA professionals to - gain new insight, deepen their knowledge of the Global Business field, competitive advantage, steps to value chain analysis,industry analysis,primary activities, support activities, inbound outbound logitics,marketing & services, and more. Whether it's great food and refreshments or a place to work or relax, you can experience it in our lounges. The largest shareholders of the company often include financial institutions and investment funds, while individuals can own a smaller portion of the company through personal share ownership. In this blog post, we delve into the intricacies of Lufthansas business model, uncover the strategies that have propelled the company to the forefront of the global aviation industry and discover the pivotal role the brand plays in shaping the future of air travel. Lufthansa, one of the worlds leading airline companies, has a considerable market presence and reputation in the global aviation industry. 5. The entire travel experience is intended to be individual, flexible and intuitive. The Asia Pacific region offers higher growth rates than North America and Europe and so this is an advantage for Lufthansa relative to its European Big Three rivals. Manager at Deutsche Lufthansa AG: A Competitive History needs to see each activity as part of that value system and how adding each activity or reducing each activity impact the Deutsche Lufthansa AG: A Competitive History value chain. It has been reviewed & published by the MBA Skool Team. Plans to develop a sub-fleet of reconfigured wide bodies on point to point leisure routes under the full service Lufthansa brand will address a further niche market segment. 2. The Lufthansa Group is thus seeking to further improve on its already good position as an employer within the aviation industry as a whole. FeaturedChatGPT Statistics & Facts in 2023, FeaturedStatistics about Fast Fashion in 2023, FeaturedStatistics & Facts About Technology Addiction, FeaturedLearn Everything About Retention Marketing, What Is A Marketing Campaign: Definition & The Best Practices, Account-Based Marketing: Past, Present & Future, Responsibility vs. CAPA Membership provides access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets. Personalization-at-scale is a key strategy for fintechs to deliver hyper-relevant products and services to meet customer demands. Following are the opportunities in Lufthansa SWOT Analysis: 1. WebThe main strategic choice of Lufthansa Group is to keep the cost saving, reducing intermediaries, controlling the air ticketing fees, leasing regional airlines. Lufthansa is one of the largest & founding member of Star Alliance 2. Find more information regarding cookies on our Data Protection Declaration and regarding us on the Imprint. Step 7 - Organizing & Prioritizing the Analysis into Lufthansa 2012 Case Study Solution The Lufthansa Groups ambition is to serve its customers as an attentive host and a contact who is reachable at any time and to offer them a hassle-free and sustainable range of services. Additionally, heavy investment in maintaining safety policies and adhering to environmental regulations contribute to overall costs. Value Chain is also known as Porters Value Chain Framework and it is extensively used to analyze relevant activities of a firm to shed light on the sources of competitive advantage. At the same time, they combine a high-quality and attractive product which is attuned to the needs of their local markets with a low cost base which can hold its own against low-cost carriers at the bases in Vienna and Brussels. The first four of these, operated by the group's fully owned airlines, are located relatively close to one another in the centre of the European continent. For instance, through its refit with Allegris product generation seating, Lufthansa German Airlines will offer a new travel experience in every class on long-haul routes. It doesnt include purchase inputs themselves. In SWOT Analysis of Lufthansa, the strengths and weaknesses are the internal factors whereas opportunities and threats are the external factors. It thus aims to forge long-term relationships with them. Passengers are thus able to benefit from the wide feeder network and the established ground processes of Lufthansa Group Network Airlines. Pilot strikes have continued into 2015 as both parties struggle to resolve their differences, ostensibly over pilot retirement age and pension benefits, but also related to the increasing use by the group of lower cost vehicles avoiding the central collective labour agreement. This also aims to support cultural change and promote a flexible and enterprise-based mentality. All rights reserved. Scrum Be Used To Improve Business Processes? Competitive advantage is about superior performance and it is a relative term. Specifically, this means a wider choice of individually selectable relevant product components as well as an improved travel experience on board and on the ground, in the premium segment in particular. Certain weaknesses can be defined as attributes which the company is lacking or in which the competitors are better. Additionally, growing competition from global airlines and the rise of low-cost carriers present pricing and operational challenges to Lufthansa. The threats for any business can be factors which can negatively impact its business. The Lufthansa Group aims to maintain the leading market position of its airlines going forward. Lufthansa is alone among Europe's Big Three legacy airline groups in not embracing Gulf competitors in some form (IAG codeshares with Qatar Airways, which it also brought into oneworld and which now also owns 10% of IAG: Air France-KLM codeshares with Etihad). The Lufthansa group (including its minority stake in Brussels Airlines) has five hubs: Frankfurt, Munich, Zurich, Vienna and Brussels. Take advantage of our great value fares with low cost flights to Los Angeles International Airport (LAX) direct from London Heathrow or from Kotler & Armstrong (2017) "Principles of Marketing Management Management", Published by Pearson Publications. 