Kotler & Armstrong (2017) "Principles of Marketing Management Management", Published by Pearson Publications. Within the framework of these net goals, the Lufthansa Group sets itself specific efficiency targets for reducing carbon emissions in its core business segment that are line with the Paris Agreement and have been validated by the internationally recognised Science Based Targets initiative (SBTi) supported by the UN. In future it will come from China, maybe from somewhere else in Asia, or perhaps from a low cost European competitor. SWISS is also investing in this premium product, with new seats in every class on its long-haul fleets. VRIO Analysis of Lufthansa - Case48 You seem to have JavaScript disabled in your browser. The Lufthansa Group aims to maintain the leading market position of its airlines going forward. As a result of the coronavirus crisis and the war in Ukraine especially, the aviation sector is characterised by a dynamic market and competitive environment. It is used to analyse traffic to determine if it is automated traffic generated by bots or a human user. A full rift would mean new strategies for each. Threats: Lufthansa faces significant threats from external factors like geopolitical tensions, terrorism, and natural disasters, which can impact the aviation industry as a whole. The majority of this website will not function as intended without JavaScript enabled. 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. 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%. Deutsche Lufthansa AG: A Competitive History case study is a Harvard Business School (HBR) case study written by Matthias Hild. The Lufthansa Group is one of the biggest airlines worldwide and a leading European airline group. 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. 2- Key building blocks for this development are continuous investment in quality, as well as products and services tailored even more closely to The Lufthansa Group actively used the coronavirus crisis to accelerate its process of transformation and establish a good starting position in order to succeed in the future market environment. Apples scale makes even the worlds largest banks look little. Opportunities: The expansion of long-haul and low-cost services in emerging markets offers a great opportunity for Lufthansa to tap into the increasing passenger traffic and economic growth. Germanwings is in the short haul point to point lower fares segment. Historically, Lufthansa management has favoured a more conservative approach to its balance sheet than most other airlines. 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: Business Model, SWOT Analysis & Competitors 2023 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. Shareholder value, measured by stock price, is not a good barometer to analyze value chain. The airlines within the Lufthansa group occupy positions across a range of market segments, both in terms of product/service offer and national geographies. In conclusion, Lufthansas business model showcases a dynamic, innovative, and customer-centric approach that has enabled the company to maintain its competitive edge in the global aviation industry. With its Aviation Services, the Lufthansa Group has several companies that are global leaders in their respective sectors. Artificial intelligence has long been a big part of In addition, the introduction of a travel ID which recognises customers at every point of contact, no matter which airline they are flying on, will make it possible to match services and offerings with the personal needs of Lufthansa Group Airlines passengers. Lufthansas subsidiary companies, such as Lufthansa Technik, provide maintenance, repair, and overhaul services, contributing to the companys overall revenue. 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. The Lufthansa group has a stronger presence in Europe, judged by seat capacity, than the other two major European legacy airline groups. The first benefit this brings is codeshare flights. This strategy offers several advantages for businesses seeking to enter the Full-Service Airline market segment. This cookie is associated with Akamai and is used to differentiate between traffic from humans and bots. Through all these efforts, the company aims to surpass customer expectations and contribute to the growth and development of a world connected by air travel. M. E. Porter, Competitive Strategy(New York: Free Press, 1980) WebAir carriers with the lowest costs have the most significant competitive advantage because airline customers value low prices above all other carrier selection factors. 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. From that time on, Lufthansa faced a series of challenges by both private entrepreneurs and established airlines, including Deutsche BA, Go-fly, Eurowings, Germania, and Preussag/TUI. Source: CAPA analysis of airline company traffic and financial statements and press releases. Although CEO Carsten Spohr has shown consistency and resolve in pressing ahead with the establishment of these vehicles, their successful operation will require the cooperation of all staff groups. They are positioned in the relevant market segments as high-quality carriers. LGAV 3100 Final Flashcards | Quizlet 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. Lufthansa is one of the leading IT service provider for aviation industry, maintenance, Lufthansa International Strategy - UKEssays.com Our newsletter is packed with essential growth strategies for your business. Lufthansa's brand and those of its principal subsidiaries SWISS and Austrian command strong loyalty in their home markets. 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. Web1- The Lufthansa Group will focus even more sharply on customer orientation in all of its operating segments. Strengths and Competitive Advantages First Mover Advantage in Hyperscale and Cloud Deployments Microsoft ( MSFT ) and Meta Platforms ( META ) Lufthansa itself aims to become Europe's only five star rated airline brand. The threats for any business can be factors which can negatively impact its business. These include significantly shorter advance booking periods than before the coronavirus pandemic, a significant increase in the take-up of sustainable products and data-based optimisation of aircraft maintenance. Overall, these measures will enable the Lufthansa Group to offer its customers a unique product experience and thus significantly differentiate itself from the competition. It means that we are committed to creating added value for our customers, employees and investors and to meeting our responsibilities toward the environment and society. In doing so, it aspires to set standards in terms of customer-friendliness and sustainability. Improvement in experience and high-quality services to customers. 