Deutsche Lufthansa AG, commonly known as Lufthansa, is owned by its shareholders, as it is a publicly traded company listed on the Frankfurt Stock Exchange. Now we want to lead it into a sustainable future. Lufthansa, a prominent airline company, faces considerable competition from various other airlines in the global market. The global distribution strength of Lufthansa Group Airlines is also exploited. Market share growth of Lufthansarestricted due to pressure from competition. It strives to follow its mission statement: the Lufthansa Group connects people, cultures and economies in a sustainable way. HRM support activities include Recruiting, Hiring, Selection, People Planning, Training & Development, Skill Assessment and Compensation at both business unit level and corporate level. 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. The decision is regarding where to sit in the value system. On the other hand they allow us to improve our content for you. 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 - Track record of innovation - Even though most players in the Transportation strive to innovate, Lufthansa has successful record at consumer driven innovation. In view of changes to the structures of supply and demand, an even greater focus on the customer is a core element of the Group strategy. In the past, this has also provided it with an acquisition war chest, allowing it to take a leading role in the consolidation of the airline sector in Europe. https://www.facebook.com/AviationPros. It can include material handling, warehousing of physical products, as well as architecture to receive and store customer information for digital media company. WebIn order to contribute to the achievement of these goals, the Lufthansa Group focuses on those SDGs for which, based on its business model, it can strengthen positive effects or 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. Click the card to flip True Click the card to flip 1 / 190 Flashcards Learn Test Match Created by tomflattery Terms in this set (190) Moreover, the Eurowings brand will move into long haul markets, operated by SunExpress, a 50/50 joint venture company co-owned by Turkish Airlines. 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. Outbound logistics activities include distribution network, wholesalers and retailers order fulfillment, processing, warehousing, and scheduling. At the same time, large German companies serve as a benchmark. To achieve our ambitious The brand names and other brand information used in the SWOT Analysis section are properties of their respective companies. What are the key value-creating activities at each step in the chain? He answered the question in two parts How companies benefit or limited by the structure of their industry, and second a firms relative position within that industry. More penetration in emerging economies tapping the high-end customers 3. Having more destinations in the world helps Lufthansa to be in competitive Lufthansa, as an airline company, has a mission statement that emphasizes on providing exceptional customer experiences, connecting people and cultures across the globe, and ensuring safe and reliable transportation services. Take advantage of our great value fares with low cost flights to Los Angeles International Airport (LAX) direct from London Heathrow or from A significant portion of the workforce is highly trained, and this leads to 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 Moreover, it withdrew from codeshare agreements with Turkish Airlines in 2013 (although the use of SunExpress to operate the new long haul Eurowings-branded routes suggests an improvement in its relationship with Turkish). In conclusion, Lufthansa has a strong market position and global reputation but faces significant challenges in todays highly competitive and volatile market. The next significant benefit is arguably how the airlines share their frequent flyer rewards. In addition, the aim is to cut structural costs continuously in order to mitigate or fully compensate for the effects of inflation-related increases. Lufthansa is one of the leading IT service provider for aviation industry, maintenance, Elon Musk's persistence. By focusing on continuous improvement and leveraging cutting-edge technologies, the airline has successfully adapted to the ever-changing demands of modern-day passengers. The objective of strategic alliance is to enable the firms share some of the capabilities and resources that they have thus developing a higher competitive advantage. Some important factors in a brand's strengths include its financial position, experienced workforce, product uniqueness & intangible assets like brand value. These cookies are needed for a smooth operation of our website. The Lufthansa Group has contributed to the progress of the aviation industry. All its capacity growth will be on the long haul network, where unit revenue was weakest in 2014. Strategic planning of Lufthansa 2. 