Lufthansa Navigates Union Turbulence (in fewer than 1000 words)

A great blog on industrial action, actually written by Ryan Cook

As I sit in tax-dodging Starbucks (http://www.bbc.co.uk/news/business-19967397), looking out of the window across the retail park my glance is fixed on the entrance to Comet (http://www.bbc.co.uk/news/business-20171479) where angry customers are banging on the shutters; I am reminded of the fact that no one is safe. The business world is of course hugely dynamic and rather unpredictable. Or it is?

Actually for some businesses some threats appear perfectly predictable and may even be described as an inevitable and regular occurrence. I am of course, referring to what is arguably my favourite industry, the international airline industry and the almost seasonal occasion that is industrial action. In fact, in recent year’s industrial action in the international airline industry, and the publicity that this brings, has been as reliable an event as Christmas or Eid.

Only 12 months ago my students and I were conducting a rather thorough analysis of the problems being experienced by British Airways (now part of the International Airline Group following their rather protracted merger with Iberia Airways) and Willie Walsh (http://www.bbc.co.uk/news/business-13880312). This year it is the tern of Lufthansa. I count my lucky stars that when October dawns the business gods will throw an interesting story in my direction and once again they have not disappointed. Trade unions and industrial action is sometimes considered a somewhat dry topic on the syllabus but I (and my students, I hope) can’t get enough of it. A casual flick through the Buss3 past papers proves that it always features in one form or another.

For their weekly essay title over half-term I set my students the following “Industrial Action at Lufthansa: who is right?” I know on the surface this appears tough as it is much more in-keeping with the rigours of a Buss4 essay but I have not left them unsupported. I thought I would share the learning activity we undertook (and the essay assessment mentioned above) for fellow teachers looking to funk things up and those students of you that love a challenge. Here goes…

Activity 1 – get to grips with the situation

The following articles, you’ll be pleased to know, are brief but wonderfully informative. Watch the two videos (only 3 minutes combined) and then scan the other articles so that you have some background. I printed these and provided my randomly grouped students with a copy for them to review. I gave them some A3 paper and a 20 minute timeframe. They didn’t panic too much!

http://www.bbc.co.uk/news/business-19517990, http://www.bbc.co.uk/news/business-19513949

http://www.bbc.co.uk/news/business-19521737, http://www.bbc.co.uk/news/business-19525810

http://www.bbc.co.uk/news/business-19656960

Activity 2 – Prepare a case in favour of the workers

Following a quick review of what the students consider to be the key facts and thoughts I armed the students with a 15 minute timeframe and asked them to make a compelling case in favour of the workers. I advised them to take the role of lawyer and that the judge (me) had to be convinced. In true buss3 style I required each argument to be appropriately supported by relevant facts, figures and information from the resources I had provided them with. Every student from each group was required to contribute their ideas once the 15 minutes had elapsed. The students recorded the answers on the interactive board for all to see. These were copied down by students who hadn’t originally uncovered them.

Activity 3 – prepare a case in favour of the management

Now fully convinced I asked the students to swing me to completely the other end of the opinion spectrum and deliver a compelling case in favour of the management. Again they were granted a 15 minute timeframe. By the time we had recorded the answers collectively uncovered by the group we now had a kick-ass essay plan.

Activity 4 – Themes for Analysis and Evaluation

The final activity I asked them to complete was to generate rich themes for the evaluation. We are now focusing upon this quite heavily in class as we all know that’s where the big marks are on the exam paper. I have, below, shared some of their ideas which I have to say are first class. I have also highlighted some key evaluation terms.

1. In a service based industry customer service is often a differentiating factor which distinguishes airlines from their rivals. Therefore it is essential that staff motivation is maintained and not damaged.

2. Lufthansa’s plan to merge routes under a low cost brand is dependent upon the willingness and professionalism of its staff especially given the particularly cut-throat nature of this segment of the airline industry.

3. The successful implementation (stage 4 of the marketing plan – see my previous blog: http://www.tutor2u.net/blog/index.php/business-studies/comments/buss3-the-marketing-plan-in-fewer-than-1000-words ) of the above marketing plan means staff are vital / essential to successful operations.

4. In a service-based industry where staff are the face of the organisation they represent the manifestation of the brand and how it is perceived. Therefore the staff have a direct influence upon branding, positioning and performance.

5. The union’s request of a 5% pay rise is laughable, especially in what Porter describes a 1 star market which is characterised by narrow profit margins and intense price-competition.

6. The new low-cost merger plan is a classic example of Porter’s ‘Cost leadership strategy’ and this simply does not advocate or support high staffing levels or an above inflation 5% pay rise.

7. Flights and holidays are a luxury product and have experienced falling demand as a result of the global credit crunch, rising fuel prices and diminishing consumer incomes. Thus Lufthansa simply cannot afford a 5% pay rise when their profits have fallen by 24%!

8. There is a strong trend of market-consolidation in the international airline market where mergers and acquisitions are now the norm. Further job losses, let alone stagnant pay are unavoidable however well managed the airline is.

The great thing about this learning activity is the opportunity for debate and analysis. Notice my deliberate ploy to have my students present both sides of the argument and then decide. This is useful as it gets them ready to take on the 34 marker at the end of buss3.

Finally, to all my A2’s who generated these wonderful answers thank you. I can’t wait to read your completed essays on Monday.