Scandinavian Airlines and Lufthansa
Lufthansa: Going Global, but How to Manage Complexity
Strayer University
Business Administration Capstone – BUS 499 #004016
September 5, 2010
Describe the type of international strategy the company has chosen. An international strategy is a strategy through which the firm sells its goods or services outside its domestic market (Hitt, Ireland & Hoskisson, 2009). Lufthansa tends to follow a transnational strategy that will help grow the company internationally and in their own country. Since the September 11 terrorist attacks airlines have been struggling to stay in business. The fear that passengers have is slowing diminishing but it is still affecting the airlines. Airlines have been forced to enforce many regulations and fees adding to their financial struggle. With any international strategy comes a risk. Lufthansa seems to have managed to survive many risks all while being one of three airlines where their debt is to the point of bankruptcy if they have not started it already. Since mergers are illegal across country boarders the response from Lufthansa was an alliance with Star Alliance (Hitt, Ireland & Hoskisson). Star Alliance is an alliance that is made up of a partnership amongst several airlines, in an effort to offset costs and create value. The alliance has been a constant balancing act. The alliance was done to help reduce Lufthansa’s debt but has come with many challenges in managing the alliance with Star Alliance. The plan was to increase the revenue side of Star Alliance by keeping passengers’ loyalty to fly with them. Since the late 1999, Lufthansa has been running according to the value –based management. The aim of the value-based management approach applies to all planning, steering and monitoring processes in order to achieve a purposeful, long-term and continuous increase in enterprise value in investor’ and lenders interest (Lufthansa Investor Relations).
Explain what means the company has used to expand internationally
Strayer University
Business Administration Capstone – BUS 499 #004016
September 5, 2010
Describe the type of international strategy the company has chosen. An international strategy is a strategy through which the firm sells its goods or services outside its domestic market (Hitt, Ireland & Hoskisson, 2009). Lufthansa tends to follow a transnational strategy that will help grow the company internationally and in their own country. Since the September 11 terrorist attacks airlines have been struggling to stay in business. The fear that passengers have is slowing diminishing but it is still affecting the airlines. Airlines have been forced to enforce many regulations and fees adding to their financial struggle. With any international strategy comes a risk. Lufthansa seems to have managed to survive many risks all while being one of three airlines where their debt is to the point of bankruptcy if they have not started it already. Since mergers are illegal across country boarders the response from Lufthansa was an alliance with Star Alliance (Hitt, Ireland & Hoskisson). Star Alliance is an alliance that is made up of a partnership amongst several airlines, in an effort to offset costs and create value. The alliance has been a constant balancing act. The alliance was done to help reduce Lufthansa’s debt but has come with many challenges in managing the alliance with Star Alliance. The plan was to increase the revenue side of Star Alliance by keeping passengers’ loyalty to fly with them. Since the late 1999, Lufthansa has been running according to the value –based management. The aim of the value-based management approach applies to all planning, steering and monitoring processes in order to achieve a purposeful, long-term and continuous increase in enterprise value in investor’ and lenders interest (Lufthansa Investor Relations).
Explain what means the company has used to expand internationally
References: Corporate Profile (2009), Retrieved September 3, 2010 from http://www.lufthansa- cargo.com/content.jsp?path=0,1,19142,91382,99001 Hitt, M., Ireland, D.R. & Hoskisson, R.E. (2009), Strategic Management: Competitiveness and Globalization, Concepts and Cases. Ohio: Cengage Learning. Lufthansa a Star Alliance Member (2010), Retrieved September 3, 2010 from http://www.staralliance.com/en/about/airlines/lufthansa/ Lufthansa Investor Relations (2009), Retrieved August 24, 2010 from http://investor- relations.lufthansa.com/en/fakten-zum-unternehmem/group-strategy.html Michaels, D. (2008). Lufthansa’s Labor of Love: Restoring Some Really Old Junkers, Retrieved August 25, 2010from http://online.wsj.com/article/SB121357457537975947.html?mod=hps_us_inside_today