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. Within this long-term strategic framework, the Lufthansa Group has tactical areas of focus in line with specific internal and external requirements. Human resource management affects competitive advantage in any firm, but in some industries it is defining factor. As illustrated in the Value Chain diagram, Lufthansa Deutsche has five generic categories of primary activities . FeaturedChatGPT Statistics & Facts in 2023, FeaturedStatistics about Fast Fashion in 2023, FeaturedStatistics & Facts About Technology Addiction, FeaturedLearn Everything About Retention Marketing, What Is A Marketing Campaign: Definition & The Best Practices, Account-Based Marketing: Past, Present & Future, Responsibility vs. 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. Learn how top companies The Lufthansa Group aspires to lead the airline industry with high standards in this area too. 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. Starting in 1988, European governments deregulated the European airline industry in preparation for a single European market. For instance, through its refit with Allegris product generation seating, Lufthansa German Airlines will offer a new travel experience in every class on long-haul routes. Lufthansa flies to over 250 domestic and international destinations in over 100 countries across Europe, Africa, Asia, the Americas, and the Middle East. In the SWOT analysis below, we will discuss the companys strengths, weaknesses, opportunities, and threats in a comprehensive manner. Revenue Streams: Lufthansa generates revenue through ticket sales (business, economy, and first-class), cargo transportation, ancillary services (baggage fees, onboard sales), and loyalty programs. These activities are undertaken by Lufthansa Deutsche to create means through which the buyer can buy a firms products. 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, Passengers will experience a holistically linked range of physical products, such as seating and lounges, attentive service from employees both on board and on the ground and digital travel solutions. The simple fact is that, even if the Gulf carriers could be stopped or at least slowed down, there will always be a new competitor with a better way of doing things. Also, the high operating costs, a complex organizational structure, and unionized workforce add to their challenges related to efficiency, flexibility and employee management. Lufthansa's JV agreements cover the USA (its biggest international destination country by ASK), Japan (number three international destination) and Canada (number seven) and account for 37% of its international ASKs. Apples scale makes even the worlds largest banks look little. 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. Lufthansa is one of the largest & founding member of Star Alliance 2. Arista, The Network Stalwart (NYSE:ANET) | Seeking Alpha Published by HBR Publications. Additionally, low-cost carriers such as Ryanair, easyJet, and Eurowings also compete with Lufthansa by offering budget-friendly alternatives to travelers. The value contributed to the Lufthansa Group by every one of the Aviation Services is reviewed and refined continuously. Finding the Best Free Online Meeting Software. Whether it's great food and refreshments or a place to work or relax, you can experience it in our lounges. Will Apple take a big bite out of the banks? | Financial Times The strengths of Lufthansa looks at the key aspects of its business which gives it competitive advantage in the market. Lufthansa is a strongstatus symbol amongst Corporate/Business men, 5. First of all, following the end of the coronavirus pandemic the company will once again flawlessly deliver on its promise as a premium provider, at every point of contact throughout the travel chain. WebAccomplished at strengthening competitive advantage, operational efficiency, accurate budgeting & forecasting. However, as noted above, Germanwings is not sufficiently low cost and its pilots are covered by the same collective wage agreement as the mainline pilots. Lufthansa AirPlus stays competitive with paperless workflows More penetration in emerging economies tapping the high-end customers 3. Competitive Advantage, Organisational Culture and Lufthansa's WebThree global trends are reshaping travel distribution business models and threaten to weaken the connection between airlines and their customers. The Lufthansa Group also works with policymakers and partners in industry, technology and research to promote the industrialisation and use of sustainable fuels. These cookies are needed for a smooth operation of our website. Additionally, growing competition from global airlines and the rise of low-cost carriers present pricing and operational challenges to Lufthansa. It uses the potential of innovation and digitalisation to develop customer-focused products and increase efficiency. Lufthansa, one of the worlds leading airline companies, has a considerable market presence and reputation in the global aviation industry. What is the frequent flyer program offered by Lufthansa? It also touches upon business topics such as - Marketing Mix, Product, Price, Place, Promotion, 4P, Policy, Strategic planning. WebLufthansa Competitive Environment and Business Model How Caribbean Airlines can Capitalise on Big Data As we explored how Lufthansa was able to capitalise on big data , here are some ideas from the Lufthansa case , a regional airline such as Caribbean Airlines may take advantage of . Value Chain was first introduced in 1985 in Harvard Business Review article and Porters book Competitive Advantage. Some important factors in a brand's strengths include its financial position, experienced workforce, product uniqueness & intangible assets like brand value. It thus aims to forge long-term relationships with them. The productivity of aircraft and crews is to be boosted by reducing the number of aircraft types in the long-haul fleet and permanent optimisation of operating processes and the route network. 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. Artificial intelligence has long been a big part of Tesla CEO Elon Musk's career. 