1. What type of international strategy has Lufthansa chosen and what means has it used to expand internationally?
2. Assess the elements and objectives of Lufthansa's cooperative strategies.
3. What options does Lufthansa have for managing cooperative strategies, protecting the company from risks, and sustaining success? How can Lufthansa's role in the Star Alliance influence performance?
Lufthansa, also known as Deutsche Lufthansa, is a German flag carrier. It is the largest airline in Europe. It operates in 18 domestic destinations and 197 international destinations in 78 countries across America, Africa, Europe and Asia. It has a total of 280 aircrafts. Lufthansa’s offices and headquarters are in cologne. It was one of the five founding members of the “Star Alliance” which is the world’s largest airline alliance founded in 1997.
1. The international strategy of Lufthansa and its expansion world-wide:
Lufthansa has chosen the transnational strategy to achieve global recognition.The market of Lufthansa has become saturated in Europe and like any other company it needed to expand outside. The transnational strategy has been successful due to the alliances that Lufthansa has made with other carriers, other partnerships and great customer service. Lufthansa, ever since has carried on with this strategy to become the undisputed leader of Europe.
In order to expand internationally, Lufthansa has made strategic alliances with groups like Star Alliance which is the biggest of the global airlines alliances. The Star Alliance is comprised of 28 members including its five founders, Lufthansa, Air Canada, Thai airways, Scandinavian Airlines and United Airlines. This alliance has been able to give Lufthansa the opportunity to reduce resources and costs. This has been possible because it has shared its installation with other airlines partners. This resource sharing has lead to the gaining of higher profits. This alliance has also allowed Lufthansa to enter new markets without facing the risk of market entry and also without paying a vast amount of money. Lufthansa also acquired smaller carriers and created other alliances to launch new flying destinations. It entered The American market, with the joining of Continental Airlines within The Star Alliance (Tigrai Online, 2012). It is a competitive advantage of Lufthansa to be able to fly in many international destinations. It has also formed partnerships with airlines in China and India which has opened new destinations for it.
2. The objectives and elements of Lufthansa’s Cooperative strategies:
Lufthansa’s main aims are profitable growth and sustainability. Lufthansa has used a network Cooperative strategy that has allowed them to form many partnerships with the members of the Star Alliance. Lufthansa is involved with a number of cooperative strategies. These Strategies enable Lufthansa to serve its customers better, compared to its competitors and also help keeping their customers in a certain network. By combining capabilities and resources with the alliances Lufthansa has been able to offer more flights to its customers, more destinations, better service and better flight connections. Lufthansa has also been able to improve its network in transatlantic traffic by making alliances with airlines like United Airlines, continental airlines and Air Canada. For increasing its networks in Africa and Eastern Europe, Lufthansa has created strategic alliance with Brussels Airlines and Australian airlines (Miller, Vandome & McBrewster, 2009).
Lufthansa’s cooperative strategy:
Being in a cooperative strategy is not free of risks .However, Lufthansa is aware of specific risks of partnerships and alliances and threats from competitors. These risks can happen if alliances are based on false notions and motives. Risks can also arrive if one of the partners fail o make the necessary investment for the development of a product or service needed for the purpose of the alliance. Thus in such cases, Lufthansa has to find suitable strategic partners who can help the alliance in positive ways (Drijber & Dictus, 2014). The goal of Lufthansa was to expand and rescue the company by achieving a competitive market position in order to become a profitable company. Lufthansa adjusted itself to competitions and markets and reoriented its strategy. Lufthansa in order to initiate success went for strategic alliances and cooperation. In the personal arena, the aim was increase of employment. Lufthansa also initiated economic instruments, technical progress, operational measures and improved infrastructure for the success of the Airlines.
3. Contribution of Lufthansa towards Star Alliance:
Lufthansa has contributed largely towards the future of Star Alliance (COMKOM° GmbH, 2015). It provided it the best opportunity to operate successfully against competition. Lufthansa’s multi brand and multi hub strategies have contributed largely towards the future growth and stability of Star Alliance. Lufthansa with the integration with airlines such as Brussels airlines, has strengthened its position as a leading international network carrier. With the success of Lufthansa airlines the opportunity of Star Alliance is also increasing. Lufthansa is proving with the attractiveness for other airlines to join Star Alliance for its remarkable revenue growth and cost effectiveness. Airlines such as Air India have joined Star Alliance and many more Airlines have joined in the recent time.
Lufthansa, also known as Deutsche Lufthansa, is a German flag carrier. It is the largest airline in Europe. Lufthansa has chosen the transnational strategy to achieve global recognition. Lufthansa’s main aims are profitable growth and sustainability (Brusselsairlines.com, 2015). The goal of Lufthansa was to expand and rescue the company by achieving a competitive market position in order to become a profitable company. Lufthansa has contributed largely towards the future of Star Alliance.
Brusselsairlines.com,. (2015). Brussels Airlines and Lufthansa. Retrieved 19 February 2015, from https://www.brusselsairlines.com/en-lt/corporate/partnerships/brussels-airlines-and-lufthansa.aspx
COMKOMÂ° GmbH, G. (2015). Group strategy - Corporate Facts - Lufthansa Group. Investor-relations.lufthansagroup.com. Retrieved 19 February 2015, from https://investor-relations.lufthansagroup.com/en/fakten-zum-unternehmen/group-strategy.html
Drijber, B., & Dictus, G. (2014). Lufthansa. Markt En Mededinging, 17(1), 28-31. doi:10.5553/menm/138762362014017001005
Miller, F., Vandome, A., & McBrewster, J. (2009). Lufthansa. Beau Bassin, Mauritius: Alphascript Pub.
Tigrai Online,. (2012). Lufthansa Technik to Support Ethiopian Airlines 787 Fleet. Retrieved 19 February 2015, from https://tigraionline.com/news/2012/10/25/lufthansa-technik-to-support-ethiopian-airlines-787-fleet/