Lufthansa Airline Corporative Culture - Research Paper Example

Organizational Culture Report (Lufthansa Airline) Table of Contents Executive summary 3 Introduction 3 Discussion 4 Work specializations 5 Departmentalization 6 Chain of command 6 Span of control 7 Formalization 7 Decentralization and centralization 8 Common organizational designs 9 Organizational Chart 10 Conclusion 12 References 13 Executive summary The organizational structure is considered as set of things that are collectively contributing and cooperating towards formation of one common objective. This paper provides vivid explanation about organization structure of Lufthansa Airline. The organizational structural performance is effectively evaluated by introduction of work practice simulation and modeling. A set of guideline questions are assessed to evaluate the organizational structure of Lufthansa Airlines. The corporate level business structure of Lufthansa Airline Company is identified and discussed in-depth. Lastly, several organization structure, chart and design related elements have been analyzed with respect to the particular airline. Introduction The Lufthansa Airline is a German airline that is considered as fourth largest in terms of fleet size and complete passengers carried after Southwest Airlines, United Airlines and Delta Airlines. This airline company operates in 197 international destinations and 18 domestic destinations. The Lufthansa German Airline born in the year 1926. The company merged with Junkers Luftverkehr and Deutsche Aero Lloyd. After World War II, the German company extended its business segments by Lufthansa System, Lufthansa Technik and Lufthansa Cargo. The annual report of the year 2010 reveals that the Lufthansa Company defines and outlines their business in terms of profitable and sustainable growth. The organizational structure helps to define and explain how supervision, coordination and task allocation are effectively directed towards the attainment of organizational goals and intentions. Furthermore, the organization structure of an organization is considered as perception and viewing glass through which entities see its setting and organization. The structure is primarily dependent upon the strategy and objectives of an organization. An effective structure controls and regulates how the responsibilities, power and roles are coordinated, controlled and assigned. Temporary building blocks, management hierarchy, goals, rules and departments are regarded as variety of elements included within organization structure. The prime purpose of the report is to present the organizational structure of Lufthansa Airlines. Moreover, this evaluation is effectively presented and based on formalization, span of control, centralization, chain of command, work specialization and departmentalization. Discussion In the era of globalized competitive world, there has been rapid upsurge on complexity of services and goods. This has augmented the requirement of involved human capital and modified work systems with the help of up-to-date technological improvements. An effective organization structure is dependent upon factors involved within the formation of structure. The organization is believed to operate and function in different environment and with diverseopenings, stratagems, products and constraints. These are supposed to influence the formation and plan of superlative organization structure. The organization selected in the process of evaluating organizational structure is Lufthansa German Airlines. This airline company is regarded as one of the largest premier airlines in the world. The Lufthansa Airline is headquartered in Cologne with main hub at Frankfurt Airport. The geopolitical expansions and general economic fluctuations can have huge influence towards the performance of the Aviation group of Lufthansa Airline. Until the year 1994, the Lufthansa Airline Company was primarily owned by the state-owned enterprises. Now-a-days, the majority of the shares of Lufthansa Airline were held by the private investors. The private investors and shake holders owns 88.52%. Furthermore, the Deutsche Bank and Deutsche Postbank also help limited amount of Lufthansa Shares. The long-term profitability of a company is determined by the structural analysis. The six critical designed questions enable to evaluate the organizational structure of Lufthansa Airlines. Work specializations The division of labor or work specialization is referred as point by which businesses subdivides their activities in to distinct jobs. Firstly, it is critical for organization to create suitable organizational structure. This application of effective organizational structure will benefit to aid businesses to attain their objectives and allow implementing appropriate operating processesfurthermore, it is defined as degree to which workers and labors are segmented and divided in to smaller groups to accomplish their work successfully. This process of segmentation enables workers to gain maximum amount of knowledge on single task and eventually become expert on single job. In the era of globalization and expansion of world trade, it is crucial for organization to expand their division of labor for the benefit of the company. It is believed that labors in airline industry sector greatly prioritizes the labor management relations and are highly unionized. There has been significant rate of division on labor segment. The Lufthansa Airlines tried to segment their labor department to enhance their business operations. The company focused to make employees feel that they are valued in the organization. The application of operative work specializations has upsurge level of work. The employees and labor are more acquainted towards the work. Departmentalization The division of labor needs synchronization and coordination that is facilitated by specialists in various departments. The manner on which allocation and task of different individual are combined and joined to form functional area are specialized on