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In 2002 the management team of Deutsche Lufthansa AG was considering the upcoming threat from low-cost airlines in the context of an increasingly complex and competitive strategic environment. Finally the decision was taken to respond to the innovation by opening an own low-cost carrier, Germanwings in late 2002. But over time the business model of Germanwings was modified repeatedly. The case series covers * Lufthansa’s considerations regarding various options to respond to the competitive challenges brought up by the emerging low-cost airlines such as easyJet or Ryanair in 2002 (Case A), * the foundation of Germanwings in late 2002 and some early successes until 2005 (Case B), and * some more recent changes in the Germanwings business model in the following five years until end of 2010 (Case C).

The purpose of the Germanwings case series is to develop a better understanding of possible responses to disruptive business models. It relies on the example of Lufthansa who for many years was considered to have mastered the ability to manage two alternative business models, the full-service model of the mother company and the low-cost model through its subsidiary Germanwings that was launched in 2002. The following three learning objectives are addressed in particular: 1. How can an incumbent player address the challenge of business model disruptive innovation? 2. How to structure the relationship between the two businesses exploiting the different models? 3. How can a company manage two radically different business models?

In 2002 the management team of Deutsche Lufthansa AG was considering the upcoming threat from low-cost airlines in the context of an increasingly complex and competitive strategic environment. Finally the decision was taken to respond to the innovation by opening an own low-cost carrier, Germanwings in late 2002. But over time the business model of Germanwings was modified repeatedly. The case series covers * Lufthansa’s considerations regarding various options to respond to the competitive challenges brought up by the emerging low-cost airlines such as easyJet or Ryanair in 2002 (Case A), * the foundation of Germanwings in late 2002 and some early successes until 2005 (Case B), and * some more recent changes in the Germanwings business model in the following five years until end of 2010 (Case C).

The purpose of the Germanwings case series is to develop a better understanding of possible responses to disruptive business models. It relies on the example of Lufthansa who for many years was considered to have mastered the ability to manage two alternative business models, the full-service model of the mother company and the low-cost model through its subsidiary Germanwings that was launched in 2002. The following three learning objectives are addressed in particular: 1. How can an incumbent player address the challenge of business model disruptive innovation? 2. How to structure the relationship between the two businesses exploiting the different models? 3. How can a company manage two radically different business models?

In 2002 the management team of Deutsche Lufthansa AG was considering the upcoming threat from low-cost airlines in the context of an increasingly complex and competitive strategic environment. Finally the decision was taken to respond to the innovation by opening an own low-cost carrier, Germanwings in late 2002. But over time the business model of Germanwings was modified repeatedly. The case series covers * Lufthansa’s considerations regarding various options to respond to the competitive challenges brought up by the emerging low-cost airlines such as easyJet or Ryanair in 2002 (Case A), * the foundation of Germanwings in late 2002 and some early successes until 2005 (Case B), and * some more recent changes in the Germanwings business model in the following five years until end of 2010 (Case C).

The purpose of the Germanwings case series is to develop a better understanding of possible responses to disruptive business models. It relies on the example of Lufthansa who for many years was considered to have mastered the ability to manage two alternative business models, the full-service model of the mother company and the low-cost model through its subsidiary Germanwings that was launched in 2002. The following three learning objectives are addressed in particular: 1. How can an incumbent player address the challenge of business model disruptive innovation? 2. How to structure the relationship between the two businesses exploiting the different models? 3. How can a company manage two radically different business models?

Around 6:00 p.m. on May 31, 2007, Urs Müller and Christoph Burger from ESMT European School of Management and Technology were getting prepared for the presentation. In about an hour they would present their proposal for an executive education program to the CEO of Energie aus Deutschland Systems (EAD Systems) and two of his senior HR managers. Sitting in the lobby of a hotel in western Germany next to the main entrance of the EAD Systems headquarters, Urs recalled the pitching process by scrolling through his notes. ESMT’s pitch to EAD Systems describes the efforts of ESMT European School of Management and Technology to acquire EAD Systems as a client for an executive education program. The case study comprises two parts, A and B, which allow comprehensively reviewing sales management in a professional services firm.

