Spirit Airline Strategic Planning
Executive of the Sprit Airline
Spirit Airlines is a highly low cost carrier. It gives the clients many options of customizing their base tickets amounts. The company has agent print-outs known as the boarding pass. The boarding pass is used to check the input versus the doing in the online kiosk. The system checks bags and progressively increases charges for overweight bags. By 2007, the Spirit started charging an amount of $3 for drinks. The charges increased to $5 in 2011 for passengers boarding passes printed at the check-in. According to these company, any bags that can exactly fit under the seats, are not charged. Any big bags that cause the overwhelming condition to the operators are the ones that are charged. The company ensures that the luggage does not exceed 50 pounds, and the bags are loaded up to $25. The company started in the US as a carrier to temporary to increase the passenger baggage fees (Eden, 1996). In the states, the bag fees began with a minimal fee of $2 to attract fewer bags to the airline during traveling. The aim of the company in discouraging passengers from carrying huge bags have resulted in another open business.
The company attains a higher competitive advantage over the higher-cost carriers. Its low prices in the market make it maintain its customers. Unlike some other companies such as the Delta Airline, US Airways and many other means of transport enterprises in the US, the stripe line has the least charges thus making many people prefer to use it. The company is also winning the competitive ability by ensuring that its bankruptcy is protected (White, 2001). The company was recorded to be among the businesses in the US airlines that protected its bankruptcy. By so doing, it established a strong foundation in the market as compared to the other airline which was declared bankrupt in the year 2012
The attractiveness of the Airstrip industry makes customers like it. The leisure travels cost which depends on the service provided by the airstrip increases when the service given by the airline industry are active. The most significant factor that makes the airstrip gain more customers is its effectiveness.
The BCG Matrix graphically shows differences amongst Spirit Airlines’ passenger revenues and profits and non-ticket income and profits about market share position and industry growth rate. Passenger revenue is obtained from the base company’s ticket sales. Miscellaneous income is known ancillary fees generate non-ticket profits, including but not limited to checked baggage, advance seat selection, in-flight sales, etc. Spirit Airlines’ passenger revenues and profits division fall into 1st Quadrant, the Upper “Question Mark.” Units positioned in 1st Quadrant have high cash needs and small relative market share position, although they compete in a high-growth industry. Divisions in this Quadrant require close monitoring by internal controls and are often considered “problem children.” Spirit Airlines’ passenger revenues and profits section maintain a relatively small market share position, as evidenced by the firm’s 2% market share. Also, Spirit Airlines only carries 1% of U.S. passengers. At the heart Spirit Airlines’ business model is offering the lowest base fare to its customers.
Therefore, the passenger revenues and profits division will never become a Star or Cash Cow without dramatic strategy implementation. Attractive plans for departments in the Question Mark Quadrant are market penetration, market development, product development and divestiture. Spirit Airlines has made a significant investment to double the size of its fleet by 2020, representative of a current market growth strategy. As a result, this action could allow the passenger revenues and profits division to move from a Question Mark to Star, and ultimately Cash Cows if the airline continues to operate profitability. Spirit Airlines’ non-ticket income and benefits section fall into Quadrant III, the Upper “Cash Cow”. Divisions positioned in 3rd Quadrant of the BCG Matrix compete in a low-growth industry and have a high relative market share position. The non-ticket revenues and profits division generates cash more than its operating needs. It is the non-ticket income and benefits department that allows Spirit Airlines to maintain its competitive position in the marketplace, of offering the lowest base fare ticket value. As long as the non-ticket section’s revenues and profits continue to perform at this highly profitable level, Spirit Airlines will be able to maintain its strong position in the future. Although Spirit Airlines is innovative about its competition in using this division to generate significant portions of total revenue, this is a mature market because the firm has actively pursued this strategy and has been profitable (Eden, 1994). Attractive plans for divisions in the Cash Cow Quadrant include product development, diversification, retrenchment, and divestiture. Regarding Spirit Airlines non-ticket division, product development and diversification are the most advantageous strategies to pursue. On a BCG Matrix, the size of the divisional circles illustrates overall sales volume.
Code sharing agreements are selected, acquisition of another airline, and the addition of a new route as viable strategies for Spirit Airlines to pursue. These strategies simultaneously combat the most heavily weighted threats and weaknesses, while capitalizing on Spirit’s strongest strengths and opportunities.