particular department. This are believed to different and varied from other functional regions. This division of separate jobs through work specialization can be effectively grouped together by departmentalization. The types of departmentalization are customer, product, functional, process and divisional. Thedivisions of various businesses in to corporate functions are accounting, sales, manufacturing and purchasing, etc (Hitt, 2006, p.18). The Lufthansa Airline implemented departmentalization to make task responsibilities and duties clear. This process enables labor to be fully committed towards their work. The broad range of techniques is being implemented by the German airline to develop wide variety of skill. Chain of command In Lufthansa Airlines, the first attendant and associated in the chain of command is Cabin Service Director, Cabin Service Manager, Flight Service Manager and Inflight Service Manager. This is basically based on flight attendants. The chain of command is primarily considered as a process and chain of instructions that are passed from one to other individuals. The clear chain of command enables to enhance the efficiency of organization and improve decision making process. New members joined the Board of Executives. The members of Lufthansa Airlines have now responsibilities and objectives to reorganize. The strategies have been reorganized to improve the company value, improve customer satisfaction and create profitable growth. This benefited the company to shape their cost-effective growth in the aviation industry. The information and instruction of group and individuals reports are provided to the hierarchical department of Lufthansa Airline. Span of control The span of control is defined as the number of functions and area of activities that employees and labor working in an organization are responsible towards certain drawbacks. The managers in Lufthansa Airlines can manage maximum number of individuals in the airline industry. The number of subordinated agrees to work under the order of managers of Lufthansa Airline is referred as the span of control (Cheney, 2010, p.68). These acts as beneficial for the organization as it enable to shorten the bureaucratic structure and chain of command. The CEO of the Lufthansa Airline needs to view the organization chart to determine and notify the span of control and width of the organization. The Lufthansa Airline used to have higher number of reports. This is primarily due to the fact that the company uses multidivisional structure to amplify their business process. This results in to wider and flatter organizational chart. This can be notified from the explanation that the company opts to average span of control. this impacts the cost structures and time of make decision within the company. Formalization This part of the organization structure focuses on the positions and roles. The formalization tends to benefit on concentrating and directing on roles. This benefits the organization to rationalize the decision making process of an organization. The rules and regulations are implemented and initiated within the Lufthansa Airlines to direct and manage managers (Flouris, 2006, p.72). The Lufthansa Airlines tries to formalize their organizational structure by focusing on decision making structures, top to down reporting and hierarchical structures. The top level of departmental heads and directors of airlines, operational supervisors and middle managers within the Lufthansa Airlines helps to formalize structure. It took nearly 2 years for Boeing and Lufthansa to accept their terms and conditions towards formalization and solidifying relationship with German carriers. Decentralization and centralization The decentralization is defined as the process of dispersing and reallocating the power and functions from central authority and location. This process of redistributing enables to conflict resolution and enhance efficiency of the organization. The decision making authority of the Lufthansa Airlines is being increased with the help of other airlines. The CEO and Chairman of the advisory board are regarded as prime person to take decision making decisions of the Lufthansa Airlines. Furthermore, the European Commission of Airline Industry also has the authority to control the decision making process. This specific process can help the organization to engage potential and important stakeholders in the decision making process. The centralization is another decision making process that is being implemented and focused by the Lufthansa Airlines. It is considered as the process on which organization opts to select decisions of decision making and process within particular groups and locations. In the case of Airline industry, the centralization of the assessment procedure that is based on Board of Equalization should be under control (Effenberger, 2005, p.42). This would benefit the Lufthansa Airline to eliminate and nullify problem on commercial air carriers. The centralized business is considered to have strict hierarchical rules and regulations. In case of Lufthansa Airlines, several levels of management within the business operation and advisory board such as Corporate Human Resources and Chief Officer of Group Airlines, Chief Officer of the financial services, CEO of the Lufthansa Airline and CEO and Chairman of the Board usually set policy and delegate tasks. Since, the managers working within the company have full level of information about what is going on in the organization. This resembles the fact that managers in the Lufthansa Airlines have full knowledge and information to maintain precise control over their products and budgets in the airline industry. Common organizational designs The organizational designs are categorized in to contemporary and traditional designs. Some of limited number of basic models for organization structure, divisional structure, modified functional structural, elementary structures and the matrix structures. The elementary structure is a plain approach implemented by