International Business Management Report: Wizz Air Expansion Strategy

This report provides a comprehensive analysis of Wizz Air's international business operations and expansion strategies. It begins with an executive summary and an introduction to international business management, focusing on Wizz Air, a low-cost airline. The main body covers Wizz Air's current global operations and international strategy, emphasizing the Uppsala method for market entry and its response to the pandemic. The report then delves into country selection methods, identifying candidate countries based on per capita income and applying criteria like economic freedom and political rights. It includes a PESTLE analysis to assess macro environmental trends, considering political, economic, social, technological, environmental, and legal factors. The report also examines operational and trade factors, such as reporting requirements and labor laws, and discusses ethical issues and entry modes, justifying the chosen strategies. The conclusion summarizes the key findings, and references are provided. This report offers valuable insights into Wizz Air's international business challenges and opportunities.

INTERNATIONAL BUSINESS
MANAGEMENT

Executive Summary
Airlines are one of the main sources of fast and easy transport in today’s world. Wizz Air
is low cost airlines which are headquartered in Budapest. The airlines provide its services in
many cities across Europe and also to some more destinations. The evaluation on company’s
domestic and international operations and various environmental trends is given. There is a
discussion on ethical challenges faced by the airlines and the choice on selection methods.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
A: Current global operations and international strategy..............................................................1
B: Country selection methods......................................................................................................2
C: Macro environmental trends...................................................................................................3
D: Operational and trade factors..................................................................................................5
E: Ethical issues...........................................................................................................................6
F: Entry modes discussion and justification................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
International business management explains how a business understands the global
environment and its affects on the management of the business in the international market. The
chosen company for this project is Wizz Air which is an aviation company. This project
discusses how the company utilizes the Uppsala method which describes the low market
commitment of a company for entering the foreign market. This project discusses the global
operations and the international strategy of the company in the foreign market. With the help of
this project the methods which the company uses for selecting the country is also discussed. In
this project the macro environment trends are evaluated for the company. This project also
discusses the ethical issue which the company can face. With justification this project discusses
entry modes for this company in the countries.
MAIN BODY
A: Current global operations and international strategy
Wizz Air is an aviation company based in Hungary which is looking to expand its
business in the foreign markets of the world (Szabo and et.al., 2019). The method which this
company is going to use is the uppsala method which describes how the company will enter a
market by giving low commitment to the foreign market. This company has had difficulties
during the pandemic in which it had to face many challenges in its business operations.
However, currently this company is clearly at far better position for tackling the future
challenges it might have to face in this year. The international strategy of this company has been
very robust. The company has been seen very determined for expanding its business in other
countries. Although the method which is utilized by the company is about putting low
commitment but that has not seen any affects on the determination level of the company
(Traneva and Tranev, 2020).
Even though, the capacity of the passengers in the flights of the company was reduced by
almost 80% the company was still keen on becoming lowest- cost flights in Europe (Loh, 2020).
The expansion began when the company started to expand the network route of its flights. There
were high risks in this expansion which the company was willing to take as it had incredible
amount of cash reserves. Robusting the business model of the company is the current plan for the
future of the company in international market. The Hungarian company is preparing itself to
diversify its market in Europe and other countries once the restrictions due to covid-19 are lifted.
1

This company made a name for itself in the European market as the budget carrier. This allowed
the company to recover very quickly (Jiniuzashvili, 2020). As some countries lifted the
restrictions in the company was very well positioned for starting its flight for achieving the post
covid demands of the customers.
According to the part of its strategy for expansion the company also decided to open a
new base for operations of its flights in Lviv. This was the second base established by the
company in Ukraine. The company is slowly trying to expand its business without giving a lot of
commitment by targeting countries in which it has seen success but has more potential. The
strategy of the company was to show desperateness for restarting its flights after the lock down.
This company is also trying certain plans for expansion. The company was eyeing for the
expansion in the London Gatwick. The Wizz Air Airbuss A320 started its flight in five cities in
five different countries across the Europe. The company also revealed that it is going to launch
five new routes from the form its brand new airport hub in Abu Dhabi.
B: Country selection methods
The method which the company is going to use is the Upsala method which is describes
the different process of this company. This process states that Wizz air an aviation company will
chose to enter the market which are relatively close to it and those market in which the company
will not have to give much commitment. These market would be those countries in which the
competition level is less. For examples countries situated in the continents of Africa, Asia and
also South America. This will be an easy and less commitment task for the company.
For the selection of countries in which this company can expand its business these
methods can be utilized.
Identification of Candidates :
The company Wizz Air needs to make a pool of countries on the basis of their per capita
income annually. These countries can then be categorized by the company into two types. These
types will be discriminating in the countries in two distinct groups. The first group including
those companies which have low per capita income and second group which has more pet capita
income (Aliyev, 2018). This will help the company to decide whether it wants to start of business
in countries which has customers have less buying capacity but there is very less competition,
choosing those countries in which the customers paying capacity is high the company has to face
competition from other aviation company. According to the Uppsala method the company will
2

