Business and the Business Environment: A Case Study of Virgin Atlantic

This assignment delves into the complexities of the business environment by examining Virgin Atlantic, a prominent UK-based airline. It explores the different types of organizations, their structures, and the interrelationships between their functions. The assignment utilizes PESTLE and SWOT analyses to identify the impact of external and internal factors on Virgin Atlantic's operations and growth. It also examines the connection between macro and micro environmental factors, highlighting the challenges and opportunities faced by the company in the dynamic UK market.

Business and the Business Environment

Contents
INTRODUCTION................................................................................................................................2
LO1...................................................................................................................................................3
P1, P2 and M1..............................................................................................................................3
LO2.................................................................................................................................................17
P3...............................................................................................................................................17
M2..............................................................................................................................................19
LO3.................................................................................................................................................20
P4...............................................................................................................................................20
M3..............................................................................................................................................22
LO4.................................................................................................................................................25
P5...............................................................................................................................................25
M4..............................................................................................................................................27
P6...............................................................................................................................................29
CONCLUSION.................................................................................................................................30
REFERENCE.....................................................................................................................................31
1

INTRODUCTION
Study of business environment helps companies to make policy and strategy best supported by
the internal and the external factors that influence the company (Fernando, 2011). This
assignment based upon the study of different types of organisation that function in a business
environment. It also focuses on the different organisation function and their interrelation.
Pestle and SWOT analysis used in this assignment to identify the impact of external and internal
factors on the company. This assignment also focuses on interrelationship between the macro
and the micro environmental factors that affect the company.
The company that studied in this assignment is Virgin Atlantic. Virgin Atlantic is an UK base
aviation company, which is the part of Virgin Group. The airline revenue of more than two
thousand pounds, and has been operating in more than forty counties (Virgin Atlantic, 2018).
The company has been successful in reducing the carbon emission by a well-planned suitable
development policy. Virgin Atlantic started thirty-four years ago and has a fleet of forty-nine
airplanes which includes both cargo and passenger aircrafts (Virgin Atlantic, 2018). As a
Business Analyst of Virgin Atlantic, to study of business environment with regard to the recent
changes in UK, this assignment written.
2

LO1
P1, P2 and M1
1
3

2
4

3
The business environment is the space in which the operations of business activity that related
to the business happen. The business environment comprises of internal and external factors.
The internal factors are organisation structure, leadership, culture and staff of the business. The
external environment comprises of political, environmental, economic, legal and social factors
that influence the business.
5

4
Public organisation are owned by government of states, they are focused on public service and
do not aim to earn profits from their operations. The investments and operation cost in this
sectors is given by the government and some of it is shared with the public. The public sector
deal with large size investment and operations.
6