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. Lufthansa Deutsche needs to provide after sales services and maintenance for successful usage of the product. Customers and their individual needs and wishes are at the heart of things. Our newsletter is packed with essential growth strategies for your business. Purchased inputs may include - raw materials, supplies, machinery, laboratory equipment, office equipment, and buildings. As a major global airline, Lufthansas ownership is constantly evolving since shares can be bought and sold, which reflects the dynamic nature of the modern marketplace. The Lufthansa Groups successful joint ventures are therefore being developed and partnerships expanded in all key markets. WebFlights to Los Angeles from Europe. 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. The aim is to safeguard the Lufthansa Groups leading market position and economic success by developing it into an agile and flexible organisation that is even more competitive. The range of intermodal transport solutions that are seamlessly integrated into the travel chain is also being extended. Moreover, Germanwings is not even the right vehicle, since its cost base is too high to be classed as a true LCC. The Groups structure with activities throughout the airline value chain enables the maximisation of synergies between segments, while at the same time promoting the scaling of Aviation Services business from external markets. WebYou should make a list of factors that have significant impact on the organization and factors that drive growth in the industry. When all rivals in the Lufthansa Deutsches industry try to compete on the same dimension, no one firm gains a competitive advantage. It is used to analyse traffic to determine if it is automated traffic generated by bots or a human user. The goal is to consistently act upon opportunities arising due to trends and market changes. For instance, one area it is focusing on in the short term is enhancing its attractiveness as an employer, both on external labour markets and in terms of internal development opportunities for talent. In addition to its flying activities, the Lufthansa group is a global leader in the provision of a number of aviation services. What Is The Hybrid Work Model & Why Do Employees Want It? 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. Value Proposition: Lufthansa offers an extensive global network, innovative products, high-quality service, and state-of-the-art fleet with a focus on safety, reliability, and punctuality. Lufthansa Deutsche at present has outsourced most of its inbound logistics activities. 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. Has a strong workforce of over 100,000+ employees, 6. Key Resources: Lufthansa relies on different resources such as a large and modern fleet, skilled workforce, partnerships (e.g., Star Alliance), an extensive route network, and established brand reputation. Key Partnerships: Lufthansa engages in partnerships with other airlines, airports, suppliers, and service providers. 1. Setting aside arguments concerning the validity of claims that the Gulf-based airlines are government subsidised and that they provide unfair competition, this instinct is a threat to Lufthansa because it implies that its mindset is not yet completely right. This also aims to support cultural change and promote a flexible and enterprise-based mentality. The Lufthansa brand includes premium and economy cabins, long haul and short haul and offers a full range of services. Nevertheless, it is still among the higher cost European airlines, as measured by cost per available seat kilometre, when account is taken of its average trip length. The planned JV with Air China would include Lufthansa's number two destination country and take the proportion of its international ASKs covered by JV arrangements to 43%. Align price drivers in the value chain. Unreal engine vs Unity: Which one is better? It also touches upon business topics such as - Marketing Mix, Product, Price, Place, Promotion, 4P, Policy, Strategic planning. Artificial intelligence has long been a big part of Tesla CEO Elon Musk's career. 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. 4. There's no better way to fly; Non stop you, Lufthansa is one of thelargest airline in Europe in terms of overall passengers carried and fleet size, Passengers preferring comfort/reliability/quality service, Upper middle class/ business men / leisure travellers, Lufthansa gives the best airline service non stop. The four generic support activities are . Lufthansa says that its SCORE cost savings programme contributed EUR2.5 billion to the group's bottom line between 2012 and 2014. This means that it has lower levels of debt and a strong cash balance. As with LCC competition on short haul, competition in long haul markets from the Big Three Gulf carriers (Emirates, Qatar Airways and Etihad) and Lufthansa's Star Alliance partner Turkish Airlines is not going to go away. WebLufthansa enter the American market by the joining of Continental Airlines to the Star Alliance. The journey to achieve this vision encompasses three different levels of improvements and