For a long time, Lufthansa has been a market leader as an aviation group with the firm’s economic and strategic criteria focusing on the core competencies of its five business areas that is the Passenger Airline Group, Logistics, MRO, Catering and Information Technology Services. The company has been emphasizing and concentrating on quality and innovation, safety and reliability for better provision of services and maintain their existing customers as well as working an extra mile in attracting new customers. Over the years, the company has being committed to sustainability of its own firms and business strategies to provide the best services to its customers and attracting new ones in order to enhance and maintain its success. Its core value includes; improving the environment and protecting the climate for doing business, measures and means to ensure that employees are motivated and satisfied in their jobs through constant trainings and motivation seminars as well as work – shops, educational facilities are also offered at the same time to employees to enhance and improve their skills in handling and performing their duties effectively at all levels of operation within the organization (Forak 2002). Lastly the company has strived to maintain all the benefits achieved so far in the market through improvement of strategic approaches to the market to maintain its long term goals in the market through sustainable development of all its departments and focus for its operations. With the dynamic environment of doing business, competition is a factor that cannot be ignored; therefore Lufthansa as a company has used competitive strategies in order to be in business and sustain its operations. Competitive strategy moves to; attract customers, withstand competitive pressure and strengthen firms' market position according to Ireland and Hoskisson (2005) .According to them; the objectives of competitive strategy are; to earn a competitive advantage, to cultivate clientele of loyal customers and to knock off rivals, ethically and honorably. He emphasis that competitive strategy focuses on management’s plan to compete successfully and expand the market area size of their businesses without diverting from their objectives and maintaining focus to better service delivery. Many are the strategies that are employed b y companies to remain competitive in the industry, mostly companies employs competitive strategies which favors their business more than the rest in the industry. Advertising is a popular strategy employed by many companies to sensitize existing and new customers of the availability of the best services in the industry coupled with promotional tactics for their services. These competitive strategies involve underpinning other brand competitors either in terms of price or the enlargement of market area size. Therefore, the company employs all the possible means to capture new customers while retaining the existing ones to enjoy the large scale economies of scale (Ireland and Hoskisson 2005).International strategy
In view of changing dynamics and changing international environment and the economic situation the company operates; it has considered prudent to review its operations and other players’ activities. Therefore, this review of its international operations has involved expansion of the market not only to European countries but also to other parts of the world. The international markets contained un-exploited potentials which the company decided to utilize and maximally exploit them before other companies venture to them. To be a market leader is a fundamental step that every company should strive to achieve and Lufthansa has decided to incline towards utilization of this approach in the market both domestic and internationally. This has been achieved through reduction and consequential elimination of all the companies’ threats while capitalizing on the opportunities using its strengths appropriately. The most significant approach used mostly is to eliminate all the barriers resulting from unsatisfied customers which form their significant clientele. Through utilization of these approaches, the customer base has significantly increased as well as significant increase of the company’s profit margin (David and Andrew 2006). Means that the company is using to expand internationally
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In order to achieve an international front line in leading business venture, fundamental issues needs to be considered, international strategy needs to be expansionary including mergers and take overs of as many companies as possible in foreign markets to form its subsidiary. Most importantly, direct investments are paramount for the operations of any company which has been widely utilized by Lufthansa both in domestic and especially in the international market. Mergers have been the most significant mean employed by the company to achieve its international target through further establishment of foreign subsidiaries. in addition, the company also uses some vital elements in its international strategy; Segmentation of the market (s); this is done to ensure that segmented and new markets are operational in order to satisfy all its clients internationally and also plan to reach the new found markets. It uses various distribution and marketing channels to reach the market segmentations for instance the use of advertisements through the media and other sources like internet to create public awareness internationally of its offers, prices and product developments was a major boost to the company both in revenue increase which consequently resulted to higher profitability and increase in market area size (Ireland and Hoskisson 2005). Another important consideration the company adopted included the differentiation of both its commodities and especially services. In this strategic approach to market competition and customer satisfaction, the company studies through thorough market research all the customer specifications and deliver their services in line with the needs, tastes and preferences of the consumers. A premium charge is usually accompanies provision of such special services to customers to reflect the valued added and attached to the service or the good in specific since its purposely designed to fit within the customer’s specifications (Micheal and Robert 2008). International networking; Convenience and ease of transaction are two of the major factors influencing aviation firm's selection according to Forak (2002). He concluded that consumers were mostly interested in "how the service is delivered" as opposed to what the service achieves as the end result. This would seem to suggest that the issue of distribution of aviation services will remain an important competitive variable both regional and internationally. This is particularly the case of Lufthansa which explains why they insist on customer’s satisfaction and comfort in order to remain in business not only as a market leader but also a reliable company in the aviation industry (Forak 2002). Pursuing growing markets: Lufthansa seeks new markets especially in emerging economies and pursuing greater markets where specific countries are developing in terms of their economy. This is mostly considered as exploiting advantage to the company since none of the companies in the same or close industries had before established their operations in such markets. These are also considered to be potential markets with hidden abilities and opportunities for growth if well utilized (John, David and Stephen 2005).
