Wizz Air Holdings PLC (WIZZ) SWOT Analysis / TOWS Matrix / MBA Resources
Airline
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Wizz Air Holdings PLC (United Kingdom)
Based on various researches at Oak Spring University , Wizz Air Holdings PLC is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies,
wage bills are increasing, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Wizz Air Holdings PLC
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Wizz Air Holdings PLC can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Wizz Air Holdings PLC, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Wizz Air Holdings PLC operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Wizz Air Holdings PLC can be done for the following purposes –
1. Strategic planning of Wizz Air Holdings PLC
2. Improving business portfolio management of Wizz Air Holdings PLC
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Airline sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Wizz Air Holdings PLC
Strengths of Wizz Air Holdings PLC | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Wizz Air Holdings PLC are -
Organizational Resilience of Wizz Air Holdings PLC
– The covid-19 pandemic has put organizational resilience at the centre of everthing Wizz Air Holdings PLC does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Airline industry
- digital transformation varies from industry to industry. For Wizz Air Holdings PLC digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Wizz Air Holdings PLC has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Training and development
– Wizz Air Holdings PLC has one of the best training and development program in Transportation industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Highly skilled collaborators
– Wizz Air Holdings PLC has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Airline industry. Secondly the value chain collaborators of Wizz Air Holdings PLC have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Wizz Air Holdings PLC has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Low bargaining power of suppliers
– Suppliers of Wizz Air Holdings PLC in the Transportation sector have low bargaining power. Wizz Air Holdings PLC has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Wizz Air Holdings PLC to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Wizz Air Holdings PLC are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Wizz Air Holdings PLC is one of the leading players in the Airline industry in United Kingdom. It is in a position to attract the best talent available in United Kingdom. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Airline
– Wizz Air Holdings PLC is one of the leading players in the Airline industry in United Kingdom. Over the years it has not only transformed the business landscape in the Airline industry in United Kingdom but also across the existing markets. The ability to lead change has enabled Wizz Air Holdings PLC in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Wizz Air Holdings PLC is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Airline industry. The technology infrastructure of United Kingdom is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High brand equity
– Wizz Air Holdings PLC has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Wizz Air Holdings PLC to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Wizz Air Holdings PLC is one of the most innovative firm in Airline sector.
Weaknesses of Wizz Air Holdings PLC | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Wizz Air Holdings PLC are -
Compensation and incentives
– The revenue per employee of Wizz Air Holdings PLC is just above the Airline industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Aligning sales with marketing
– From the outside it seems that Wizz Air Holdings PLC needs to have more collaboration between its sales team and marketing team. Sales professionals in the Airline industry have deep experience in developing customer relationships. Marketing department at Wizz Air Holdings PLC can leverage the sales team experience to cultivate customer relationships as Wizz Air Holdings PLC is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Wizz Air Holdings PLC has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Airline industry using digital technology.
No frontier risks strategy
– From the 10K / annual statement of Wizz Air Holdings PLC, it seems that company is thinking out the frontier risks that can impact Airline industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Slow to strategic competitive environment developments
– As Wizz Air Holdings PLC is one of the leading players in the Airline industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Airline industry in last five years.
High cash cycle compare to competitors
Wizz Air Holdings PLC has a high cash cycle compare to other players in the Airline industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Workers concerns about automation
– As automation is fast increasing in the Airline industry, Wizz Air Holdings PLC needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Ability to respond to the competition
– As the decision making is very deliberative at Wizz Air Holdings PLC, in the dynamic environment of Airline industry it has struggled to respond to the nimble upstart competition. Wizz Air Holdings PLC has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of United Kingdom, Wizz Air Holdings PLC needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Wizz Air Holdings PLC supply chain. Even after few cautionary changes, Wizz Air Holdings PLC is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Wizz Air Holdings PLC vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Wizz Air Holdings PLC has some of the most successful models in the Airline industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Wizz Air Holdings PLC should strive to include more intangible value offerings along with its core products and services.
Wizz Air Holdings PLC Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Wizz Air Holdings PLC are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Wizz Air Holdings PLC is facing challenges because of the dominance of functional experts in the organization. Wizz Air Holdings PLC can utilize new technology in the field of Airline industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Buying journey improvements
– Wizz Air Holdings PLC can improve the customer journey of consumers in the Airline industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Better consumer reach
– The expansion of the 5G network will help Wizz Air Holdings PLC to increase its market reach. Wizz Air Holdings PLC will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Wizz Air Holdings PLC can use these opportunities to build new business models that can help the communities that Wizz Air Holdings PLC operates in. Secondly it can use opportunities from government spending in Airline sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Wizz Air Holdings PLC can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Wizz Air Holdings PLC can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Use of Bitcoin and other crypto currencies for transactions in Airline industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Wizz Air Holdings PLC in the Airline industry. Now Wizz Air Holdings PLC can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Wizz Air Holdings PLC to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Wizz Air Holdings PLC to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Wizz Air Holdings PLC can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Learning at scale
– Online learning technologies has now opened space for Wizz Air Holdings PLC to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Developing new processes and practices
– Wizz Air Holdings PLC can develop new processes and procedures in Airline industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Wizz Air Holdings PLC in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Airline industry, and it will provide faster access to the consumers.
Loyalty marketing
– Wizz Air Holdings PLC has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats Wizz Air Holdings PLC External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Wizz Air Holdings PLC are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Wizz Air Holdings PLC in Airline industry. The Airline industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Wizz Air Holdings PLC may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Airline sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Wizz Air Holdings PLC in the Airline sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Wizz Air Holdings PLC has witnessed rapid integration of technology during Covid-19 in the Airline industry. As one of the leading players in the industry, Wizz Air Holdings PLC needs to keep up with the evolution of technology in the Airline sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Airline industry are lowering. It can presents Wizz Air Holdings PLC with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Airline sector.
Environmental challenges
– Wizz Air Holdings PLC needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Wizz Air Holdings PLC can take advantage of this fund but it will also bring new competitors in the Airline industry.
Regulatory challenges
– Wizz Air Holdings PLC needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Airline industry regulations.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Wizz Air Holdings PLC will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Easy access to finance
– Easy access to finance in Airline industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Wizz Air Holdings PLC can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Wizz Air Holdings PLC needs to understand the core reasons impacting the Airline industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Wizz Air Holdings PLC high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Wizz Air Holdings PLC business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Wizz Air Holdings PLC Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Wizz Air Holdings PLC needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of Wizz Air Holdings PLC is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of Wizz Air Holdings PLC is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Wizz Air Holdings PLC to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Wizz Air Holdings PLC needs to make to build a sustainable competitive advantage.