1. Describe the type of international strategy the company has chosen. Lufthansa, one of the world's largest airliners, has divisions that handle maintenance, catering and air cargo. Since World War II the airline industry has never earned its cost of capital over the business cycle (Hitt, 2010). Most airlines have declared bankruptcy or been bailed out by the government. Lufthansa had also gone through these difficult times, but had re-emerged to become one of the most profitable airlines in the world. The company has adopted a transnational strategy, seeking to achieve both global efficiency and local responsiveness. Lufthansa's monopoly in Germany ended with the creation of the European Union. All EU member countries become a single region and therefore European competition has increasingly become a local competition. Lufthansa has created its regional hubs, to cater to its domestic market. But the availability of substitutes such as high-speed trains and the Eurotunnel is necessary for Lufthansa to create short travel times, customization and quality standards in the region to gain a competitive advantage. But outside the EU there are no substitutes for air travel as all national airlines compete on the market, the international airline industry is a highly competitive environment. A new force has also emerged in the world of air travel, in the form of three Gulf airlines with gigantic ambitions. Within a decade the Emirates of Dubai, Qatar Airways and Eithad of Abu Dhabi together carried a capacity of two hundred million passengers (Micheal, 2010). The company needed to go global and therefore adopted the international strategy at the corporate level, in which Lufthansa will operate...... middle of paper ......xperience (Thomas, 2010). Finally, Lufthansa could have a flat management structure and some sort of flexible, highly productive workforce, different from that of rival British Airways' strike-torn employee union. It could also recruit low-wage cabin crew and ancillary staff from Southeast Asia and Africa who will work up to regulatory limits to reduce labor costs. Works Cited Clark, P. (2010, June 8). European airlines struggle to take off as rivals gain speed. Financial Times, p.15.Hitt, M., Ireland, R. & Hoskisson, R. (2010).Strategic management: competition and globalisation, concept and cases. Mason, Ohio: Cengage Learning Michael, D. (2010, June 9). The Emirates airline orders more Airbus planes, challenging Germany's Lufthansa. The Wall Street Journal, p.B1.Thomas, B. (2010, May 12).Briefing Aviation: Rulers of the new Silk road. Financial Times, p.16