Political Science

The importance of global strategic survival in the airline industry is of paramount importance for growth and sustenance of operations. Lufthansa is a global airlines facing several strategic challenges and issues that need to be tackled. This report proposes several changes that can be implemented in the strategy of Lufthansa in order to make it successful and able to overcome its global challenges.

The Strategy at Lufthansa Airlines
Lufthansa is a large airline that operates at a global level. It has a challenging task of managing the global change and complexities resulting due to that. Lufthansa has opted for a transnational or multinational strategy. There is a shift of Lufthansa from a regional monopolist to becoming a major player in the international airline service industry. The continuing acquisitions of regional carriers and the formation of the Star Alliance have paved its way towards expanding globally.  Its international strategy was a based on a multicultural approach to overcome the high price point perception to attract the economically savvy customers in a successful but ethical way (Lufthansa, 2009). Partnerships and joint ventures have played an important role for its global expansion. Lufthansa has optimized its strategic global alliances.

Lufthansas Corporate Strategy
Lufthansas strategy is based on working with other firms having the same objective. Lufthansa has adopted a cooperative strategy through a non equity strategic alliance. So it has developed a contractual relationship with some other firms to share some of their unique resources and capabilities to create a competitive advantage. This has allowed it to outperform airlines that operate only at a domestic level. It has become member of the Star Alliance in order to pursue its cooperative strategy. As a result of this membership Lufthansa has cooperation with other foreign airlines in the areas of equipment, flight plan, spare parts, mile collection programs etc. The most important objective of Lufthansas cooperative strategy is to expand internally and gain more market share.

Challenges and Uncertainties
Although operating beyond the companys national boundaries has some benefits like increasing market share, more customer base etc. but there are some uncertainties and challenges related to it. It is a challenging task to manage international alliances due to the differences in culture, management and regulatory constraints. Lufthansa must judge partners strategic intent so that the partner does not become a competitor. There are some potential risks of cooperative strategy as well. The partners might act opportunistically. Lufthansas partners might misrepresent the competencies brought to the partnership. There might be failure of partners to provide committed resources and capabilities available to the other partners. One partner might make investments that are specific to the alliance but that might not be the case with others.

Organizational Structure for Strategy Control
The organizational structure and controls of Lufthansa are effective enough to support its strategy. The CEO, Wolfgang Mayrhuber is always working for the best of the organization and the employees are managed effectively. The contracts made for the cooperative strategy are always very detailed and are monitored throughout the term (Shangqon, 2000). Lufthansa has focused on developing trusting relationship that does not pose potential risk for the company. The goals are to minimize costs and also to prevent opportunistic behavior by the partners as well as to maximize partnerships value creation opportunities.

Strategic Leadership
It is a very critical task to manage the global change and complexities. The human capital of Lufthansa must be treated as the most important asset of the company because that would help to maximize their performance and loyalty for the company. The hiring must be done very carefully. The organizational culture must support Lufthansas international and cooperative strategy. As the firm operates in foreign countries as well so the local culture of that country should be promoted. There should be decentralization of authority as Lufthansa has a multicultural strategy (Hit, Ireland  Hoskison, 2008). Employees must be motivated by effective reward system in order to promote entrepreneurial mind-set amongst them and to reduce complexities at Lufthansa.