1. Understanding tender processes from the seller’s perspective: The case illustrates the typical process responding to a tender by putting together and proposal and presenting it to a B2B client, in this case a tender for executive education support of a company by a business school. As this particular process is largely in line with the tender process of other professional services such as consultancy, legal advice or auditing etc., the case can also be used to help students understand how professional service firms acquire business. To a lesser extend the case can be used to draw parallels and learnings for other B2B service offers, e.g. maintenance, complex solutions etc. 2. Understanding success factors for selling in tender processes: Beyond a mere description of the proposal process, the case helps students understand how to successfully structure a proposal process and which pitfalls are on the way. Hereby, students may improve their personal selling and sales management skills. 3. Managing the sales force: The case also allows to discuss the role of sales managers in leading sales people, especially with respect to the question of how they can get the best out of their people and what they can do to support them in their proposal and client management efforts. 4. Client management and retention: And finally – and possibly most importantly – the case sheds some light on the interconnection of winning clients on one side and managing and retaining clients on the other side.

Around 6:00 p.m. on May 31, 2007, Urs Müller and Christoph Burger from ESMT European School of Management and Technology were getting prepared for the presentation. In about an hour they would present their proposal for an executive education program to the CEO of Energie aus Deutschland Systems (EAD Systems) and two of his senior HR managers. Sitting in the lobby of a hotel in western Germany next to the main entrance of the EAD Systems headquarters, Urs recalled the pitching process by scrolling through his notes. ESMT’s pitch to EAD Systems describes the efforts of ESMT European School of Management and Technology to acquire EAD Systems as a client for an executive education program. The case study comprises two parts, A and B, which allow comprehensively reviewing sales management in a professional services firm.

1. Understanding tender processes from the seller’s perspective: The case illustrates the typical process responding to a tender by putting together and proposal and presenting it to a B2B client, in this case a tender for executive education support of a company by a business school. As this particular process is largely in line with the tender process of other professional services such as consultancy, legal advice or auditing etc., the case can also be used to help students understand how professional service firms acquire business. To a lesser extend the case can be used to draw parallels and learnings for other B2B service offers, e.g. maintenance, complex solutions etc. 2. Understanding success factors for selling in tender processes: Beyond a mere description of the proposal process, the case helps students understand how to successfully structure a proposal process and which pitfalls are on the way. Hereby, students may improve their personal selling and sales management skills. 3. Managing the sales force: The case also allows to discuss the role of sales managers in leading sales people, especially with respect to the question of how they can get the best out of their people and what they can do to support them in their proposal and client management efforts. 4. Client management and retention: And finally – and possibly most importantly – the case sheds some light on the interconnection of winning clients on one side and managing and retaining clients on the other side.

Ulrich Homburg must have had an unpleasant déjà-vu on January 28, 2010, when hearing of headlines in Germany’s leading tabloid, Bild, about “Schaffnerin Herzlos,” the “heartless train conductor.” The board member of Germany’s national railway company, Deutsche Bahn AG (DB), and head of its passenger transportation division, was confronted with media reports about a minor who had been thrown off the train the night before by a DB train conductor. The incident happened on what turned out to be the coldest night of the winter, in one of the most deserted provincial train stations in the German state of Brandenburg. The girl was traveling without a valid train ticket. This incident was not the first of its kind. In the fall of 2008, Bahn employees had also forced several children and youths off of trains. The train company had subsequently given service personnel very clear instructions: Under no circumstances should minors be asked to leave the train. Now Homburg had to ask himself if further action was necessary.

We have successfully used this case with various different audiences ranging from MBA students to executive education. Given its rather untechnical and general perspective it can be used in a broad range of class contexts. However, the level of reflection and discussion will obviously vary according to the participant group and/or the position within a program. The case can be used to discuss topics such as: Responsible leadership and business ethics, corporate social responsibility, change management, and strategy and service management

The case describes an innovative public service conceived and operated by a private company. The case examines how a public-private partnership, and its underlying political stakes, affect the way the service is designed and operated.