organization with simple production practices. This form of structural model is basically related to family owned business. In this business segment, the investors are regarded as similar supervisors and managers. The number of exemptions is regarded as non-relevant. This brings out the fact that elementary structure permits single director to achieve direction and economical purposes. The limited number of members and activities enable to lessen the level of specialization on elementary structural model. On the other hand, the Lufthansa Airlines are using progressive system of multidivisional structure. This form of structure is stared as Strategic Business Units. In this multidivisional structure, the units are differentiated in to three different levels (Westarp, 2012, p.82). In perspective to Strategic Business Units, the firms are considered to be organized and planned within business portfolios. The three different level of multidivisional structure are CEO, strategic business unit and divisions. Most part of the functional facets of the industry is supposed to have corporate operations which include research & development, strategic planning, legal finance, marketing and human resources. The prime benefit of implementation of Strategic Business Units by Lufthansa Airline Company is to expand their divisions to control business operation easier. From the year 1994, the Lufthansa Airline transformed and made huge turnaround to alter their business operation from state enterprise in to customer focused and market oriented organization. This dramatic alteration in their business process has been success story of the Lufthansa Airlines. This implementation of Strategic Business Units enables Lufthansa Airline Company to segment their structural business form to upsurge their focuses on every department. At present, the Lufthansa group has segmented and augmented their business areas in to IT services, leisure travel, MRO, logistics and passenger traffic. The philosophy and viewpoint of champion enterprises is followed by the Aviation group of Lufthansa. This concept primarily revolves and rotates around the model of Strategic Business Units. This execution of structure benefited the company to expand their market share. The Lufthansa Technik and Lufthansa Systems had achieved good results in the international market segment. In the airline IT business segment, the Lufthansa Group has made significant progression towards the expansion of their business internationally. Organizational Chart The Deutsche Lufthansa AG is considered as one of the largest aviation based group that act as parent company for Lufthansa Airline. Moreover, it acts as an Executive Board that primarily comprises of four associates. The primary purpose of the Executive Board is to ensure sustainability and determine implementation of effective strategic approach. This would benefit Lufthansa Airline to augment their market value (Lawton, 2007, p.82). On the other hand, it is a job of Supervisory Board to monitor the activities of Executive Board and advise them to work accordingly. The individual business segments and Passenger airlines of Lufthansa are responsible and accountable towards the business outcomes. The own Supervisory boards helps to monitor Lufthansa Passenger airlines. The top management and Group of Executive Board characterize and signify the business results. Stephan Gemkow is the chief officer of the financial department. The work of this department is to focus on Lufthansa Cargo, Lufthansa systems, Lufthansa Technik and financial services. On the other hand, the work of chief officer and corporate human resources of Group Airlines is segmented in to Austrian Airlines, SunExpress, Germanwings, Brussels Airlines, bmi and SWISS. The CEO of the airline needs to focus on Lufthansa Passenger Airline department. Conclusion This can be concluded that the organization structure of Lufthansa Airline is based on multidivisional or Strategic Business Units structure. The Lufthansa Airline is considered as one of the largest multinational airline alliances by membership with Star Alliance. The company tends to implement organizational structure that can benefit to operate in decentralized and high diversified segment. The structure is believed to consist of several profit centers and businesses. Furthermore, it is considered to have separate supervisory structures and management. This benefited the company to nullify their previous drawbacks and amplify the future sustainability. The strategic business unit is being implemented by the Lufthansa Airline to cooperate with their acquisitions and Group. The Executive Board of the Lufthansa Airline have the responsibility of the managing the business operations. It aims to create sustainable growth and create clear strategic directions of the company. Each part of the individual business sections and divisions runs in a form of separate group company. Each group company is supposed to have their own operating responsibilities, loss and profit. The financial strategy of the Lufthansa Airline is to secure liberty of activities in terms of strategic, financial and operation performance. This strategy of the company creates to keep hold of their brand and identity. This implementation of effective organizational structure allows companies to support Lufthansa Airlines in regards to resources and steadiness. Moreover, it can be notified that the organization structure of Lufthansa Airlines has changed the culture of the firms and made necessary alteration towards adaptation on new culture. References Cheney, G., 2010. Organizational Communication. London: Sage. Effenberger, D., 2005. Outsourcing and handling agents at Lufthansa Cargo. New York: Springer. Flouris, T., 2006. Executing strategy in Airlines. London: Kogan Page. Graf, F., 2012. Business Communication and Organizational Design. Stamford: Cengage Learning. Hitt, M., 2006. Strategic Management. London: Routledge. Lawton, T., 2007. Strategic Management. New Jersey: Pearson. Read More