Lufthansa: Going Global, but How to Manage Complexity

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Lufthansa Aviation group has become a worldwide leader in the airline industry with several powerful business segments, inclusive of a passenger airline component, business component, logistics, MRO catering and IT services. The aviation success has been largely due to their focus on quality, innovation, safety and reliability. Head quartered in Germany, Lufthansa has lead the pack with regard to international airline business. The Aviation Groups’ International Business Strategy has evolved to that of a corporate level transnational strategy, whereas there is a shared vision to achieve global efficiency yet effort to strengthen its local responsiveness in Germany (Hitt, 2009). Evident with the strategic alliance with Star Alliance, the…show more content…
This strategic network serves as a valuable cooperative arrangement to take place between the 18 members within the Star Alliance. This alliance allows for the sharing of cooperative relationships with stakeholders, customers, suppliers and competitors (Hitt, 2009). Air carriers commonly participate in multiple horizontal complementary alliances; this is demonstrated with the relationship between Star Alliance and Lufthansa. However, these type of business-level cooperative strategies present challenges with perception of loyalty, and speculation of illegal collusive activities this feeds into the discussion of other risks. Lufthansa has faced some friction with regard to making compromises counter to its culture. However; the use of the cooperative strategies such as the alliance formed with Star Alliance proves reasonable given the high uncertainty of the industry and risk associated with pursing growth opportunities independently. It is considerably important to evaluate these uncertainties and challenges when pursing business outside of the national boundaries. The risk of a network cooperative alliance such as Star Alliance carries the risk of opportunistic behavior. What may have initially been viewed as a partnership, could become compromised with potential for failure due in part to a false perception of trustworthiness amongst members. (Hitt, 2008) Additional risk, may also include misrepresentation; full
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