Swot Analysis of Lufthansa

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Lufthansa;

An analysis of SWOT and KSF’s

Table of contents:

1.0 Terms of reference:

2.0 Procedure:

3.0 Findings:

3.1 SWOT:
3.1.1: Strengths:
3.1.2 Weaknesses:
3.1.3 Opportunities:
3.1.4 Threats:
3.2 KSF’s:
3.2.1 KSF by industry:
3.2.2 KSF by Organisation:
3.2.3 KSF by Customers:
4.0 Recommendation:

5.0 Conclusion:

6.0 Bibliography:

7.0 Appendix A – Critical Source Evaluation

1.0 Terms of reference:
This is a 1000 word report by me analysing the Strengths, Weaknesses, Opportunities, Threats and key success factors for the German airline giant (€17bn turnover) Lufthansa. The report will be handed in on October 25th in the BUS101 1-hour seminar.

2.0 Procedure:
This report is based solely on secondary research, which in hand is based predominately on the most current information accessible, i.e. the internet and news articles. It has been attempted, as far as possible, to rely solely on acclaimed sources, but more on this issue can be found in Appendix A.

3.0 Findings:

3.1: Strengths:
One of the major strengths of Lufthansa is brand recognition. Lufthansa has one of the strongest airlines names in Europe and China; being “the leading European carrier in the Chinese market” (“Eighty Years Lufthansa in China, 2006). This is obviously a big advantage pertaining to customer loyalty, since its name is one of the first to come to the customer’s attention when booking a flight. Besides from the commercial part of flights, Lufthansa benefits from having the worlds second largest cargo airline (“MarketLine Business Information on Lufthansa, 2006).

The Lufthansa group owns several companies, taking care of many essential airline issues, which other airline companies have had to outsource. This naturally only furthers their already existing opportunity to take major advantage of economies of scale.

Furthermore Lufthansa has an excellent trainee programme, offering to many members of staff, the possibility to take a Bachelor in aviation management. This is a very positive initiative, which naturally heightening the morale amongst members of staff. (“Lufthansa – Press Releases, 2006)

3.2 Weaknesses:
As mentioned before Lufthansa is very dependent on their cargo fright profits –too dependent. This is considered a key weakness, since the air cargo market has been declining in recent times, thus cutting Lufthansa profits. The market decreased by 1% in 2005, meaning that Lufthansa suffered a 2% pr. Tons pr. Km., and with 15% of the Lufthansa groups profits coming from logistic business, this is obviously a considerable loss. (MarketLine Business Information > Lufthansa, 2006).

This is very evident when considering 2005 compared to 2004 profits which saw no less than a 24,6% decrease

3.3 Opportunities:
A considerable competitive advantage from which Lufthansa benefits is its “Star Alliance” group. Expansion of the Alliance, beyond the current 18 airlines, holds many rewards for Lufthansa (Star Alliance AG 2006). They can, as a group, benefit from further economies of scale, critical with today’s oil price at around $70 per Barrel. (Bloomberg Energy Prices, 2006) Technological innovations including alternative fuel sources also propose opportunities to Lufthansa. Technological innovations generally leads to increased efficiency, which improves customer confidence and loyalty, as lost time can be made up and flights are punctual. Furthermore, with oil prices at around $70 a barrel (Bloomberg Energy Prices, 2006) Lufthansa could very well benefit from continuing and improving their fuel efficiency, and invest in studies for alternative fuel sources; Lufthansa won the Fuel Management award in 2006. (Lufthansa Press Releases, 2006)

Lufthansa will benefit from the arrival of the Airbus A380 in many ways. It is more fuel efficient compared to the Boeing 747, and is a symbol of Lufthansa’s strength. It essentially acts as a status symbol, impressing customers....
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