Case Study

Lufthansa: Going global, but how to manage complexity?

16 pages
December 2006
Reference: IMD-3-1746

This case addresses the development of Lufthansa’s business within the cyclical and global airline environment. First, we discuss the main features of globalization, its interrelatedness with complexity and the consequences for the airline industry. Then we analyze how Lufthansa has managed to remain one of the few profitable airline companies in the past by touching on issues such as extraordinary events, low-cost competition, governance structures, financial constraints and culture. For this, we consider passenger transportation data over time on a corporate and industry level. Also, we analyze the trend of flag carriers to cooperate within airline alliances such as Star Alliance, One World and Sky Team on the background of its management implications. Further, we present the evolution of the organisational structure of Lufthansa and the current organisation of Star Alliance. Given that the airline business will remain complex and cyclical, we finally ask if the current strategy of Lufthansa is sufficient to maintain its status as one of the few profitable airlines worldwide in the future.

Learning Objective

1. To get an idea about the interrelationship between globalization and complexity2. To understand how to manage complexity and to develop a successful business strategy in a highly volatile business environment 3. To discuss on how to survive as a flag carrier in the global airline industry

Keywords
Globalization, Complexity, Business Strategy, Airline
Settings
Germany
Lufthansa, Travel and Leisure, Airlines and Aviation
1980-2006
Type
Published Sources
Copyright
© 2006
Available Languages
English
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