additions to the product range. Lufthansa made a strategic decision to transfer point to point European routes that do not touch its hubs at Frankfurt and Munich to Germanwings. Economies of scale will thus be realised consistently and flight operations with competitive structures and a good operating performance will be scaled up. Global Aircraft Engine MRO key players include GE, Rolls-Royce, MTU Maintenance, Lufthansa Technik, Pratt and Whitney, etc. Assessing feasibility of the new initiative in Germany 4. Eurowings will assume the operation of 55 Germanwings routes at the start of the winter season on 25-Oct-2015 and Lufthansa has so far indicated that Eurowings will take over a further five routes in summer 2016. Lufthansa now plans to expand its use of Eurowings, whose pilots operate outside the collective agreement and whose unit cost is some 20% lower than that of Germanwings (according to Lufthansa). Monitoring the contract ensures that the probability of opportunistic behavior occurring between the partners are minimized. In order to secure and build on their successful positioning, Aviation Services are permanently adapting their business models to changing market conditions and competitive environments. Here are the weaknesses in the Lufthansa SWOT Analysis: 1. In two business models network airlines and point-to-point airlines they serve the relevant customers and market segments with dedicated brands and differentiated service promises, connecting Europe with the world. Lufthansa serves over 200 international destinations in nearly 80 countries, 7. 2. These activities of Lufthansa Deutsche are associated with receiving, storing and disseminating the inputs of the products. Personalization-at-scale is a key strategy for fintechs to deliver hyper-relevant products and services to meet customer demands. The national airlines in the Lufthansa group continue to operate as distinct brands, each with its own fleet, operations and labour structures. WebIf Lufthansa Deutsche have a real competitive advantage, it means that compared to its rivals Lufthansa Deutsche is - operating at lower costs, commanding a premium price, WebAs Lufthansa Airlines transforms its business in the aggressively competitive air travel market, it demands tools and information, which helps cut costs, speed transactions and allows employees to make informed purchasing decisions. Here the aim is to replace disposable plastic and aluminium products with environmentally friendly products wherever possible. WebFrequent Flyers Benefits and Privileges An experience awaits in over 1,000 lounges worldwide. Lufthansa is one of the leading brands in the airlines sector. Growth in sales is not a good goal for value chain analysis as every managers know that boosting sales is easy to do by reducing the prices dramatically. Nevertheless, a greater degree of integration would offer increased efficiency to the Lufthansa group. Growth or market share is also not a very reliable goal as often firms end up pursuing market share at the cost of profitability. The automation of customer services is also being further expanded. M. E. Porter, Competitive Strategy(New York: Free Press, 1980) Lufthansa: a joint venture with Air China could mean almost half its ASKs are covered by JVs, Air China-Lufthansa Group JV will control 35% of China-Europe,market while easing growth tensions, Germanwings has preserved Lufthansa's market share, but still has too many legacy issues for a LCC, Lufthansa's planned new lower cost long-haul airline must avoid legacy issues, Ryanair lags easyJet on business traveller & customer service initiatives; both have great potential, EasyJet SWOT: you must be getting things right if Stelios has gone quiet, Emirates Airline to make the United States its third largest source of revenue, US airlines take aim at the Gulf carriers when perhaps they would be better woo-ing them, Etihad raises its Europe profile with codeshares and equity, expanding indirect connections, Lufthansa ends codesharing with Turkish Airlines. Step 7 - Organizing & Prioritizing the Analysis into Lufthansa 2012 Case Study Solution Revenue Streams: Lufthansa generates revenue through ticket sales (business, economy, and first-class), cargo transportation, ancillary services (baggage fees, onboard sales), and loyalty programs. The threats in the SWOT Analysis of Lufthansa are as mentioned: 1. Lufthansa is one of the leading IT service provider for aviation industry, maintenance, meal services etc 3. WebThe main strategic choice of Lufthansa Group is to keep the cost saving, reducing intermediaries, controlling the air ticketing fees, leasing regional airlines. Uncertain fuel prices and growing concerns about environmental regulations have put pressure on airlines to invest heavily in fuel-efficient aircraft and adopt sustainable practices. Overall, these measures will enable the Lufthansa Group to offer its customers a unique product experience and thus significantly differentiate itself from the competition. Set goals for the organization 6. Established 1989. To conduct industry structure analysis Porter developed Five Forces Model, and to understand the sources of competitive advantage of the firm in relation to competitors in that industry Porter developed Value Chain Analysis Method. Such arrangements, when approved by competition authorities, allow the participants to coordinate schedules and prices and typically provide significant unit cost enhancements. 