1. Introduction
The report focuses on stakeholders, which are interested in receiving financial information about the company and how this information is communicated with stakeholders. In second section the different types of financial data and information required for decision making will be identified. Afterwards, evaluation and comparison of financial statements will take place and appropriate types of accounting concepts will be discussed.
1.1 Background of Wizz Air
Figure 1. Wizz Air Logo (Branding Monitor, 2015)
Wizz Air plan conceived in June 2003 when six people with a wide area of airline acquaintance created a team. After three months of hard work the company was registered as ready to fly. A company is succeeding a decade of reliable growth to become Central and Eastern Europe’s greatest low-cost airline with 3000 employees. Currently, the company is headquartered in Budapest, Hungary (WizzAir, 2017). The airline’s target audience are customers from Central and Eastern Europe with an average age – 34, also 51% of passengers are between ages 35-49. Wizz Air operates more than 120 destinations on over 450 routes (CAPA, 2019) Compared to 2017 a business attained 19.6% increase in traveller figures and hit 33.8 million in 2018 (Kemp, 2019) The organisation has been listed on the London Stock Exchange in 2015.
2. Financial Information
Financial reports play an influential role in a life of all organisations. It is the corporate voice, providing messages not only to shareholders but also to the wider public (Stittle, 2003). McLaney and Atrill (2016) state that for information to be appropriable it has to be oriented at precise stakeholders. The users of financial information in Wizz Air include 8 most dominant stakeholders: government/regulations, customers, environmental issues, employees, competitors, suppliers, shareholders and management (Wizz Air, 2017) The users may be categorised into internal and external categories. Internal users refer to managers who use accounting information in decision making process associated with the company’s operations, when external users are not involved in the activities of a business but hold some financial interest (Bucholtz and Carroll, 2014). Mendelow’s (1991) Matrix is a tool which identifies stakeholders’ interest and power in the organisation.
Figure 2. Wizz Air Stakeholders (Mendelow, 1991)
2.1. Suppliers
Suppliers are interested in receiving financial statements to ensure the stability of the company (Bandler, 1994). Airbus is the main supplier for Wizz Air. The supplier uses the financial information to find out more about competitive deliverers and their contribution towards Wizz Air, such as Boeing (Airline-Suppliers, 2017). Basing on business financial affirmation, contractors can also compare their transactions with other companies and find opportunities to deliver more.
2.2. Shareholders
Shareholders use a company’s financial information to determine whether their investment will be sold or bought more shares of the organisation. After balance sheet analysis, equity partners can decide the clarity of returns from their investments. (Makoujy, 2010). According to Maverick (2019) there are variety of tools that shareholders have at their disposition. Return on equity is a most common profitability ratio used by Wizz Air investors. It helps with calculations about a company’s ability to generate income from shareholders equity (Burja and Marginean, 2014) The higher the return, the better a business performance.
2.3. Customers
Consumers are concerned in receiving financial affirmation to know about the organisation’s profitability because profitability sheds light to know about all improvements (Cascino and Clatworthy, 2014). More importantly, balance sheets visualise the cost structure of the jets that Wizz Air uses.
2.4. Wizz Air Management
According to Wizz Air (2018) Annual Report, Management establish overall targets and periodical aims basing on financial information. Richards (2018) states that balance sheet, income statement and cash flow statement can be used as a management tool and may affect positive changes within a business. When a tool is used correctly, the productivity level of organisation can significantly increase.
• Asses/how your organisation uses marketing research to contribute to the development of its marketing plan for your selected goods(L03)
3. Communication of Financial Information with Stakeholders
Ineffective communication of financial information leads to investors ignoring influential information or failing to recognise relationships between bits of information in alternative parts of an organisation’s financial statements (Hoogervorst, 2017). On the other hand, effective communication of an item of news in financial statements can contribute to better investment decision and a lower cost of capital for business. According to Surbhi (2015) stakeholders can be divided into internal and external. In Wizz Air the first group represents individuals and parties that are part of an organisation (employees, management). The second group refers to outside parties which get affected b
y a business, such as the government, shareholders and suppliers.
3.1. Communication Model
Lewis (2007) states that The Dialogic Change Model presents a shaped approach for businesses to plan and implement their stakeholder communication initiatives. This model can be applied to Wizz Air and it is separated into four phases shown on figure below:
Figure 3. Dialogic Change Model (Sustainet, 2012)
• Exploring and Engaging
In this phase Wizz Air should explore the factors that may influence communication, for example what systems are in place and how might they impact stakeholder participation (Rogers, 1995). Talking to selected stakeholders at this point helps to understand the prospects and potential impediments.
• Building and Formalising:
This part is focused on perpetuating the stakeholder communication process and moving towards. Project teams should be set up as well as meeting schedules. Agreements with stakeholders have to be signed.
• Implementing and Evaluating:
This is the genuine implementation stage in which Wizz Air must deliver the visible progress and change or stakeholders will lose interest in the case (Jones and Wicks, 2003). For example, the business should provide status reports and share successful milestones.
• Further Development:
The major defiance in part 4 is keeping the spirit of alteration alive. Moreover, existing management structures demand subsequent legitimacy and credibility. Additional stakeholder participation is essential in this phase.
3.2. Internal Stakeholders
Grunig and Hunt (1984) highlighted two key dimensions of corporate communication: the direction of information flow and the power association between the business and its group of recipients. Internal meetings are an appropriate method to convey a consistent message to a large amount of people. Wizz Air should use that opportunity in order to keep every employee updated about annual progress.
Roadmap is a tool used to present financial information in an organised and easy to understand method. Wizz Air uses pictures and graphs instead of a list of numbers and showing trends to help managers visualise projections. It also leads to improvement of meeting productivity.
3.3. External Stakeholders
Presenting financial information in a readily digestible format to external stakeholders is crucial to the long-term success of the company. Annual General Meetings are a key medium used by Wizz Air to disclose information to external stakeholders (Lafare, 2017). During these meetings, investors have a chance to get more credible information so that they can take conscious decisions. The main purpose of an AGM is to adhere with legal requirements, including the presentation and agreement of audited accounts.