Global competitiveness: there are numerous organizations with international scope of operations in all fields that seek to achieve their global objectives successfully and efficiently. They therefore incorporate all the aspects in marketing to sell their products and services in the international market using various strategies that maintains them in operation and safeguards them from competitors’ actions in the same line of operation. This gives them economies of scale advantage through large scale production which not only reduces cost but also increases productivity. Elements and objectives of Lufthansa's cooperative strategyLufthansa cooperative strategy is aimed at opening up new markets internationally with an aim of satisfying all its clients worldwide. This is aimed at global expansion and retention of the customers’ needs in order to develop and raise profitability margin in the business. This in great magnitude increases the company’s potentiality to increase its investments and expand its capital base. Uncertainties and challenges related to operating beyond the company's national boundaries includes; High promotional costs because of the international markets; Due to the fact that any company that opts to operate beyond company's boundaries with different environment, it usually occurs that they find different set policies and expenses that they need to adhere to. These policies and expenses usually come at a cost due to the fact that each and every country has its own environment of doing business. Another factor taken in to consideration is the uncertainty that the host government many presents in the field of doing business. Mostly, multinational companies are vulnerable to multiple dealings with various governments which offer a stiff challenge. The situation is extremely hard when a country does not follow the rule of the rule and economic as well as political policies are not well stipulated by independent body to ensure transparency and accountability (Forak 2002). Diversity of Business Restraints; international companies especially from the U.S do face numerous challenges especially policy restrictions sand prescriptions by the host governments where they establish subsidiaries. This greatly hinders and prevents the company’s potential growth and expansion especially from the benefits of international growth. Firm restrictions are found in all countries, developing and developed which offers an opportunity for the company to compare which environment is suitable for doing business (John, David and Stephen 2005). Potential risks of cooperative strategiesThe most potential risk of cooperative strategies is the management of human resource factors. Dealing with human factors that have different believes and routine is very risky in that, some communities do things which others see to be wrong and in that case the company will find out that these aspects will endanger the potential risk of cooperative strategies. The other factor is the aspect of salary, when one department in an international country realizes that the same department in the other country receives higher salaries and compensations than them, this may affect the cooperative strategy within the company by triggering suspicion and mistrust (John, David and Stephen 2005).How Lufthansa's strategy is supported by organizational structureOrganizational structure forms an essential aspect in a company’s affair to effectively and efficiently run its affairs to increase profitability and expand business. This is because it carries the policies, goals and objectives of the firm to be achieved in a given time frame. These goals, policies and objective are essential for proper running and management of the firm which determines the amount of equity gained in a financial year as noted by Zhou (2004)
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Strategic leadership actions should be recommended for developing human capital at Lufthansa through selective actions concerning human capital in a company. This assists a company to have a review of both its capital and human resources in order to devise a strategy of how well they can be utilized and employed to achieve the desired objectives and organizational goals. This is successfully done through talent planning which involves identification of specific and particular talents available in an organization and devising the best ways and means of achieving them (Zhou 2004).Another strategy involves workforce planning and management. This involves data analysis of the talents and various work groups that exist in a company to identify ways and means of developing and achieving for the benefit of the company. Strategic leadership actions recommended for establishing an effective organizational culture at Lufthansa is also emphasized in all the departments and in all its undertakings to enhance efficiency and productivity and all its departments. There must be proper policies of recruitment and selection in order to increase the performance of the firm. Also as a prerequisite, the firm should endeavor to achieve leadership standards which the employees must possess before being given a placement in the firm since this will encourage equity and transparency in the firm which will enhance employees working in harmony and with determination for improved productivity and increased profitability (Robins, 2003)
Strategic leadership actions recommended for promoting an entrepreneurial mind-set at Lufthansa.Lufthansa should embrace training of its employees. This should be done especially in Basic management skills will enable the employees and the management of Lufthansa to manage the firm well and also enables growth and expansion. Secondly, Business start up and entrepreneurship development training should be highly considered for objective achievement and growth. This should be done to enhance productivity of the firm and better management of the new market openings that the company is operating internationally.
Strategic leadership actions recommended for reducing complexity at LufthansaThe fact that the firm has laid down policies goals and objectives, the management of Lufthansa should ensure that these policies and goals are adhered to in order to avoid and to reduce the complexity at Lufthansa. Secondly, any implementation program and policy should be guided by the market research conducted prior to the implementation. In addition, there should be appraisal activities to the company’s activities in all its departments to ensure collections and improvements to those that are not up to the expectations. Lastly, the hierarchical relationship should be designed in not only vertical manner but also horizontal to encourage frequent sharing of ideas and improved performance through transparency and accountability (John, David and Stephen 2005).
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ConclusionIn conclusion therefore, Consumers of aviation services are becoming more demanding in terms of the level of service they expect and how they are able to access services when required. A general increase in organizations' customer orientation, owing to increased competition, witnessed in many markets especially in the international front, has also occurred in aviation services, further heightening customer expectations. This has therefo9re resulted to customers demands of accessibility and convenience to be reflected in longer branch opening hours and an increase in the choice of delivery mechanisms. There has been a step change in lifestyles in the latter part of the twentieth century as individuals have become more affluent and spent more on leisure activities. Therefore, in order for Lufthansa to create a marketing niche in all aspects of its international competition worldwide, these aspects that the paper has noted above should be taken into consideration. The management of the firm should ensure that it has set policies and organizational structures which give guidelines of employees' expectation in all aspects in the working environment throughout the company.