SWOT Analysis of Lufthansa Airlines

Presented By Tejas Rathod

 History of SWOT Analysis

● In 1965, three colleagues at the Long Range Planning Service of Stanford Research Institute
—Robert F. Stewart, Otis J. Benepe, and Arnold Mitchell—wrote a technical report titled
Formal Planning: The Staff Planner's Role at Start-Up.
● The report described how a person in the role of a company's staff planner would gather
information from managers assessing operational issues grouped into four components
represented by the acronym SOFT: the "satisfactory" in present operations, "opportunities" in
future operations, "faults" in present operations, and "threats" to future operations.
● Stewart et al. focused on internal operational assessment and divided the four components
into present (satisfactory and fault) and future (opportunity and threat), and not, as would
later become common in SWOT analysis, into internal (strengths and weaknesses) and
external (opportunities and threats).
 SWOT Analysis

● SWOT analysis (or SWOT matrix) is a strategic planning and strategic management
technique used to help a person or organization identify strengths, weaknesses,
opportunities, and threats related to business competition or project planning.
● It is sometimes called situational assessment or situational analysis.
● Additional acronyms using the same components include TOWS and WOTS-UP.
● This technique is designed for use in the preliminary stages of decision-making processes
and can be used as a tool for evaluation of the strategic position of organizations of many
kinds (for-profit enterprises, local and national governments, NGOs, etc.).
● It is intended to identify the internal and external factors that are favorable and unfavorable
to achieving the objectives of the venture or project.
 SWOT Analysis(Conti.)

● Users of a SWOT analysis often ask and answer questions to generate meaningful
information for each category to make the tool useful and identify their
competitive advantage.
● SWOT has been described as a tried-and-true tool of strategic analysis,but has also been
criticized for its limitations, and alternatives have been developed.
● The SWOT analysis has been used in community work as a tool to identify positive and
negative factors within organizations, communities, and the broader society that promote or
inhibit successful implementation of social services and social change efforts.
● It is used as a preliminary resource, assessing strengths, weaknesses, opportunities, and
threats in a community served by a nonprofit or community organization.
SWOT Analysis (Conti.)
SWOT Analysis of Lufthansa Airlines

● Lufthansa is the flag carrier and largest airline of

Germany which, when combined with its
subsidiaries, is the second-largest airline in Europe
in terms of passengers carried.
● The name of the former flag carrie is derived from
the German word Luft meaning "air" and Hansa for
the Hanseatic League.
 History (Conti.)

● Lufthansa is one of the five founding members of Star Alliance, the world's largest
airline alliance, formed in 1997.
● The company slogan is 'Say yes to the world.'
● Besides its own services, and owning subsidiary passenger airlines Austrian Airlines,
Swiss International Air Lines, Brussels Airlines, and Eurowings (referred to in English by
Lufthansa as its Passenger Airline Group), Deutsche Lufthansa AG owns several aviation-
related companies, such as Lufthansa Technik and LSG Sky Chefs, as part of the
Lufthansa Group.
● In total, the group has over 700 aircraft, making it one of the largest airline fleets in the world.
 SWOT Analysis
● SWOT analysis of Lufthansa analyses the brand by its strengths, weaknesses, opportunities
& threats.
● In Lufthansa SWOT Analysis, the strengths and weaknesses are the internal factors whereas
opportunities and threats are the external factors.
● SWOT Analysis is a proven management framework which enables a brand like Lufthansa to
benchmark its business & performance as compared to the competitors.
● Lufthansa is one of the leading brands in the airlines sector.
 Strengths

● Brand strength: Lufthansa has some strong brands under it like the Swiss and Austrian
airlines. Lufthansa is also trying to become Europe only five star rated airlines.
● In-flight services: Lufthansa is known for its services that are provided in-flight. Some of
these services include in-flight meals, free check-in, frequent flier points etc.
● Multi-passenger branding: Lufthansa has brands under its umbrella which cater to almost
all segments as well as permit the airline to cover all its segments and economy. The airline
owns luxury and economy cabins, long haul and short haul and offers an entire spectrum of
services.
● Solid Balance sheet: From the days of its inception, Lufthansa has been showcasing a
more traditional perspective to its balance sheet in comparison to other airlines. The debt is
low and the cash balance is higher. The ratio of cost of equity to the cost of debt is also low.
● Coverage in Europe: Lufthansa has coverage in Europe with multiple hubs all over the
region and this ensures complete coverage in the region.
 Weaknesses

● Lufthansa has a high-cost base: Lufthansa has been taking numerous efforts for cost
savings which accounted for more than EUR 2.5 billion savings in the airline’s bottom line
between 2012 and 2014. The airline continues to be amongst the higher cost European
airlines, in terms of cost per available seat kilometer, when accounted in terms of the
average trip length.
● Poor labor relations: The Company has been notorious for numerous issues regarding its
human resource policies. There have been a number of pilot strikes which continued to 2015
and both parties are trying their best to iron out their differences. There have also been
numerous debates with respect to pay differences and pension schemes.
● Slow response to competitive threat: As more low-cost carriers entered the market
Lufthansa started losing face rapidly. However, its response to the low-cost carriers has been
lukewarm.
 Opportunities

● Increase in foreign travel: A large number of businesses have opened out into various parts of the
world. This has resulted in a lot of international business travel which in turn has resulted in the
increase in the number of business travel.
● Increased demand in emerging economies: The number of travelers in emerging economies has
grown and so have the need for airlines. This has resulted in more airlines preferring routes in
developing countries.
● Increase in overseas vacations: The overseas vacations of families have increased and couples,
as well as families with children, have preferred traveling to countries abroad for vacations. This has
resulted in more sales from these segments which were previously not the case.
● Fussy customers: Customers have become choosier in their list of services. This makes
companies focus more on add-on services. This means that the value of the seat has increased
since customers are willing to pay more for privileged services.
 Threates

● Competition: There is a lot of competition in the aviation sector like Etihad Airlines,
Singapore Airlines, Air India, Air France, British Airways etc.
● Rising Costs: The costs are ever increasing with rising in fuel costs, maintenance and labor
costs.
 Conclusions

● In a word, this PPT initially assesses the method of strategic change programme which
Lufthansa applied in four aspects: reconstruction from functional structure to multidivisional
structure, combination of human resources management and business strategy, control in
the implementation of strategy, and new network alliance.
● It firstly highlights the management of strategic alliance through the difficulties in cooperation
with alliance members and exploration in the new market; the second point mainly
contributes to how to improve excellent service to satisfy with customers' requirement;
thirdly, deterioration in global environment may make Lufthansa carry out some
environmental programmes; the further challenge for Lufthansa is that they should be
conscious of economic environment change and some emergent events and draw out the
reaction plan to respond.
 Bibliography

● https://en.wikipedia.org/wiki/SWOT_analysis
● http://wiki.doing-projects.org/index.php/File:SWOT_profile.png
● http://wiki.doing-projects.org/index.php/Implementing_SWOT#Implementation_of_the_SWO
T
● https://en.wikipedia.org/wiki/Lufthansa
● https://www.mbaskool.com/brandguide/airlines/4266-lufthansa.html
Thank You