Organisational Strategy: Challenges, SWOT and Ansoff Matrix Analysis of Wizz Air

This report analyses the challenges faced by Wizz Air in its external environment, and uses SWOT and VRIO frameworks to analyse its internal business environment. It also examines the competitive environment using Porter's five forces model and suggests strategic options and directions using Ansoff Matrix.

Organisational
Strategy

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Main challenges in the external environment.............................................................................3
SWOT and VRIO frameworks to analyse the internal business environment............................5
Porter's five forces model is used to examine the competitive environments.............................6
Ansoff Matrix involves strategic options and directions............................................................7
CONCLUSION ...............................................................................................................................8
REFERNCES:..................................................................................................................................9
Books and Journals:....................................................................................................................9

INTRODUCTION
Organisational strategy is the key aspect of any corporation, whether it is an established
global company or new start-up such as small based organisation. Organizational strategy can be
defined as the set of actions, that a business requires to attain its long-term aspirations. These
actions simultaneously create a strategic plan for the business. Strategic planning takes into
consideration different organisational requirements and allocation of resources among all
members, which signifies that decision-making stakeholders have access to a roadmap that is
linked across the organisation (Anthony Jr, 2019). Having roadmap and a set of criteria enables
decisions more straightforward and assists team members to attain the strategic objectives. This
report is based on the Wizz Air Organisation which is a ultra-low cost airline carrier. The
company is headquartered in Budapest, Hungary. This company serves and allocated business
across Europe and other destinations in Middle East and North Africa. It serves approximately
in 44 countries. It is founded in the year 2003. The report is prepared to discuss main challenges
that the organisation is facing in its external environment. The internal business situation and
resources of Wizz Air is analysed with the SWOT and VRIO model respectively. Later, it is
mentioned with the strategic options and directions that could be used by the chosen firm to grow
and develop its business in the UK and international market.
TASK
Main challenges in the external environment.
PESTLE analysis is the framework that is used to make strategic decisions in the
company. It is an important management tool that shapes the macro business environment. It is
involved with factors such as political, economic, social, technological, environment and legal
factors. In case of Wizz Air, these factors are highly responsible for increasing and decreasing
the productivity of the business (Bezzina, Baldacchino and Cassar, 2020). The discussion is
below: Political factors: These factors possesses a vital role in determining the variables that
can affect the long-term profitability of the Wizz Air in a certain country. As the
company serves in several nations apart from Europe, it is necessary for them to examine
the political stability of country in which they are operating business. It needs to consider
taxation system, government rules and regulations, political uncertainties and many

more. It is found that Wizz Air is operating business in more 44 countries, it is a
challenge to manage tax systems and policies. Economic factors: It is consisting factors such as inflation rate, interest rates, foreign
exchange rates, savings rates and many more. Wizz Air is also influenced by the demand
and supply of the labours that how it can attract skilled labour and leverage their skills to
enhance the organisational performance (Direction, 2019). When labour markets are
flexible, then the company is able to take benefits otherwise it can be greater challenge
to get high skilled workers in the company. Particularly, due to the Covid-19 pandemic,
the company gets affected by deploying its talented workers as it generated less revenue
in the business. Social factors: Society's way of doing things and culture affects the business and its
environment. Shared beliefs and norms of the people possesses a greater role in how
marketing experts will identify the customers of a specified market. Due the Covid-19,
the company gets severely affected as people tend to avoid travelling and rest in their
houses and respective work. Technological factors: It involves the factors such as artificial intelligence, social media,
communication system, 5G and many more. Wizz Air needs to analyse the on-going
technological innovation in order to stay ahead of the rivalries. Also, the business is
required to consider the investments made by other companies on both micro and macro
level to find how upgraded technologies influences the value chain of firm and
prevailing cost structure (Héroux and Roussy, 2020). In case of Wizz Air, due to the
high booking of tickets by the travellers in certain period, the company needs to pay
attention on the effective payment system with the help of Artificial Intelligence. So
that, payments can be done in the prominent way. Legal factors: It involves the government interference and legal norms that influences
the business operations. Wizz Air employers needs to consider different wage systems in
different countries as every country has their own legal frameworks. Employees must be
paid with the minimum wage rate.
 Environmental factors: It is becoming the most significant factor that influences the
daily operations of business. It involves several systems and laws related with
sustainability and environment protection. Wizz Air has introduced a novice product line

