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Lufthansa is poised to grow in 2000 than in 1994, following a group of changes brought about by several reconstruction programs that implemented by the management. Following a three-phase procedure, that involved restructuring operations (sale of assets, reduction in workforce), structure (optimizing process orientation and reducing the stages of production), and strategic (full privatization & establishment of partnerships such as the star alliance) the company has seen its profits rise on an annual basis beating forecast and thriving where other airlines have faltered (Tywuschik & Ulrich, 2006).
Lufthansa has various forms of management due to the wide range of services that it offers and also due to its size. In some instances, the firm follows a divisional structure. A divisional structure is necessitated in large firms at risk of becoming unmanageable and slow in reacting to stimulus. Big firms have a reputation of inflexibility to market needs and loss of focus on organizational goals. A division is identified as a business unit encompassing a group of defined customers and competitors.
It operates autonomously as it is responsible for its finances i.e. profits and losses. There are also instances where Lufthansa is managed by strategic business units which are just like departments under the parent company. Most of these strategic business units operate for the sole purpose of making the airline’s process more efficient. These strategic business units in the Lufthansa group are involved in the airline industry or are acting as supply backup in both the hospitality and ground handling businesses.
Fields covered by these businesses include logistics of goods, maintenance of planes in airports catering, or even Information technology service provision (Tywuschik & Ulrich, 2006). The units are best described as autonomous profit centers within the parent company. Lufthansa is a big group that covers a multitude of other business functions covers a vast array of business functions.
Benefits derived by the airline by being a member of Star Alliance are many with the fact of its position as one of the major members in the star alliance team, currently holding the number two slot in the alliance grants it the privilege of serving more travelers through the network. With a better-coordinated structure that ensures the traveler is able to journey seamlessly, the alliance has been enjoyed a higher market for its services as more travelers embrace the idea of “one airline”.
Being a member of the privileged team also ensures that planes and airport infrastructure are employed to the maximum to serve as many clients as possible. Parts of the infrastructure include airport lounges, and baggage handling facilities. I the few years that it has been a member the airline has seen itself grow both through its fleet and through profits. It is after the realization that it was unsustainable to expand globally while increasing the capital outlay of the firm on expansion expenditures (Tywuschik & Ulrich, 2006).
Difficulties of being a member include the erosion of its corporate culture that prided on excellence and maintenance of high standards. In-house functions such as I.T and quality assurance had to be in tandem with the requirements of the alliance. This meant that the airline had to lose some of its independence by being a member of the alliance. Being a major member of the alliance has forced the company to offer aid and salvage other airlines within the alliance for the sake of the survival of the alliance itself. Examples of airlines assisted by Lufthansa include Swiss Air Canada among others. This has come to affect its bottom line as such acquisitions were not forecasted within its budget.
Tywuschik, S., &Ulrich, S. (2006). Lufthansa: Going Global, but How to Manage Complexity? Switzerland: International Institute for Management Development.
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