4. Published by HBR Publications. A significant portion of the workforce is highly trained, and this leads to Those have two functions: On the one hand they are providing basic functionality for this website. In doing so, it aspires to set standards in terms of customer-friendliness and sustainability. In April 1997, the final phase of this process gave private airlines owned by a majority of EU nationals the right to operate freely on any of the domestic routes within the member states of the European Economic Area. Efforts are also being made to turn fixed into variable costs, in order to minimise the effects of inflation-related cost increases, seasonality and slumps in demand. Here are three reasons AI could become Tesla's biggest competitive advantage. For example, the complexity was reduced by simplifying the base and AOC structure including by ending the flight operations of SunExpress Deutschland and passenger flight operations at Germanwings. In addition to that, the company faces stiff competition from low-cost carriers as well as from high-speed rail services within Europe, affecting its profitability. The sale timing will depend on the recovery of the relevant markets that are key to achieving a fair valuation for the sale. Unit costs (cost per available seat kilometre, USc) and average sector length for Lufthansa Group and selected other European airlines 2013*, *Nearest financial year to calendar 2013. Artificial intelligence has long been a big part of Tesla CEO Elon Musk's career. Lufthansas subsidiary companies, such as Lufthansa Technik, provide maintenance, repair, and overhaul services, contributing to the companys overall revenue. Continue reading more about the brand/company. By focusing on continuous improvement and leveraging cutting-edge technologies, the airline has successfully adapted to the ever-changing demands of modern-day passengers. As noted above, Lufthansa is increasing its presence in the LCC segment of the market with Eurowings. The companies are not associated with MBA Skool in any way.Edit the brand or add a new one to SWOT Analysis section : Contribute. The central importance of sustainability for the Lufthansa Group is reflected in the fact that it is represented at the Executive Board level. Improvement in experience and high-quality services to customers. Finding the Best Free Online Meeting Software. Moreover, the Eurowings brand will move into long haul markets, operated by SunExpress, a 50/50 joint venture company co-owned by Turkish Airlines. Personalization-at-scale is a key strategy for fintechs to deliver hyper-relevant products and services to meet customer demands. WebLufthansa AirPlus remains competitive in a changing market using paperless workflows supported by Adobe Sign. Credentialed Project Management Professional (PMP), Agile The strengths of Lufthansa looks at the key aspects of its business which gives it competitive advantage in the market. For example, Lufthansa's India network provides important feed through Frankfurt into its US network, but the more extensive India networks of Gulf based airlines is taking an increasing share of this traffic through their own hubs. Low cost airlines affect passenger volume of the airlines, 4. WebAir carriers with the lowest costs have the most significant competitive advantage because airline customers value low prices above all other carrier selection factors. Deutsche Lufthansa AG: A Competitive History case study is a Harvard Business School (HBR) case study written by Matthias Hild. Lufthansa says that its SCORE cost savings programme contributed EUR2.5 billion to the group's bottom line between 2012 and 2014. Strengths: Lufthansas primary strength lies in its strong brand presence, extensive global network, and reputation for quality service in its core business Although CEO Carsten Spohr has shown consistency and resolve in pressing ahead with the establishment of these vehicles, their successful operation will require the cooperation of all staff groups. To achieve our ambitious Austrian Airlines and Brussels Airlines connect their home markets with Europe and the world. The Lufthansa Group is one of the biggest airlines worldwide and a leading European airline group. Apples scale makes even the worlds largest banks look little. The article below lists the Lufthansa SWOT, competitors and includes its target market, segmentation, positioning & USP. WebAccomplished at strengthening competitive advantage, operational efficiency, accurate budgeting & forecasting. In particular, a further increase in its customer orientation, accelerating innovation and digitalisation, corporate responsibility and sustainability, modern forms of work organisation and value-based management will ensure that the Lufthansa Group is ready for the future. Web1- The