of recycled the goods for customers to benefit from. The company must links itself with
waste management institutions and authorities to be able to maintain the checks, follow
regulations and avoid mishappenings.
SWOT and VRIO frameworks to analyse the internal business environment.
SWOT Analysis is the useful framework that is used to get key insights into both internal
and external variables that can influence the performance of the business.
Strengths: Strong brand recognition: The chosen firm has strong brand image in the airline
industry. This enables the Wizz Air to charge premium in comparison with its
competitors. Track record of innovation: Even though many companies in the airline industry strive
to innovate, the chosen brand has successful record at consumer driven innovation. First mover advantage: The new products introduced by the Wizz Air helps to enhance
its current market share in the transportation industry (Mendoza-Abarca and Gras, 2019).
Weaknesses: Declining market share: Even though the company is increasing its market share, the
airline sector is rapidly growing. In such scenario, the chosen firm has to carefully
examine the different trends within the transportation industry and find out what it
requires to do to drive the forthcoming development. High turnover of employees: It is a concern for the chosen firm that employees leave the
organisation very soon (Mishra and Reddy, 2021). It is necessary to provide higher
salaries to maintain the employees within the business.
Opportunities: Low inflation rate: When the inflation rate is low in the economy then there is chance of
stability in the market, which enables credit at very low interest rates. It will also help to
boost the consumption rates. Increasing customer base in lower segments: As travellers have to move from
unorganized operators in the airline sector to licensed companies. It will offer the chosen
brand a chance to penetrate entry level market with a no frill content.
Threats:

 Distrust of institutions: As the WTO regulations and rules are complicated to enforce in
different markets, the threat of legal actions is increasing. Legal process have become
lengthy and expensive (Oetari and Arifin, 2020). It can also leads to less investment into
growing markets, hence, resulting slower growth of the company. Shortage of skilled HR resources: As the turnover rate is high in the company and
increasing dependence on the innovative methods, Wizz Air can face the lack of skilled
employees in the near future.
VRIO analysis: It is a vital strategic tool that is used by managers to evaluate competitive
benefits and resources of the firm. In case of Wizz Air, strategies are formulated for the purpose
to attain long-term success. Valuable: For Wizz Air Company, the financial resources and delivering good quality
and low cost services are the most valuable asset for the brand. With the support of such
resources, the brand easily boost their profit and market share. Hence, when the business
serves a good quality service to its customers then the company easily raised its value the
customer's mind. Rare: The company provides a positive work culture and better wage rate to the workers
so that they remains motivated. This makes every employee to develop their skills and
talent which is rare for the company. Imitable: The SCM is highly imitable for the brand as their channels of distribution is
very costly. The main reason behind this is that Wizz Air uses artificial intelligence
which needs excessive costs (Pitelis and Wagner, 2019). With the use of AI, customers
can do their transactions in fast way.
 Organised: The company manages their activities and operations in the systematic way
from upper level to bottom level, and even with their consumers. For instance, the flight
can be hold by the management for 5 to 10 minutes if the passenger arrives late. This
demonstrates that issues of customers are understand and resolved on time.
Porter's five forces model is used to examine the competitive environments.
Porter's five forces analysis is used to examine the industry and its competitive
environment. The managers of Wizz Air can use this model to analyse the factors that affects its
profitability and formulate plans for improving the competitive advantage. The discussion is
underneath:

 Threats of substitutes: The threat of the substitute product or service is high in the
airline industry if the it provides a value proposition that is uniquely varied from the
existing offerings of the sector (Saeed and et.al., 2020). The threat is high for the Wizz
Air and they need to invest more in the R&D otherwise it risks losing out the disruptors
in the airline sector. Threat of new entrants: New entrants in the airline industry brings innovation, new
methods of doing things and puts stress on the chosen firm through new value
propositions, low pricing industry, reducing costs. This threat is low for the Wizz Air as
new companies requires huge investment to grow, but still brand needs to tackle all such
challenges and develop effective barriers to protect its edge. Bargaining power of customers: Customers are often a demanding a lot and they tend to
purchase the best offerings by investing lesser amount as possible. This puts pressure on
the chosen firm as it affects long term profitability and growth. The bargaining power of
buyer is high for the company as there are many other options in the airline industry in
which they can switch. Bargaining power of suppliers: There are countless number of suppliers in the airline
industry where the company can purchase its raw materials and other goods. Dominant
suppliers can decrease the profit margins of the firm and vice versa. The bargaining
power of suppliers is low to moderate as the company can switch from supplier to
another who offers best price.
 Rivalries: If the competition among existing players is intense then it will drive down
the prices and fall the profitability rate of the business. Wizz Air operates their business
in a very competitive industry. Hence, it becomes challenging to earn sustainable profits
for the business.
Ansoff Matrix involves strategic options and directions.
Ansoff Matrix is fundamental tool to analyse and plan strategies for the growth and
development of the business (Yilmaz and Malagas, 2021). It involves four ways through which
company can grow its business and examine risks related with each strategy. In case of Wizz Air,
the four strategies and directions are mentioned underneath: Market penetration: This strategy is used by the brand to increase its current market
share with current goods and services. The brand is trying to sell even more of its

services to its new, current and competitors' customers. It involves relatively low risk but
has small growth opportunities. Market development: In involves the activities to develop new markets with current
offerings. The new markets can be new nations and new customer base. In involves small
changes to the goods to adapt new markets. Product development: This strategy involves the introduction of new product to an
existing marketplace with existing buyers (Stewart and Brown, 2019). It can involve the
expansion of current product range or replacing current product to another ones.
 Diversification: It involves the activities to launch a complete new product to the new
market. It provided greatest potential for growth but simultaneously involves greater risks
to failure.
It has been suggested to Wizz Air to opt for new product development strategy as it helps
to increase its current customer base in the same market. When it offers a new product or service
to the same customer base, there is a greater chance to build loyalty and gains new customers as
well.
CONCLUSION
It is concluded from the above report is that organisational strategy is vital for any
business as it helps to gain long-term advantage to the firm. It involves various frameworks such
as Pestle, SWOT, VRIO, Porter's five forces, Ansoff Matrix and many more. Each and every
framework has definite purpose and aim so that managers can make an effective decisions and
plans in order gain long-term aspirations.

REFERNCES:
Books and Journals:
Anthony Jr, B., 2019. Green information system integration for environmental performance in
organizations: An extension of belief–action–outcome framework and natural resource-
based view theory. Benchmarking: An International Journal.
Bezzina, F., Baldacchino, D. and Cassar, V., 2020. Relating Knowledge Management Enablers,
Knowledge Management Processes, and Organizational Effectiveness: The Case for the
Maltese Pharmaceutical Sector. International Journal of Knowledge Management
(IJKM), 16(4), pp.109-124.
Direction, S., 2019. Does culture override strategy? Looking at the role and power of
organizational culture and strategy.
Héroux, S. and Roussy, M., 2020. Three cases of compliance with governance regulation: an
organizational learning perspective. Journal of Management and Governance, 24(2),
pp.449-479.
Mendoza-Abarca, K. I. and Gras, D., 2019. The performance effects of pursuing a diversification
strategy by newly founded nonprofit organizations. Journal of Management, 45(3),
pp.984-1008.
Mishra, B. and Reddy, J. M., 2021. Is “character” the link between organizational learning and
learning organization? An interview with Mary M. Crossan. The Learning
Organization.
Oetari, A. and Arifin, Z., 2020. Alliance Strategic and Organizational Form, Managerial and
Market Engangement to Improve Performance. International Journal of Project
Management and Productivity Assessment (IJPMPA), 8(1), pp.1-17.
Pitelis, C. N. and Wagner, J. D., 2019. Strategic shared leadership and organizational dynamic
capabilities. The Leadership Quarterly, 30(2), pp.233-242.
Saeed, M. A. and et.al., 2020. Organizational flexibility and project portfolio performance: the
roles of innovation, absorptive capacity and environmental dynamism. International
Journal of Managing Projects in Business.
Stewart, G. L. and Brown, K. G., 2019. Human resource management. John Wiley & Sons.
Yilmaz, A. K. and Malagas, K., 2021. Α proposed organizational structure that contributes to the
efficient handling of risk in an approved training organization (ATO). SN Business &
Economics, 1(7), pp.1-22.