Case A, the subject of this particular teaching note, traces Gazi’s personal and business journey, and contains ample material to evaluate Gazi as a person, as an entrepreneur, and as a leader. Ostensibly, the case issue is the degree to which Gazi should now scale up from the approx. €10 millionof current revenues, but this issue is best set aside until the B case discussion. In fact, the B case includes substantial bottom-up information from each of Gazi’s key managers allowing this scale-up question to be tackled from both top-down and bottom-up perspectives. The A case raises much more the question what does it take to be a successful and exemplary entrepreneur, and how, when, and from where such capacities are acquired. The case lends itself not only to a detailed discussion of Gazi’s entrepreneurial capacities and their origins, but also prompts participants to ask themselves to which degree they themselves exhibit such capacities, and whether they can and should embark on an entrepreneurial career.

The question that the A case ostensibly poses, namely to what degree Gazi and his team should now scale up the overall business, and in which areas, is best left to the B case discussion for reasons outlined in the abstract. The A case discussion should therefore be mainly backward-looking focusing on Gazi as an individual, as an entrepreneur and as a leader. The A case discussion should also include a critical analysis of the strategy that Gazi has employed so far to grow the business—essentially diversification by pursuing new market opportunities.

The Gazi B case focuses on two issues: First, it provides a bottom-up perspective on each of Gazi’s main lines of business, namely, the Avis/Budget car rental and other vehicle and leasing businesses; in-bound tourism; outbound tourism and ticketing; conference and event business; and cruise ship landings. Detailed plans are presented for each of these business lines and can be contrasted with plans and figures presented in the A case which provided a top-down perspective. The two perspectives remain far apart! Gazi’s top-down vision is to have overall company revenues of €100 million within five years; bottom-up estimates range from €50 million overall downwards. The case invites a debate of how to reconcile these two disparate perspectives. It allows students to understand that the real issue behind these disparate growth goals is to decide first and foremost on the overall corporate business definition and scope, and whether the previous pattern of continuous diversification is sustainable in the long run. Also worth debating is whether Gazi’s focus on “top” line revenue growth, and on employee projections, should not be tempered by a parallel concern for the bottom line, for example profitability. The second in the B case is to decide on a possible brand name to replace Albanian Experience for the incoming tourism and conference business. This existing brand’s credibility and utility has been overtaken by a substantial de-facto expansion of tourism destinations to include virtually all of the Balkan area, Greece to the South and parts of Italy to the North, as well as destinations in Central and Eastern Europe (CEE). Although the corporate scope and focus issue and the branding issue appear to be separate, they are of course related. A new brand name must be found which if possible reflects the overall business scope as well as the new tourist sources, destinations, and USPs.

The question that the A case ostensibly poses, namely to what degree Gazi and his team should now scale up the overall business, and in which areas, is best left to the B case discussion for reasons outlined in the abstract. The A case discussion should therefore be mainly backward-looking focusing on Gazi as an individual, as an entrepreneur and as a leader. The A case discussion should also include a critical analysis of the strategy that Gazi has employed so far to grow the business—essentially diversification by pursuing new market opportunities.

Ostensibly there are two issues to be resolved: How to organize for the future; and the future roles and responsibilities of Gazi himself as the organization embarks on its next step of substantial growth. The larger issue behind these apparent issues is how to find the right balance in the future between the two extremes of a top-down strongly led, fast, entrepreneurial organization (as at present), and the growing need to institutionalize and decentralize the organization with both strategy and leadership pushed to levels below Gazi—all the while retaining an entrepreneurial culture and speed. Such new balances go beyond organizational structure and involve processes, systems, culture, people, and leadership. All are open for discussion in the C case.

The question that the A case ostensibly poses, namely to what degree Gazi and his team should now scale up the overall business, and in which areas, is best left to the B case discussion for reasons outlined in the abstract. The A case discussion should therefore be mainly backward-looking focusing on Gazi as an individual, as an entrepreneur and as a leader. The A case discussion should also include a critical analysis of the strategy that Gazi has employed so far to grow the business—essentially diversification by pursuing new market opportunities.