Wizz Air Holdings PLC (WIZZ) SWOT Analysis / TOWS Matrix / 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 – increasing commodity prices, talent flight as more people leaving formal jobs, there is backlash against globalization, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, increasing energy prices, technology disruption, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, etc

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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.

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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

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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 -

Successful track record of launching new products

– Wizz Air Holdings PLC has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Wizz Air Holdings PLC has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.

Superior customer experience

– The customer experience strategy of Wizz Air Holdings PLC in Airline industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Operational resilience

– The operational resilience strategy of Wizz Air Holdings PLC comprises – understanding the underlying the factors in the Airline industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.

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.

Strong track record of project management in the Airline industry

– Wizz Air Holdings PLC is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Diverse revenue streams

– Wizz Air Holdings PLC is present in almost all the verticals within the Airline industry. This has provided Wizz Air Holdings PLC a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.

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.

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.

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.

Effective Research and Development (R&D)

– Wizz Air Holdings PLC has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Wizz Air Holdings PLC staying ahead in the Airline industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Sustainable margins compare to other players in Airline industry

– Wizz Air Holdings PLC has clearly differentiated products in the market place. This has enabled Wizz Air Holdings PLC to fetch slight price premium compare to the competitors in the Airline industry. The sustainable margins have also helped Wizz Air Holdings PLC to invest into research and development (R&D) and innovation.

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.

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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 -

High dependence on Wizz Air Holdings PLC ‘s star products

– The top 2 products and services of Wizz Air Holdings PLC still accounts for major business revenue. This dependence on star products in Airline industry has resulted into insufficient focus on developing new products, even though Wizz Air Holdings PLC has relatively successful track record of launching new products.

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.

Increasing silos among functional specialists

– The organizational structure of Wizz Air Holdings PLC is dominated by functional specialists. It is not different from other players in the Airline industry, but Wizz Air Holdings PLC needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Wizz Air Holdings PLC to focus more on services in the Airline industry rather than just following the product oriented approach.

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 operating costs

– Compare to the competitors, Wizz Air Holdings PLC has high operating costs in the Airline industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Wizz Air Holdings PLC lucrative customers.

Lack of clear differentiation of Wizz Air Holdings PLC products

– To increase the profitability and margins on the products, Wizz Air Holdings PLC needs to provide more differentiated products than what it is currently offering in the marketplace.

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.

Skills based hiring in Airline industry

– The stress on hiring functional specialists at Wizz Air Holdings PLC has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.

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.

Employees’ less understanding of Wizz Air Holdings PLC strategy

– From the outside it seems that the employees of Wizz Air Holdings PLC don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.

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.

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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 -

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.

Using analytics as competitive advantage

– Wizz Air Holdings PLC has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Airline sector. This continuous investment in analytics has enabled Wizz Air Holdings PLC to build a competitive advantage using analytics. The analytics driven competitive advantage can help Wizz Air Holdings PLC to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Building a culture of innovation

– managers at Wizz Air Holdings PLC can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Airline industry.

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.

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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Wizz Air Holdings PLC can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help Wizz Air Holdings PLC to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

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.

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.

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.

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.

Manufacturing automation

– Wizz Air Holdings PLC can use the latest technology developments to improve its manufacturing and designing process in Airline sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.

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.

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.

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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 -

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.

Stagnating economy with rate increase

– Wizz Air Holdings PLC can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the Airline industry.

Shortening product life cycle

– it is one of the major threat that Wizz Air Holdings PLC is facing in Airline sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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.

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.

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.

Capital market disruption

– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Wizz Air Holdings PLC.

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.

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 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.

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.

Aging population

– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.

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.

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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.

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