Lufthansa Group will focus even more sharply on customer orientation in all of its operating segments. See related report: Lufthansa ends codesharing with Turkish Airlines. What Is SEO Positioning, And Why Should You Start Using It? The aim is to continue strengthening the role of the airlines in the portfolio of business segments over the long term. How To Handle Conflict In A Business Meeting? Lufthansa is one of the leading IT service provider for aviation industry, maintenance, Technology supports almost all activities in modern day organization. Although it also generates a premium in its unit revenue (revenue per ASK, RASK), this high cost structure leaves it vulnerable to a demand downswing and to growing LCC competition in short/medium haul markets. This means that it has lower levels of debt and a strong cash balance. These include significantly shorter advance booking periods than before the coronavirus pandemic, a significant increase in the take-up of sustainable products and data-based optimisation of aircraft maintenance. WebThe Lufthansa VRIO Analysis shows that Lufthansa's employees are a valuable resource to the firm. Strengths and Competitive Advantages First Mover Advantage in Hyperscale and Cloud Deployments Microsoft ( MSFT ) and Meta Platforms ( META ) accounted for a whopping 41% of Arista's revenues in 2022. Group strategy - Annual Report 2022/ page 18, Data, facts and highlights on corporate responsibility within the Lufthansa Group. The opportunities for any brand can include areas of improvement to increase its business. Exclusive services for customers like lounges, frequent flyer programs, first/ business class services etc, 9. When all rivals in the Lufthansa Deutsches industry try to compete on the same dimension, no one firm gains a competitive advantage. If he can persuade all labour groups of the need to accept and act upon this as a matter of urgency, Lufthansa may still have an opportunity to re-establish its competitiveness. Mailgun vs Sendgrid: Which one is better? Economies of scale will thus be realised consistently and flight operations with competitive structures and a good operating performance will be scaled up. It is also true that progress has been made with the centralisation of certain administrative, financial and procurement functions. 3. But it will come and Lufthansa should focus on self-improvement and not on seeking increased protectionism. The range of intermodal transport solutions that are seamlessly integrated into the travel chain is also being extended. For example, Lufthansa's India network provides important fee WebStrengths of Lufthansa Strengths are the firm's capabilities and resources that it can use to design, develop, and sustain competitive advantage in the marketplace - Talent Value Chain is developed by management guru Michael E. Porter and it was a major breakthrough in business world for analyzing a firms relative cost and value. Monitoring the contract ensures that the probability of opportunistic behavior occurring between the partners are minimized. One effect is to funnel strategic options into subsidiaries whose costs and effectiveness are often questionable - and which if unsuccessful result not only in internal disruption, but also diversion of resources. Health Management and Occupational Safety, Financial strategy & value-based management, Corporate Governance Declaration, Section 289f HGB, Declaration of compliance, Section 161 AktG, Information on corporate governance practises, Board of Management and Supervisory Board procedures, Compensation of the Executive Board and Supervisory Board, Law on the equal participation of women and men in executive positions, Articles of Association and Rules of Procedure, Shares held by members of the Executive Board. Comparing two or more alternative value chains can provide a good insight into bottlenecks within the industry. Services, business models and organisational structures are to be continuously aligned with the complex and dynamic market environment. As one of the worlds leading aviation giants, Lufthansa has sculpted an impressive footprint in the airline industry by consistently delivering exceptional services and revolutionizing the customer travel experience. The Lufthansa Group is a global aviation group with a total of more than 580 subsidiaries and equity investments. Lufthansa flies to over 250 domestic and international destinations in over 100 countries across Europe, Africa, Asia, the Americas, and the Middle East. If the strategy dictates cutting cost to be profitable then Lufthansa Deutsche should focus on areas that are not adding value to customers' expectations, and costs that are there because of operational inefficiencies. In addition to its flying activities, the Lufthansa group is a global leader in the provision of a number of aviation services. WebFrequent Flyers Benefits and Privileges An experience awaits in over 1,000 lounges worldwide. The continuous optimisation of the Group fleet has been accelerated as a result of the crisis. In the SWOT analysis below, we will discuss the companys strengths, weaknesses, opportunities, and threats in a comprehensive manner. Here are three reasons AI could become Tesla's biggest competitive advantage. This will enable Lufthansa to develop 7. Overall, these measures will enable the Lufthansa Group to offer its customers a unique product experience and thus significantly differentiate