8. In the SWOT analysis below, we will discuss the companys strengths, weaknesses, opportunities, and threats in a comprehensive manner. Strategic alliances and acquisitions with other airlines or companies in related sectors can offer the benefit of network expansion and cost reduction. This helps to resist growing competition from Gulf carriers on Asia Pacific routes (but does not repel it). The Lufthansa Group is one of the biggest airlines worldwide and a leading European airline group. Capturing and Delivering Competitive Advantage in the Japan to Europe and Europe to Japan Air Cargo Markets: The Case of the ANA Cargo and Lufthansa Cargo A.G. Strategic Joint Venture April 2019 The weaknesses of a brand are certain aspects of its business which are it can improve to increase its position further. Historically, Lufthansa management has favoured a more conservative approach to its balance sheet than most other airlines. As the name explains, Support Activities of Lufthansa Deutsche are the one that supports the firms Primary Activities. The development of strategic joint ventures to resist growing long haul competition from Gulf-based airlines makes sense. In doing so, it aspires to set standards in terms of customer-friendliness and sustainability. As per the Value Chain model there are broadly two generic categories of activities Primary Activities and Supporting Activities. WebIn terms of competitive advantage, Lufthansa is the quintessential legacy carrier, providing excellent service while also emphasizing safety (Oqubay and Tesfachew, 2019) There are a host of historical and cultural reasons why integration within the Lufthansa group (and within other large European airline groups) has been slower. These activities have provided more stable levels of profit through the cycle than the more volatile flying businesses. 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. In this context, the Lufthansa Group is expanding its existing, somewhat transactional concept of customer loyalty and will in future demonstrate greater individual appreciation for every passenger. SWISS is also investing in this premium product, with new seats in every class on its long-haul fleets. This section covers SWOT Analysis, Competitors, Segmentation, Target Market, Positioning & USP of more than 2500 brands from over 20 industry sectors. Conversely, since 2022 additional state-of-the-art long- haul aircraft like the Airbus A350-900 and Boeing 787-9 technology have strengthened the Lufthansa Group fleet. This will operate under the full service Lufthansa brand and so will not be a wholly new vehicle, but it is a further example of creating options for growth. Through Compensaid and Squake, the Lufthansa Group offers passengers with the Groups own airlines and also those travelling with other airlines the option of reducing CO2 emissions by purchasing sustainable fuels (SAF) or offsetting them through high-quality climate protection projects. However, penetration of the European short/medium haul market from Germany excluding Frankfurt and Munich by LCCs other than Germanwings was around 27% in 2014, according to CAPA research published in a previous report. However, Germanwings, its main brand in this segment until now, is not competitive on costs against Europe's leading LCCs and we do not have details of Eurowings unit cost. Artificial intelligence has long been a big part of Tesla CEO Elon Musk's career. In order to exploit opportunities in the long-distance leisure travel market, the range of long-haul connections from the hubs in Frankfurt and Munich targeting private travellers is being expanded. SEO Marketing: Importance, Definition And How To Do It, The Importance Of SEO In Advertising Strategies, What Is Local SEO: Definition And Importance. This new long haul low cost operation will launch six long haul destinations from Cologne/Bonn in summer 2016. In connection with its positioning as an airline group, the Lufthansa Group not only assesses the attractiveness of the individual market segments, it also determines whether it is the best owner for the respective company on the basis of existing or potential synergies. 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. To this end, the Lufthansa Groups traffic system is continuing to be developed into a multi-traffic system, consisting of hubs, point-to-point traffic and intermodal offerings. WebLufthansa AirPlus remains competitive in a changing market using paperless workflows supported by Adobe Sign. As with LCC competition on short haul, competition in long haul markets from the Big Three Gulf carriers (Emirates, Qatar Airways and Etihad) and Lufthansa's Star Alliance partner Turkish Airlines is not going to go away. These activities are undertaken by Lufthansa Deutsche to create means through which the buyer can buy a firms products. As Mr Spohr emphasised at the publication of Lufthansa's 2014 financial results, "sticking to uneconomical structures is not an option for our future". 