choose the first category of countries as it does not want to give much commitment which is
required for high competition. Examples are, countries situated in the continents of Africa, Asia
and also South America.
Applying certain criteria :
The criteria which the company needs to follow before selecting the countries are,
economic freedom, people and ruling justly. These criteria will make the company measure the
candidate countries by making comparison between them. The countries which are used for
comparison should contain score that will help the company to select the country with the
highest score. These comparisons will be based on the indicators such as the control of
corruption, political rights and the civil liberties of the customers of the company. Based on the
method this aviation company is utilizing its should select those countries which have the least
corruption, easy political rights and liberty to the customers (ABSOLOM NGARI , 2019).
Board discretion :
This is a very important in selection of the country for expansion, The selection for
expansion is a very important decision for the company to make. This is why it becomes very
important for the company Wizz Air to discuss the few selected countries with the board of
directors which represent the share holders before the expansion can begun. For doing this the
company provides its board of directors with all the informations which is gathered. This process
of discretion considers the gaps, weaknesses and the over all performance of the countries before
selection. It is even more important as the company is following the method of Uppsala. The
selected country is then explored for more details about the preferred locations and competition
in its market then the further steps can be completed by the company (Stevenson and Marintseva,
2019).
C: Macro environmental trends
The macro environmental analysis of Wizz Air entering international markets can be
explained by the help of PESTLE analysis,
Political :
These factors can impact the expansion of this company and its profitability in the
countries in which it is looking to expand itself. These factors include the political stability in the
travel & transport sector of the country's economy. Risk of military invasion effects the business.
The level of corruption is very important to be considered because it is important for the
3

regulation of the consumer service-sector. The legal framework of the company also important
while consideration of contract enforcements. Some countries may also have price regulation
regarding the prices of flights (Kipponen, 2020),
Economic :
The economic factors of the country in which this company wants to expand are, interest
rates, foreign exchange, inflation rates and also economic cycle. All these factors are collectively
responsible for determining the demand of the company in that specific country and also the
amount of investment which the company will need to make. Exchange rates of the country
should be stable so that Wizz Air do not face issue.
Social :
The culture of the society varies in different countries which impacts the culture of the
organisation as well in that particular environment. Some reason of why the society can effect
the expansion of business for this company in a chosen country is that the population of the
country determines customers and also the skill level of the potential employees which the
company may need to hire in that particular country. Education level is also important for the
company for maintaining the standard of the company.
Technological :
The technology is improving in the world every day specially the transport industry is
affected the most. This factor of a country in which the company can expand may change the
technological disruption based on the speeds of the development of technology in the country.
The technology of a country impacts the cost structure of the company. It also impacts on the
consumer services sector. Slow developing technology will make it difficult for this company to
cope up with the country (Larson, 2020).
Environmental :
The environmental factors of a country are the different norms and standards which are
set on the basis of environmental practices of the company which affects the profitability of the
organization. Natural changes in the environment also affects this company as it is a aviation
company, which requires stably weather and climate conditions for the flights. Other things like
laws regarding the pollution in air and water are also very important to be considered before
expansion.
Legal :
4