itself from the competition. Strong image associated with German Engineering 4. In the technology industry, technology development has become a source of competitive advantage. With Star Alliance Gold status you can enjoy more lounges than any other alliance and bring a guest along with you. The Lufthansa Group also includes sustainability aspects as a key factor in the design of its products and services. It also allows it to develop its network from each hub with a particular geographic focus where this adds to the overall efficiency of its operations. So efficiency improvements in technical fleet management are being sought by pooling the fleets engines across the Group in future, for example, in order to maximise their useful lives and better coordinate maintenance. Below are the top 13 competitors of Lufthansa: Hence this concludes the Lufthansa SWOT analysis. The global distribution strength of Lufthansa Group Airlines is also exploited. The safety of flight operations is and will always be the top priority. Lufthansa expects a significantly improved result in 2015, when ASK growth will be 3%, although it expects unit revenue to fall. The Company is moreover modernising and expanding its cargo centre in Frankfurt, in order to participate in the growing airfreight market. Lufthansa itself aims to become Europe's only five star rated airline brand. Personalization-at-scale is a key strategy for fintechs to deliver hyper-relevant products and services to meet customer demands. This can be done by focusing on cost leadership, maintain low debt rating and have a good financial investment stand. Market share growth of Lufthansarestricted due to pressure from competition. Accountability for Leaders, 8 Ways to Meet Your Goals with Time Management, Property Management Goals To Set In 2023 And Beyond, Human Resources Goals To Set In 2023 And Beyond, Accounting Goals To Set In 2023 And Beyond. The Lufthansa Group has contributed to the progress of the aviation industry. The development of strategic joint ventures to resist growing long haul competition from Gulf-based airlines makes sense. With its Aviation Services, the Lufthansa Group has several companies that are global leaders in their respective sectors. The Deutsche Lufthansa AG: A Competitive History (referred as Lufthansa Deutsche from here on) case study provides evaluation & decision scenario in field of Global Business. Technology development at Lufthansa Deutsche may include activities such as - field-testing, feature design, process engineering, component design, and technology selection. While codeshare agreements do exist outside of alliances, the highest density will be found within alliance members. Lufthansa's biggest hub, Frankfurt, remains minimally penetrated by LCCs. Its growing use of lower cost platforms in both short haul and long haul point to point markets is also welcome, but Lufthansa faces an ongoing challenge in taking its pilots with it on this course of action. Assigns your browser to a session on the server. This strategy offers several advantages for businesses seeking to enter the Full-Service Airline market segment. Often price drivers are customer expectations that customers are willing to pay more for. In conclusion, Lufthansas business model showcases a dynamic, innovative, and customer-centric approach that has enabled the company to maintain its competitive edge in the global aviation industry. In conclusion, Lufthansa has a strong market position and global reputation but faces significant challenges in todays highly competitive and volatile market. Our newsletter is packed with essential growth strategies for your business. Furthermore, the company generates supplementary income through collaborations, partnerships, and investments in other aviation and travel businesses, such as codeshare agreements with other airlines and its membership in the Star Alliance network. However, as noted above, Germanwings is not sufficiently low cost and its pilots are covered by the same collective wage agreement as the mainline pilots. Moreover, Germanwings is not even the right vehicle, since its cost base is too high to be classed as a true LCC. Service activities of Lufthansa Deutsche can include part supply, training, post sales maintenance, installation services, and product forward and backend alignment of software. Digital customer services also strengthen the ability of the Lufthansa Groups Passenger Airlines to fulfil their role as hosts on the ground and on board. Additionally, its extensive global network and Star Alliance partnership increase access to various routes and destinations. The next significant benefit is arguably how the airlines share their frequent flyer rewards. First of all, following the end of the coronavirus pandemic the company will once again flawlessly deliver on its promise as a premium provider, at every point of contact throughout the travel chain. Our strong balance sheet, globe-spanning network that diversifies our revenue sources, brand strength as North America's Best Airline as rated by Skytrax, young fleet, dedicated and talented employees and nimble management team equip us to respond effectively to any challenges that come our way. According to Lufthansa, industrial action by its pilots lowered the group's operating profit by EUR232 million in 2014 (this includes the impact of strikes by security personnel). Informa Markets, a trading division of Informa PLC.