Business
2016-01-16
Executive Summary
The company Spirit Airlines is a well-known ultra low-cost airline. This company operates on the American market, including the US, Canada, countries of Latin America and Carribean. It provides more than two hundred flights every day. It is amounted around fifty destinations, where it can buy tickets at Spirit Airlines (Spirit.com, 2016). This company offers clients bare fares with the opportunity to order different additional services (bag place, the choice of the seat and others). The most important advantages of the company include ultra low prices, online booking and check-in, clean airplanes and friendly staff, huge assortment of destinations and flights. At the same time, price wars and increased competition in the local market could be a strong threat for further profitable activity of the company.
Comprehensive Analysis
Let’s analyze the company Spirit Airlines. The products, which are offered by Spirit Airlines, can be divided into four groups: stars, question marks, cash cows and dogs within the BCG matrix (Netmba.com, 2016).
As we can see from the table 1, flights across the US provides the huge part of the sales of the company Spirit Airlines. They are considered as stars. The new directions of the company, including booking services and flights to Carribean/Lain America are so-called “question marks”. Additional services provide huge part of profit for the company, but it does not grow rapidly. In this case, additional services are cash cows. And the booking cruise tickets are the least attractive direction.
The next stage is the construction of the Grand Strategy Matrix. It needs to calculate axis values for it. Calculations are presented in the table 2. The range of all variables is from +1 (worst) to +6 (best) for industrial and financial strengths and from -6 (worst) to -1 (best) for competitive advantage and environmental stability.
Now it can be possible to construct the Grand Strategy Matrix for Spirit Airlines. It is represented in the figure 1.
Rapid Market Growth
Quadrant 2 Quadrant 1
Spirit Airlines ( 2.45; 1)
Weak Compet. Position Strong Compet. Position
Quadrant 3 Quadrant 4
Slow Market Growth
As we can see, Spirit Airlines comes in the 1st quadrant. The company management should focus on the current market and achieve growth through adopting market and product development, market penetration strategy.
The last stage is developing QSPM for Spirit Airlines. It needs to analyze strengths and weaknesses, opportunities and threats of the company Spirit Airlines in order to form key factors. Their weight and attractiveness scores are represented in the table 3. Rates of factors are as follows: 0 – note relevant, 1 – poor, 2 – below average, 3 – above average and 4 – superior (Maxi-pedia.com, 2016).
It should be noted, that Americans are more loyal to the company that they know very well. It can be assumed that the company Spirit Airlines knows cultural features better than other companies. It is one of the advantages of the company and it confirms that it is better to operate in the local market.
After analyzing the QSPM for the company Spirit Airlines, one can say that alternative strategy 2 “Expand on the Current Market” should be more appropriate. The company Spirit Airlines takes a strong position in the local market (primarily in the US). The client base of the company has already formed. In this case, it would be more easily and less risky to grow on the American market than to enter European ad other markets.
Conclusion
In conclusion one can say, that the most appropriate strategy for the further effective activity of the company Spirit Airlines should be expanding within the current market. It focuses on the American market. Spirit Airlines have products at different stages of the product cycle. There is a lot of so-called “question marks”. They include flights to Latin America and different booking services. They are quite new directions of activity for the company and would grow rapidly. Additional services are one of the most profitable parts of the company’s offers. After analyzing grand strategy matrix and QSPM, one can say that market development strategy is the most suitable for the company in the next 3-5 years. At the same time, company should foresee increased competition and price war on the analyzed market. In this case, the company will need to review its strategy regularly.
References
Maxi-pedia.com,. (2016). Quantitative Strategic Planning Matrix (QSPM). Retrieved 15 February 2016, from http://www.maxi-pedia.com/quantitative+strategic+planning+matrix+qpsm
Netmba.com,. (2016). BCG Matrix. Retrieved 15 February 2016, from http://www.netmba.com/strategy/matrix/bcg/
Spirit.com,. (2016). About Us. Retrieved 15 February 2016, from https://www.spirit.com/AboutUs.aspx
