Lufthansa External Environment Analysis

CASE : 4 LUFTHANSA 2003 : ENERGIZING A DECADE OF CHANGE CASE PROFILE PROBLEM IDENTIFICATION: The Basic question arises that why Lufthansa has survived, and even prospered, when so many legacy carriers have not, after facing so many crisis. What was the primary means through which CEO, Jurgen Weber, changed the culture of the organization? In organization theory terms, how did the structure of Lufthansa change between1991 and 2003 and What are the advantages of the “new” structure? Whether the company would be able to sustain the growth that it has achieved in the past and manage any such Crisis in future.? GENERAL ENVIRONMENT ANALYSIS The general environment analysis will focus on trends in the four segments of General Environment. The following table shows the changes in the general environment that are affecting airline Business on an ongoing basis. B. Industry Analysis PORTER’S FORCES Threat of new Entrants and Barriers to Entry: Following are some of the threats to enter into a Airline Industry High initial investments and fixed Costs. Higher Infrastructure requirements also act as a entry Barrier. Technology also acts as an entry barrier for those who are not already established in Airline Industry. However it may be noted that in an Airline Industry exit barriers were high as compared to entry barriers. So threat of new entrants is high. Bargaining Power of Supplier: Bargaining power of suppliers was high because of following reasons: Geopolitical instability in certain regions of the world and Gulf War contributed to oil crisis. This lead to increase in the bargaining power of suppliers of oil. Major suppliers of aviation aircraft – Boeing, McDonnell Douglas and Airbus. Less number of suppliers led to increase in their Bargaining power. Hence it can be said that Bargaining power of suppliers was high. Bargaining Power of Buyers: The