Out of company total fixed assets estimated at €10,002 billion, €3,273 billion is in aircraft and €63 mln.
A more in other tangible assets. The company has extensive fleet and is currently devoted to improving it in all the business segments, including passenger and freight services.
5. Apply the value chain model to Lufthansa. Based on this model, in which activities does Lufthansa have its main competencies?
In 2005, the biggest company generated Value Added was within the logistics and MRO (Maintenance, Repairment and Overhaul) business segments. Also, it services attributed a considerable share to the total company generated and added income.
6. Does Lufthansa have a sustainable competitive advantage in the global airline industry?
Lufthansa currently does not have a very sustainable competitive position within the global airline industry, but the current strategy plan of the company is very competitive and wise and accounts for all the company strengths within each business segment the company plays in, and within each region where the company exists and needs to strengthen the position, or whether the company is planning to enter. The strategy included Long Haul growth which shall enable to carry more passengers and develop partnerships with more airlines, improve the quality which shall lead to overall perfection of the company perception among passengers of all types, employ economies of scale from multi-hubbing, and achieve unit cost advantage from economies of scale after SWISS merger.
7. What is Lufthansa's business-level strategy? Is the strategy appropriate to offset the forces in the industry? Do you recommend any changes?
The current goal of the group is to become the largest group in Europe offering global...
In the short-term, the company management is devoted to growing the profitability of the passenger segment of the business through growing passenger flows through such hubs as Munich and Frankfurt, while decreasing the servicing costs, and strengthening passenger flights in Chine and India, big growing markets. Revenue and costs synergies from SWISS merger are expected to be experienced the most in 2006-2007 with further improvement of overall company performance.
8. Which methods of restructuring were used at Lufthansa and which were most successful?
The company used several restructuring methods. Namely, the restructure in South America increased the revenues in this region by 8.8%, followed by restructuring of Europian services.
9. What entry strategies are being used by Lufthansa? Are airlines able to pursue international expansion like other firms?
Airlines are able to pursue international expansion even to some extent at higher rates than companies within other industries, and currently Lufthansa is planning to generate its' highest revenue share from other than original to the company market.
10. What kind of cooperative strategy is being used by Lufthansa?
The strategy is geographical expansion together with cost reduction in all the regions, also employment of synergy effects and economies of scale through horizontal merger.
11. What is your evaluation of the leadership actions at Lufthansa?
The management is highly qualified with well planned and worked out strategy which allows the company to growth the market capitalization and profitability.
Lufthansa 2005 Annual Report, available at http://www.lufthansa-financials.de/lhir/pdf/en/DLH-GB_2005e.pdf
Lufthansa 2003
