Assessment of Spirit Airlines' Competitive Strategy

The assessment begins by defining Spirit Airlines' strategy as a business-level strategy focusing on ultra-low-cost carrier (ULCC) operations. The alignment of this strategy with both the market environment and internal resources is discussed, highlighting how low fares attract customers. Financially, Spirit Airlines has shown an upward trend in net income from 2012 to 2015, indicating successful strategic implementation. Despite intense industry competition leading to slim profit margins, Spirit's strategies have enabled it to outperform competitors. Key threats include economic instability and capital structure risks, suggesting a need for strategic adaptation. The recommendation is for Spirit Airlines to expand global reach and integrate modern technology in operations.

Running Head: COMPETITIVE STRATEGY 1
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Running Head: COMPETITIVE STRATEGY 2
1. What is the Spirit Airline strategy?
The strategy applied by Spirit Airline is a business strategy. Typically, there are two
types of strategies that can be considered in this case. The business strategy and corporate
strategy. A corporate strategy relates to the decision of a firm to determine what kind of a
business activity to undertake and then commit the resources necessary for the task (Barnett
2004). In this case the strategy of Spirit Airline is a business strategy because an activity have
been selected. All the company need is to have a competitive advantage in the industry.
2. Assess spirit Airline strategy in terms of its fit (with its business environment and its
internal resources/ capabilities).
The business strategy applied by Spirit Airline have a perfect positive correlation with
business environment along with capabilities to undertake the business. First, Spirit Airline is an
ultra-low-cost company. This low fare airline make affordable offers to the customers so as to
enable them move from one destination to another. Therefore, by lowering the costs in this
business environment, Spirit Airline will be able to attract more customers as compared to other
airlines. Therefore, the business strategy fit the company fully (Thomas 2009). In terms of
resources and capabilities, Spirit Airline uses its ULCC business model to offer low and
affordable travel fares to its customers. This is associated with a range of optional services that
they offer. In that case, the customers are in a position to select the options they find fit for them
from that list produced by the company. Spirit Airline have capability of lowering their travel
costs and at the same time able to maintain huge profit margins.
3. Assess spirit Airline strategy in relation to its financial performance (ROE, ROA,
and fuel/Turn).
Spirit Airline business strategy have enabled the company to generate huge profits. The
financial performance of Spirit Airline have been facing serious troubles in the past. However,
by application of business strategy, the company have been able to possess an upward trend in
terms of financial performance. Again, in terms of fuel, there have been some benefits associated
with reduction in prices of oil. This have boosted the financial performance of Spirit Airline
business to a larger extent. Again, there has been recovery of the US economy from great
depression which as well play a significant part in financial performance (Saunders, Lewis &
Thornhill 2009). In terms of ROE, Spirit Airline have been able to utilize ultra-low cost
structure to attain a manageable operation costs which have been facilitated by utilization of

Running Head: COMPETITIVE STRATEGY 3
aircraft services, high carrying capacity, dedicated workforce along with well-planned flight
schedules. Again, there has been reduction on costs associated with sales, marketing as well as in
distribution. Finally on ROA, Spirit Airline Company have been able to achieve financial
performance by using the opportunities to position or to strategize itself for growth and
development (Ryan & Deci 2017). There has been several networks that have opened up. Thus,
the market for the services offered by the company are increasing. There are still more targeted
markets such as Latin America and Caribbean. The existence of niche markets along with new
opportunities in Latin America and Caribbean have assisted the company to focus on financial
performance.
4. What can we learn from financial data about the sources of its performance
compared to competition?
The financial data offered for Spirit Airline are indicating a particular trend on operating
data as well as in the financial position of Spirit Airline Company. The cash flow statement also
offer substantial financial data on performance of Spirit Airline Company. Each year from 2012
to 2015, the net income generated by Spirit Airline Company tend to be an upward trend. This is
a very positive trend in business (Richard 2013). It indicate that the business is undergoing
growth and development. If this is compared to what the competitors have dine in this field of
business, then we can be able to indicate whether Spirit Airline have achieved competitive
advantage. On competition, it is very clear that airline industry tend to be very competitive. This
implies that, Spirit Airline need to come up with strategies to outdone these competitors and in
return gain the competitive advantage (McGregor 2012). From the financial data, it is clear and
distinct that Spirit Airline have been able to outdo the competitors. This may have resulted from
application of business strategy such lowering travel costs and offering a range of options to the
consumers on the service list.
5. What threats does spirit Airline face; how should it counter these threats?
The main challenge that Spirit Airline face in this industry is competition. There are a
number of Airline companies that are in operation. In that case, the whole industry is affected by
intense competition which result to dismal profit margins (Maslow 2013). To counter this
problem, Spirit Airline Company need to use business strategy to attract consumers and in return
attain competitive advantage.

Running Head: COMPETITIVE STRATEGY 4
What threats to its continuing growth and prosperity should spirit airline be most
concerned with?
Spirit Airline Company should be concerned with treats such as poor economic
conditions that can affect business growth, instability in capital structure to expand the business
and risks of uncertainty relating to airline services.
6. What changes/ recommendations in spirit airline strategy would you recommend?
My recommendation to business strategy on Spirit Airline is based on the future of
Airline industry. In the near future, the world will become a global village (Weiss 2013). The
company should revisit the strategy to figure out whether it is possible to offer airline services to
many more destinations. The company also need to apply the modern technology in airline
industry so as to facilitate the underlying operations.

Running Head: COMPETITIVE STRATEGY 5
References.
Barnett, MB 2004, Rules of the World: International Organizations in Global Politics, Cornell
University Press.
Maslow, AH 2013, A Theory of Human Motivation, Start publishing LLC.
McGregor, D 2012, the Human Side of Enterprise, New Yolk, 21.
Richard, A 2013, Job Satisfaction from Herzberg’s Two Factor Theory Perspective, Grin
publishing.
Ryan, RM., & Deci, EL 2017, Self-Determination Theory: Basic Psychological Need in
Motivation, development and Wellness, The Guilford press.
Saunders, M., Lewis, P. & Thornhill, A 2009, Research methods for business students, Pearson.
Thomas, KW 2009, Intrinsic Motivation: What Really Drives Employees Engagement,
Berret-Koehler publishers.
Weiss, TG 2013, the United Nations and Changing World Politics, Westview Press.