The legal factors of the country are impacting the business of the company directly. The
legal framework of the countries differ and due to which companies like Wizz air has to change
their strategies and plans. Many countries have such rules which favour the domestic airlines
aiding them to gain a competitive edge over this company. The laws of discrimination can be
different which may force the company to change the culture of the company (Vu, K.P.L., and
et.al., 2018).
D: Operational and trade factors
The operational and trade factors which will affect the expansion of the business of Wizz
air company are,
Reporting requirements :
Gaining the confidence of the investors is very important for the business of Wizz air to
expand itself. This requires transparency in the operations of the company. Otherwise, these
factors lead to money laundering, tax evasions and other crimes. This is why it is important for
the company to having a common reporting standard so that these factors can be detected before
they affect the expansion of the company in foreign markets. This is developed by economical
cooperation and development in the company (Yilmaz, 2019).
Legislative changes :
These changes are becoming very frequent these days. Most of the times when a
legislative change is implemented its done for a positive cause however, they affect the business
of the company. Their intent does not define there causes their impacts on the business and its
stakeholders can impact the business and also its expansion in the foreign market.
Labour laws :
Most of the times it happens due to the political pressure in a country. This creates
difficulty for those firms which are looking to develop themselves in the global market. For the
expansion of the business of Wizz air it has to hire individuals in the specific countries for many
different reasons but if the laws of the labours of the country will be so impactful on the business
of the company it will impact the expansion of the business and also the profitability of the
business.
Penalties for non-compliance :
In some countries due to their political environment penalties can be imposed on the
company due to some reasons which can be disproportionately different in other jurisdictions.
5

For the authorities it can be breach of reputation, threatening and thus they can exemplify huge
fines on the company. It can be an internal mistake of the organization but the strictness of the
country's legislation should be understood before expansion (Zhang and et.al., 2018).
Accounting and tax requirements :
The authorities of the locality of the country in which this company can expand may
prescribe the company to follow their own formats regarding accounting and taxation. This
change in format can prove very significant in impacting the business thus should be taken under
consideration.
E: Ethical issues
Airline industry is relatively new has rapidly grown and still expanding industry. In the
easy going world, air transport have become an exceptionally safe way to travel but there are
various problems that customers and even the airline companies like Wizz Air has to face. Many
customers are fed up of the way by which Airline Company treats them. The importance of
ethical decision making is really important as applied ethics is gaining a lot of attention. Every
one likes to be treated nicely. People now a days have become very sensitive and do not hesitate
to raise their voice against some topics such as discrimination and ignoring these ethical
concerns can result in damaging brand’s reputation. Some of the possible ethical issues faced
are:
Overbooked flights: Airlines are overselling their flights by bumping or not allowing
any passengers to board plane even after they have confirmed their reservation. Airlines
overbook passengers in order to fill empty seats because some passengers cancel their flight or
do not come (Peeters and et.al., 2019). If many people cancel their tickets then company asks
them take another flight, voluntarily. If people do not contribute and volunteer, then airline
bumps them off the flight starting with the passenger who does not have boarding pass. They are
then compensated but giving such inconvenience to one’s customer is posing an ethical
challenge to the airline company as they just focus on making money from every flight without
caring much about the passengers.
Discrimination: Airlines are discriminative in very indirect ways. The process of
handling overweight passengers can raise questions on ethical behaviour of the company. Many
obese passengers are denied for extra space or giving them seats all because they do not have an
extension to secure them in the seats. Many tall people also face the problems with the spacing
6

between the seats.
False advertising: Airlines do not disclose the exact amount price of a ticket. This raises
another ethical issue. These low cost airlines have middle class people as the customer base, on
their website they show fewer prices to attract them and choose this airline over others but at the
checkout part, many charges add up such as tax and fuel charges which increase the price to high
extent. These are dishonest and bat tactics which is against the ethical working conditions.
Cramped seats: In order to gain more money, airlines place many seats as how much s
possible. This creates a cramped situation in the aircraft and been happening since past many
years. These seats are uncomfortable and can increase risk of developing some medical issues for
some passengers. Sitting in a small space and not being able to move for a certain long amount
of time can lead to blood clots as muscles cannot contract. Putting someone’s heath on line just
to earn few amount of profit is a ethical problem that economy airline like Wizz suffer from.
F: Entry modes discussion and justification
Mode of entry is the way a company establishes its business entry in a given country. For
Wizz air the mode of entries is the ways this company will expand its business in the foreign
market. Some common modes of entry are,
Exporting :
This mode of entry in the foreign market is the direct sale of product and services in the
country. This mode of Wizz air would be to directly enter the market and start providing the
services of airlines in the chosen country. Such a way of entering the market requires a lot of
research, local knowledge and ability to face the negative results of the business. This type of
entry also requires lot of investment and commitment but the entry is quick (Andreu, Claver and
Quer, 2017).
Licensing and Franchising :
According to this mode of entry the company does not enter the market directly. It takes
the help of other foreign companies which considers signing a license or franchising agreement.
In this the control of the services will be in the hands of the licensee. The control of the business
of the company is very less in this type of entry and the risk of the licensee becoming a
competitor also is very high. It is a very fast way of entering the market but has lots of risks.
Partnership :
7

