Introduction

LUFTHANSA CASEFlinders International Business Policy and Strategy Case Study Analysis
Lufthansa 2000: Maintaining the Change Momentum Author: Christian Gerlach (9905388)
June 2004 Table of Contents Executive Summary 3 1.0 Introduction 4 2.0 Lufthansa - A
company overview 5 3.0 Porter's Five Forces 6 3.1 Threat of new entrants 7 3.2
Bargaining power of suppliers 8 3.3 Bargaining power of buyers 9 3.4 Threat of substitute
products 10 3.5 Rivalry among competing firms 12 4.0 SWOT Analysis of Lufthansa 13
4.1 Strengths 13 4.2 Weaknesses 16 4.3 Opportunities 17 4.4 Threats 18 5.0 TOWS
Analysis for Lufthansa 21 6.0 Business-level strategy of Lufthansa 24 7.0 Corporate-level
strategy of Lufthansa 25 8.0 Strategic Alliances 26 9.0 Strategic Leadership and German
Culture 39 10.0 Evolutionary Patterns of Strategy and Structure 33 11.0 Conclusion 36
12.0 Appendices 37 13.0 References 39 Executive Summary In 1991 Lufthansa airlines
was almost bankrupt. In 1999 the company already announced record results in its 70year history, helped to found the Star Alliance, the industry's largest network, and is now
looking to become one of the leading airlines in the world. An impressive strategic
leadership und human resource management played an important role in the
transformation and in the process of strategic renewal. The implementation of an
integrated cost leadership/differentiation strategy and a related diversification corporatelevel strategy also contributed to Lufthansa's success. Having had major involvement in
the creation of the Star Alliance also played an important role in Lufthansa's
transformation into a successful company that operates in a quite difficult industry
environment. Right now, Lufthansa's future looks bright, but they should try to keep the
change momentum alive and possibly apply a few new strategies such as enter the lowfare market in Europe, exploit business opportunities in non-airline related market
segments, focus on improving in-flight entertainment and customer service, offer Lear
jets for lease and improve their hedging against fluctuations in the areas of exchange
rates, interest rates and fuel prices. ...read more.

Middle
Another opportunity for Lufthansa will be the addition of the Airbus A380 to its fleet in
2007. It will be the largest passenger jet in the world seating 555 passengers. The direct
operating costs per seat on the new super jumbo will be 15 to 20 per cent less than those
for the Boeing 747-400, previously the biggest aircraft in the Lufthansa fleet. The Airbus
A380 also holds room for 40% more passengers. When this new plane will go into service
with Lufthansa, it will operate on the very busy routes to North America and Asia.
Additional benefits include a lower noise level of the new aircraft and its environmental
compatibility. Besides the increasing expenses of higher fuel prices, airlines also need to
pay for the noise caused by their planes at a number of airports. With a reduction of
noise levels these expenses will decrease. Furthermore, less noisy aircrafts can be used
in a more flexible manner, as they are permitted to take off earlier in the day and land
later (Lufthansa Annual Report 2003). The Lufthansa group also has the opportunity to
engage in other diversified areas. For example Lufthansa's Sky Chef and Lufthansa IT

services have the opportunity to conduct business in the areas of catering and maybe IT
consulting that are not directly linked to the airline industry. 4.4 Threats Lufthansa faces
a range of different threats. A major threat is competition, which includes the mature
airlines, and other alliances as well as low fare carriers that have developed over the last
couple years, in particular in Europe. The organization also has to deal with cyclical risks.
General economic fluctuations as well as geopolitical developments can have a large
impact on the performance of the Lufthansa Group. As good examples serve the events
of September 11, the Iraq conflict and the outbreak of SARS in Asia along with a
stagnating global economy which seriously influenced the business activity of the entire
airline industry in a negative way (Heerkens 2003). ...read more.

Conclusion
Consequently Lufthansa continued its transformation process by implementing the
strategic cost-management programme '15', which aimed to reduce overall unit cost by
20% within five years (Bruch and Ghoshal 2000). Alliance building -- the STAR ALLIANCE
In 1997 Lufthansa was one of the key-founding members of the Star Alliance, the world's
best airline network worldwide with the purpose of realizing higher revenues and
decreasing costs by exploiting synergy effects as well as offering more customer
benefits. The Star alliance has been discussed in great detail in earlier on in this report.
11.0 Conclusion This report showed that Lufthansa went through a great deal of change
in strategy and structure in the last decade and after it successfully turned around from
near bankruptcy and the crises of September 11, SARS, the war on Iraq the future looks
very promising again for Lufthansa. Jrgen Weber's leadership skills played a very
important part in turnaround. However, the main challenge Lufthansa is currently facing
is how to maintain the awareness of the crisis and the openness for change. It is vital
that the learning from the crises is preserved. As the industry analysis and SWOT
analysis showed there are substantial threats in the airline industry. Therefore Lufthansa
constantly has to develop new strategies to overcome these threats and work on
eliminating its weaknesses in order to stay ahead of the competition. 12.0 Appendices
Appendix I - Lufthansa Key Figures Business figures 2003 2003 Revenue in million 15,957
Operating result in million 36 Capital expenditure in million 1,155 Cash flow in million
1,581 Stockholders' equity in million 2,653 Total assets in million 16,732 Employees
(31.12.2003) 93,246 Performance ratios 2003 2003 Passengers in millions 45.4 Available
seat kilometres in billion 124.0 Revenue seat kilometres in billion 90.7 Seat load factor %
73.1 Cargo and mail in millions t 1,580 Available tonne-kilometres in billion 10,814
Revenue tonne-kilometres in billion 7,089 Load factor % 65.6 Appendix II - The hubs of
Lufthansa and its partner alliances Appendix III - Airline Alliances in comparison 1