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. WebThe Lufthansa VRIO Analysis shows that Lufthansa's employees are a valuable resource to the firm. This was a further example of Lufthansa's instinct to call for protectionist barriers to defend against competitors with disruptive new business models. Purchased inputs may include - raw materials, supplies, machinery, laboratory equipment, office equipment, and buildings. In future, even more customers of the Lufthansa Groups Passenger Airlines will have on-board Wi-Fi, thus enabling them to make use of new service options in the expanded in-flight entertainment system in addition to surfing and communication. Exclusive services for customers like lounges, frequent flyer programs, first/ business class services etc, 9. Find more information regarding cookies on our Data Protection Declaration and regarding us on the Imprint. In the technology industry, technology development has become a source of competitive advantage. In spite of the difficulties with persuading its pilots to embrace necessary change, strategic developments by the Lufthansa group in recent years demonstrate some capacity for its culture to evolve. The Lufthansa group (including its minority stake in Brussels Airlines) has five hubs: Frankfurt, Munich, Zurich, 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. There are several brands in the market which are competing for the same set of customers. 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. 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. How fintechs are gaining a competitive advantage with AI WebSWOT analysis of Lufthansa can be done for the following purposes 1. Here are three reasons AI could become Tesla's biggest competitive advantage. 9. This helps to resist growing competition from Gulf carriers on Asia Pacific routes (but does not repel it). Furthermore, membership in the Star Alliance enables Lufthansa to provide a wide range of destinations worldwide while benefiting from the synergies and partnerships with other leading airline operators. A strict focus on costs, operational stability and reliability in all areas are firmly established in the DNA of the Lufthansa Group. The brand names and other brand information used in the SWOT Analysis section are properties of their respective companies. Below are the top 13 competitors of Lufthansa: Hence this concludes the Lufthansa SWOT analysis. The Lufthansa Group has contributed to the progress of the aviation industry. Lufthansa Group Enhances Service to California | Aviation Pros Condor is introducing a new business class seat that gives its a competitive advantage to Lufthansa, at least for now. As the name explains, Support Activities of Lufthansa Deutsche are the one that supports the firms Primary Activities. 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. competitive advantage Key targets are the systematic renewal of the fleet to cut fuel consumption, reduce carbon emissions and trim the number of aircraft models by retiring and phasing out older, less efficient aircraft. In future, these goals will be achieved by means of an integrated product approach. The company could focus on ancillary services to diversify its portfolio, improve revenues, and enhance the overall customer experience. Lufthansa Deutsche at present has outsourced most of its inbound logistics activities. Mailgun vs Sendgrid: Which one is better? Their subsidiary companies, such as Lufthansa Technik, Swiss International Airlines, and Austrian Airlines, also contribute to the groups overall revenue. Examples include ensuring stable, reliable flight operations, improvements to customer service, thanks to enhanced accessibility of company call centres, expanded digital service channels such as the chatbot and an upgraded catering offering. For example customers are willing to pay more for flawless uniform experience in Apple products even though Apple products are not the cutting edge products. 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. Competitive advantage is about superior performance and it is a relative term. Moreover, many other European FSCs are more cost efficient than Lufthansa and long haul carriers in the Gulf and in Asia that compete with Lufthansa for Europe-Asia traffic not only have CASK levels that are comfortably below the European FSC trend line, but also have a very high quality product. HRM support activities include Recruiting, Hiring, Selection, People Planning, Training & Development, Skill Assessment and Compensation at both business unit level and corporate level. You can even identify the source of firm's competitive advantage based on PESTEL analysis and Organization's Core Competencies. Certain weaknesses can be defined as attributes which the company is lacking or in which the competitors are better. 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. Lufthansa's biggest hub, Frankfurt, remains minimally penetrated by LCCs. The scatter plot below, of CASK versus average trip length, shows that the group sits well above the trend line for European full service carriers. Technology development at Lufthansa Deutsche may include activities such as - field-testing, feature design, process engineering, component design, and technology selection. Feel free to connect with us if you need business research. 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. 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. This strategy offers several advantages for businesses seeking to enter the Full-Service Airline market segment. In this role, the Lufthansa Group aims to continue to play a part in actively shaping the global airline market. In todays highly competitive market, the companys ability to adapt, innovate, and successfully execute its business model has been nothing short of remarkable. Compare the value chains of rivals in an industry to understand differences in prices and costs. An instinct to complain about new competitive business models as unfair (see below) suggests that it is not yet sufficiently focused on putting its own house in order, but the establishment of its new lower cost vehicles has at least given it some options in fighting this competition. 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. Collaborative partnerships, a strong commitment to sustainability, and an unwavering dedication to providing exceptional service have all played critical roles in the companys success. In SWOT Analysis of Lufthansa, the strengths and weaknesses are the internal factors whereas opportunities and threats are the external factors. The Lufthansa Groups successful joint ventures are therefore being developed and partnerships expanded in all key markets. 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. 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). WebLufthansa AirPlus remains competitive in a changing market using paperless workflows supported by Adobe Sign. Partial disposal and partnering options are currently being explored for Lufthansa Technik, taking into account the necessary capital expenditure, synergies and value creation potential. Lufthansa says that its SCORE cost savings programme contributed EUR2.5 billion to the group's bottom line between 2012 and 2014. 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. Lufthansa is one of the largest & founding member of Star Alliance 2. The decision is regarding where to sit in the value system.