Lufthansa Going Global but How to Manage Complexity
In 2005,Lufthansa acquired the Swiss International Airlines with the purpose of saving it from the aggressive takeover by British Airways, which is one of the major competitors of the company. Lufthansa does not prefer to get too much involved with other members of the Star Alliance. This is basically a part of the company’s strategy of creating a perception that it is the dominating member of the alliance. In order to compete with low-cost carriers, Lufthansa has created Lufthansa Regional. Almost half of the company’s total German and European flights are carried by Lufthansa Regional. Overall it can be said that the company has been adopting aggressive international strategies that are expected to retain its profitability and competitiveness.Lufthansa is found to be expanding its long-haul and short network partially by organic growth. While carrying out the process of expansion, cost-effectiveness is the prime factor that is taken into consideration. Hubs like Munich, Frankfurt, and Zurich are mainly used for the purpose of expansion. Lufthansa and SWISS together serve almost 242 destinations located in 87 countries. Furthermore, the company is found to be focusing on the expansion of its cooperation programs along with its partners. The Star Alliance has been playing an important role for Lufthansa in the process of capturing new markets. The alliance is constituted of 21 members that serve more than 1000 destinations in almost 168 countries. For instance, Lufthansa has improved its position in the markets of the Middle East and Turkey with the help of Turkish Airlines which is one of the newest members in the Alliance. More number of markets is likely to be covered by means of bilateral partnerships (e.g. regional partnerships) (Lufthansa, n.d.).A cooperative strategy is one in which organizations work together in order to attain a shared objective (Hitt Ireland, amp. Hoskisson, 2007).