In this mode of entry the company joins forces with an existing company in that country
to form a partnership deal. In this the companies share the costs which is good as the cost of the
company decreases but then again the risks and liability is also shared. In this mode of entry the
company has to be integrated with the partner and its corporate culture. This requires some level
of commitment from the company (Müllner, 2017).
Acquisition :
This that method of entry in which Wizz air will acquire an existing company by
purchasing its stocks or exchanging the stocks of its own. This requires a lot of investment as the
company has to buy its way into the market. The advantages of this entry is that the company has
full control over the business and might even get the help of brand name of the previous
company. This is a very suitable way of entry for this company if it has enough resources.
CONCLUSION
With the help of this project it can be concluded that for expanding of the business of
Wizz air company it can use the mode of entry such as partnership or acquisition because these
methods of entry will require less commitment from the company according to the Uppsala
method followed by the company. These modes are suitable to the method which is used in this
project. This project also explains the factors which the company needs to consider before
expansion of its business. In this project with the help of Pestle analysis the macro environmental
factors are explained and how they will affect the business of the company in any new country.
This project also talk about the ethical practices which the company has to follow before
expansion in new country. With the help of this project the current strategies of expansion is
discussed for Wizz air.
8

REFERENCES
Books and Journals
ABSOLOM NGARI, I.R.U.N.G.U., 2019. FACTORS INFLUENCING ORGANIZATIONAL
PERFORMANCE OF AIRLINES BUSINESS IN KENYA: A CASE STUDY OF KENYA
AIRWAYS (Doctoral dissertation, MUA).
Aliyev, R.R., 2018, August. Country Selection for Business Location Under Imperfect
Information. In International Conference on Theory and Applications of Fuzzy
Systems and Soft Computing (pp. 922-928). Springer, Cham.
Andreu, R., Claver, E. and Quer, D., 2017. Foreign market entry mode choice of hotel
companies: Determining factors. International Journal of Hospitality
Management. 62. pp.111-119.
Jiniuzashvili, N., 2020. Jurisdiction of Courts and Applicable Law in Aircrew Employment
Disputes: Special Reference to Ryanair Employment Disputes. Air and Space
Law. 45(4/5).
Kipponen, S., 2020. Defining the Market Potential of Industry Specific Drone Software: Case:
Metropolia Innovation Hub of Smart Mobility.
Larson, S., 2020. ENTREPRENEURSHIP AND SUSTAINABILITY IN PRACTICE: TRIPLE
BOTTOM LINE IN THE FASHION INDUSTRY.
Müllner, J., 2017. International project finance: review and implications for international
finance and international business. Management Review Quarterly. 67(2). pp.97-133.
Peeters and et.al., 2019. Airlines and corporate responsibility: Issues and challenges. Corporate
Sustainability and Responsibility in Tourism. pp.163-180.
Stevenson, I. and Marintseva, K., 2019. A review of Corporate Social Responsibility assessment
and reporting techniques in the aviation industry. Transportation research
procedia. 43. pp.93-103.
Szabo, S., and et.al., 2019. Operational statistics of Kosice airport. Zeszyty Naukowe.
Transport/Politechnika Śląska.
Traneva, V. and Tranev, S., 2020, September. Intuitionistic Fuzzy Hamiltonian Cycle by Index
Matrices. In 2020 15th Conference on Computer Science and Information Systems
(FedCSIS) (pp. 345-348). IEEE.
Vu, K.P.L., and et.al., 2018. Single pilot operations in domestic commercial aviation. Human
factors. 60(6). pp.755-762.
Yilmaz, A.K., 2019. Strategic approach to managing human factors risk in aircraft maintenance
organization: risk mapping. Aircraft Engineering and Aerospace Technology.
Zhang, R.C., and et.al., 2018. Active control of hydraulic oil contamination to extend the service
life of aviation hydraulic system. The International Journal of Advanced
Manufacturing Technology. 96(5). pp.1693-1704.
Online
Loh, C,. 2020. Wizz Air is selling around 75% seats. [Online] Available trough:
<https://simpleflying.com/wizz-air-75-seats/>
9