HP/Compaq Merger Harvard Business Case

April 24, 2009 by benderjohnr

Below are excerpts from an interesting Harvard Business School Case Study (February 22, 2004)
providing insight to the scale and value of the HP/Compaq Merger. John Benders role as Executive
Director of Merger Integration gave him a front-row seat to the largest merger in tech history.

Day-1 of the new HPs operations are viewed as best-in-class. Successful early integration
of two massive IT infrastructures included hp.com (online store) being open for business,
@hp employee portal with more than 2 million hits/day accessible to all employees, 1, 193
company networks connected at key strategic locations , active directory and enterprise
directory synchronized and all E-mail systems interconnected linking more than 229,000
mailboxes and a quarter million desktops. More than $3.7B in synergies and 95% of
integration milestones were achieved in the first 12 months spanning nearly every aspect of
the new HP, and focused on key synergy areas of procurement & supply chain, headcount
reduction, administrative facilities closures, and IT integration. Results easily exceeded Wall
Street expectations of $1.4B.
Excerpts from The New HP: The Clean Room and Beyond, Harvard Business School Case
Study, February 22, 2004.
In fiscal 2001, HP was the second largest computer company, behind IBM, with pre-merger
revenue of $45 billion, 19th on the Fortune 500, with over 88,000 employees in more than
120 countries. However, HP was struggling with difficult economic conditions and a
technology industry slump. At the time, Compaq was the third largest computer company,
behind IBM and HP, with revenue of $42 billion in fiscal 2001. The company had 66,000
employees in over 200 countries, and was ranked 27th in the Fortune 500. Compaq
integration of Tandem and Digital in 1997 and 1998 respectively proved difficult; further
pressured by the computer industrys intense competition, Compaqs stock took a beating.
When Fiorina approached Capellas about a licensing deal, he suggested a broader
relationship between HP and Compaq. Capellas felt that there was too much capacity in the
industry and that it made sense to consolidate during an economic downturn. The idea of a
merger excited Fiorina, who saw it as an opportunity to create a highly competitive
technology giant that was well positioned in virtually all of its markets. Historically, mergers
within the technology industry had proven difficult, and both HP and Compaq had less than
perfect track records with their prior acquisitions. Fiorina, recognizing the multiple obstacles
to the mergers success, had created a dedicated integration team immediately after the
merger was announced. The clean room, as the integration office came to be known,
consisted of pairs of pre-merger HP and pre-merger Compaq employees who were
responsible for planning the details of the execution of the merger upon its close.

When the merger between HP and Compaq was first announced in early September of 2001
(eight months before it was approved), Fiorina and Capellas tapped Webb McKinney of HP
and Jeff Clarke of Compaq to run the merger integration team. Together, McKinney and
Clarke created a small integration office known as the clean room where they could begin
planning the details of the merger without violating antitrust laws. The clean room started
with a small group of employees but involved almost 2,500 people by the time of the
mergers close. The clean room was responsible for developing a master plan to be
implemented upon the mergers closure; this road map was to encompass all aspects of the
combined company. The scope of decisions involved in melding the two companies was
immense, ranging from larger issues with more strategic impactsuch as branding, product
lines, and corporate cultureto smaller details, such as cash management systems and
financial reporting practices. The integration team was responsible for establishing direction
for the newly combined companies, setting priorities, and defining the details of its future
operations.
Members of the clean room used an adopt and go strategy to manage their decision-making
process. Category by category, the team reviewed elements of the approaches used by each
premerger company, and thenrather than using a hybrid or redesigning each systemselected
the best method to use going forward. McKinney noted, Before the close, we were planning
just about every aspect of the launch of the new company and how the new company would
integrate. In a sense, it was almost like leading a traditional organization. The only unusual
thing was that we were spending most of our time on planning. We could do some
prototyping, but that was about it. It was like launching an $80 billion start-up except that the
only thing we could do was plan.
Once the merger closed, the clean room couldnt allow people to think that they could change
everything that had been done for the last eight or nine months. It would just slow things
down too much. Instead, as the teams form and you get together, your job is to understand
and implement the decisions that have been made because speed is the number one thing.
HPs cultural integration team rolled out Fast Start, a program designed to ease the
transition, explain the new business model, and help define the culture of the newly combined
companies. The Fast Start workshops were conducted in groupsled by team managers
and a facilitatorand were designed to be highly interactive. All 155,000 people in the
organization were required to complete the program.
Excerpts from The New HP: The Clean Room and Beyond, Copyright 2004 President and
Fellows of Harvard College. To order complete copies or request permission to reproduce

materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or
go to http://www.hbsp.harvard.edu.