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. WebSWOT analysis of Lufthansa can be done for the following purposes 1. 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. Lufthansa operates a frequent flyer program called "Miles & More" which rewards members with award miles and status miles for flights with Lufthansa and its partner airlines, redeemable for a variety of perks such as upgrades, free flights, and access to exclusive lounges. Boasting a modern and efficient fleet of aircraft, the company has been successful in maintaining high standards of safety and reliability. Lufthansa's more recent decision to transfer a large number of Germanwings routes to Eurowings, which it will also use to expand its budget offer into Austria and Switzerland in addition to long haul markets, highlights this point. This can be done by focusing on cost leadership, maintain low debt rating and have a good financial investment stand. Moreover, although its capacity in Western Europe is much bigger than in Eastern/Central Europe, the Lufthansa group has a better balance between the two halves of Europe than the other two groups. Don't miss out! Feel free to connect with us if you need business research. Present vs Alternative Value Chain - You should design an alternative value chain and map out areas where improvements can be made. 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. In future it will come from China, maybe from somewhere else in Asia, or perhaps from a low cost European competitor. The Gulf carriers' network of secondary European cities is also taking Europe-Asia traffic that used to connect through Frankfurt. Moreover, it has owned Eurowings for as long as it has owned Germanwings, but has apparently only recently woken up to its potential for improving cost efficiency. Customer Segments: The company targets a diverse range of customer segments, including corporate clients, leisure travelers, premium passengers, and budget-conscious customers. Compare the value chains of rivals in an industry to understand differences in prices and costs. While codeshare agreements do exist outside of alliances, the highest density will be found within alliance members. With Star Alliance Gold status you can enjoy more lounges than any other alliance and bring a guest along with you. Lufthansa CEO Carsten Spohr recently called for the renegotiation of bilateral air service agreements with the UAE and Qatar to protect against an oligarchy of carriers in the Gulf (Reuters, 17-Mar-2015). As Lufthansa continues to grow and evolve, it is well-positioned to remain a leader in the global airline market, setting a benchmark in excellence for others to follow. Lufthansa, a German airline company, primarily generates its revenue through various aspects of the aviation industry, including operating passenger and cargo flights, providing aircraft maintenance and repair services, and offering other related services like catering and information technology solutions. You seem to have JavaScript disabled in your browser. In terms of social responsibility, the Company promotes greater equality of opportunity for disadvantaged people worldwide via the financial and personell support for educational establishments and training provided by help alliance, the Groups own aid organisation. Their subsidiary companies, such as Lufthansa Technik, Swiss International Airlines, and Austrian Airlines, also contribute to the groups overall revenue. Responsibility is the foundation of business activities in the Lufthansa Group. Assigns your browser to a session on the server. In order to achieve these objectives, the Lufthansa Group is investing continuously in fuel-efficient aircraft accompanied by operational efficiency measures at the airlines. Lufthansa is a strongstatus symbol amongst Corporate/Business men, 5. The first benefit this brings is codeshare flights. Our Software Directory features more than 1000 software reviews across all categories. 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. Their nationwide presence in their home markets enables them to offer an attractive range of flights and route networks. In addition, intermodal traffic is being systematically further expanded in all of its home markets. It uses the potential of innovation and digitalisation to develop customer-focused products and increase efficiency. The expansion of Eurowings on both short haul and long haul should not only provide the group with more cost competitive operations in point to point markets, but should also increase Lufthansa's bargaining power with labour groups over the reform of labour practices and terms in its mainline operations (although its mainline pilots object to this, as noted above).
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