External factors and the respective ratings from the IFE and EFE matrices quantitatively suggest codesharing, acquisition, and adding a new route are the most attractive strategies to pursue. The QSPM displays each policy regarding total relative attractiveness. Dealing with a codesharing strategy is most advantageous for the firm about existing strengths, weaknesses, opportunities, and threats. Additionally, a thorough Pro/Con Analysis has been conducted. The results supplemented the results indicated by the QSPM, affirming our decision to recommend a code sharing strategy.
Cultural Aspects Strategy
Cultural values include consist of beliefs, customs, norms, personalities, values, attitudes, heroines and heroes that exist in a company and that they describe the company. It is good to know that every organization have a culture that govern them and maintain their working relationships. Norms that can be emulated by the company define the firm’s success or failure. It is crucial to look at the strategic management from the cultural way for the reason that the success and failure purely lies on the level of support that the strategies accrue firm’s culture. For instance if the strategies of the spirit airline company are supported by the cultural products, such as rites, rituals, ceremonies, stories, language, symbols, heroes and heroines then the managers often can make the changes more easily and with a lot of easiness. It is good to know that strategies which need less cultural changes can be more appealing because more changes take considerable time and effort to implement (Post, Frederick, Lawrence, & Weber, 1996). Therefore, for the Spirit Airlines firm to succeed, they should apply and take into consideration the cultural values of the area where the firm exists.
Grand Strategy Matrix Analysis
In 2013, the total airline revenues increased 5.06%, classifying it as a moderately rapid market growth industry. Spirit Airlines fell into 1st Quadrant of the Grand Strategy Matrix. The grand matrix is the most recommended strategies for companies in Quadrant I include in market growth Spirit Airlines has made plans to expand fleet size. This expansion will allow the firm to add services into new markets and extend operations to an underserved business environment that are already operating profitability (Lawrence, & Lorsch, 1986). There is a likelihood for serious market development due to the business’s assets and extensive amounts of available capital.
The most recommendable strategy to be used in the spirit Airline is the Grand strategy matrix analysis. It is the most an appropriate strategy since the company’s operation lies in its first quadrant, and it is this quadrant that any company has a room to extend its operations to areas that their services are profitable yet the company has not fully utilized the market share. Another important strategy is the one of scanning on the cultural aspects of the community from with the organization is operating. If the culture of a such an organization should be consider and relevant services be provided as per their needs, then the Spirit Airlines will continue dominating the market.
Analysis of the spirit Airstrip’s market is very important, it helps the company identify what its customers want and the way forward of achieving them. The use of the analysis matrices will help the company identify the best way to operate in order to realize its optimum results. The company should always consider all aspects of the community from where it operates and work to words achieving what the community needs. The company on its strategic analysis should first consider the community’s opinion since it is through community opinion the company will understand the best way to present its products in an appropriate way that will attract the attention of the customer and thus more outcome. Analysis of the cultural aspects of the community marks the beginning of the company expanding its operation and profits.
In decision making, the company should not depend only one technique of strategic analysis techniques such BCG or any other mentioned strategy. The company should consider every important strategy mentioned and finally borrow concepts from the list from established. Combining the ideas obtained from the list will make the organization to come up with a hybrid technique of strategic planning. The implementation of such a plan will make the organization realize its full potential. Using of a single strategic analysis may provide a positive impact on the organization but the results would not be as good as the one used in the hybrid technique.
The spirit Airline will ever be on the lead if it implements all important aspects that are included in all strategic analysis strategies. The company should combine implement all positive aspects narrated in the BCG matrix and consider the cultural aspects to ensure that the company matches with the demand of the community. It should learn from the past experience and engineer a mechanism of fighting with any possible competition that may be coming into the market. The company will be on the lead if it maintains what its customers’ needs most
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Lawrence, P. R., & Lorsch, J. W. (1986). Organization and environment: managing differentiation and integration (Harvard Business School Classics).
Eden, S. E. (1994). Using sustainable development: The business case. Global Environmental Change, 4(2), 160-167.
White, G. W. (2001). Business ethics. Journal of Business & Finance Librarianship, 6(4), 49-49.
Kaplan, R. S., & Norton, D. P. (2001). The strategy-focused organization: How balanced scorecard companies thrive in the new business environment. Harvard Business Press.