5
The board of directors of the company heads the structure of the British airways. The board of
directors of the company reports to the Department of Civil aviation of the county. The board is
than lead by four independent communities and the CEO of the company. The CEO is the head
of operation and marketing of British Airways.
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6
British airways is one of top ten airlines in the world, it has more than thirty eight thousand
employee and hold a good position as a profit making government airline. The company also
has sufficient capacity to expand its operation internationally in both domestic and international
travel. The company can also expand its cargo capacity.
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7
Private organisation owned by group of individuals or a single individual. Their basic motive is to
earn profits through their operations. They raise money through initial public offerings or
through investors.
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8
The legal structure of Virgin Atlantic is the line and the board of directors of the Group heads
the staff type, the airline. The head of Board of directors of the group is the CEO of Virgin
Group. The CEO of Virgin Airline reports of the board of directors. He followed by the operation
and the development heads of the company.
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9
Virgin Atlantic have more a good turnover as a private company, it is also a part if the Virgin
group that provides the company support and stability to grow. The company has shown
sufficient growth in the past years, but it was in loss in this financial year. The company own
reputation of good brand name and has a scope for growth in international travel and cargo.
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10
Voluntary origination operated to address a social cause, the social cause related to reducing
poverty, women empowerment or child education. They run by the donations they get from
individual donors or companies. They play a crucial role in society by helping the society free or
minimum cost.
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11
The legal structure of the cancer research UK divided into three division that are research
division, operation division and laboratory division. All the three division are dependent on each
other. The head of all the three division is the President, The CEO and the Chief scientist of the
group.
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12
The NGO cancer research has contributed significantly in advancement of the research related
to cancer cure and identification of cancer in early stages. The NGO has developed its status in
cancer research at international level and has wide opportunity of growth in research and
treatment of cancer.
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13
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14
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LO2
P3
CONNECTION IN ORGANISATIONAL FUNCTIONS THEIR LINK TO OBJECTIVE OF VIRGIN
ATLANTIC
An organisation structure is a systemic chart, which shows allocations of task, duties and
responsibilities in a company. The organisation structure plays a very important role in the
development of a company as it makes helps to develop a clear vision in the employee and the
leadership of the company about the division of roles and responsibility in the company
(Maduenyi et al., 2015).
The organisation structure of Virgin Atlantic is a mixture of departmental and line and staff
organisation structure (Virgin Atlantic, 2018). This type of organisation structure provides an
advantage of both the types of structure and limits the disadvantage caused by both of them.
The Virgin Atlantic is a part of Virgin Group, which headed by the Broad of directors of the
Virgin Group. The objective of Virgin Atlantic is to focus on efficiency and effectiveness of
business operations of the company. The company focused on the development of best
customer service in both economy and the business class. The different departments that are
operational in the Virgin Atlantic are operation department, marketing department, finance
department and maintenance department. This all the departments are interrelated to each
other.
The marketing department at Virgin Atlantic is responsible for customer attraction and
customer support, the marketing department is supported by the operation department by
support in its daily activates and it is supported by the finance department by support in
accounts and other related duties (Maduenyi et al., 2015).
The operation department is the core department of the Virgin airline; it interred connected
with all the other departments of the company. It is in direct contact with the maintenance
department, the marketing department, and the leadership of the company. The effective
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working of the operation department helps the company to archive its business objective of
excellent service.
The maintenance department of the airline helps the other departments to work smoothly; it is
responsible for handling the smooth operations of the airlines, the heavy machines, and the
other equipment that used in the company. Their excellent working supports all the other
departments.
The finance department of the company has a major part in controlling the flow of funds within
the company (Virgin Atlantic, 2018). This department helps all the other in budgeting and
funding the projects that they are in to. They also related to internal audit and risk
management in the company.
The other departments that are working in the company also help to fulfil the business
objective of the company and their interrelationship helps the company to work smoothly
(Jones, 2010). The other departments in the company are human resource department,
product development, research and development department.
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M2
MERITS AND DEMERITS OF INTERRELATIONSHIPS IN ORGANISATIONAL DEPARTMENTS
The advantages of the interrelation between the different departments of Virgin Atlantic are
that it helps the company to take better and effective decisions. The decision-making in the
department is better because it involves view and approach of the different departments. This
interrelationship also helps to manage the risk in the company properly. In the airline industry
the risk of accident reduced by better communication between departments. The interrelation
between the departments helps the Virgin Atlantic support proper communication between all
the departments (Jones, 2010). The interrelationship between departments also helps to
leadership and the top management of the company to communicate about their vision and
target to all the employee. It also helps the management to make proper planning related to
fulfilment of origination objective.
The disadvantages of the interrelationship between the departments are that it may lead to
unwanted conflicts between the employees of the organisation, which may hinder the smooth
working of the company (Jones, 2010). The interrelationship between the departments may
also be a result of the waste of time due to unwanted communication between the staff. It may
also give rise to competition among the employees.
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LO3
P4
POSITIVE AND NEGATIVE FACTORS OF MACRO ENVIRONMENT THAT INFLUENCE VIRGIN
ATLANTIC
Virgin Atlantic is having its head office in the UK, currently, due to Brexit the county is going
through many changes both economically and politically, this all changes tend to affect the
growth of the company. The external factors influence all the organisation working known as
the macro environment condition (Hamilton and Webster, 2015). They can have a positive or a
negative impact on the company and they decide the efficiency of the company. Analysis of
macro environment condition is very important because it helps to find out the current position
of the company and help to find the growth scale of the company (Hamilton and Webster,
2015).
The positive factors of macro environment that influence Virgin Atlantic are as follows:
 The economic position of UK is strong and citizen of UK have sufficient capital to take
the services of the company, this makes sure that the company have sufficient
customers (Charter, 2017).
 The government policy of UK supports the aviation industry, by providing all the support
in terms of infrastructure, policy and licence (Forsyth, 2016)
 The aviation industry of UK has a high potential for growth in the coming years, which is
a positive factor for the company.
 Due to the good education in the UK, the company gets trained professional of the
aviation industry, which helps the company for its daily operations.
 The UK has a good market for international cargo as London is one of the commercial
capital of the world (Forsyth, 2016)
 The UK is politically stable and the danger of military invasion or war in the country in
very less; due to this, the company can aggressively plan its targets.
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The negative impact of macro environment on Virgin Atlantic is as follows:
 Due to Brexit, the company is facing political instability, due to which the stock market
of the county is volatile and domestic and international investment are limited
 Due to up gradation of new aviation policy, the company has to constantly upgrade its
planes (Forsyth, 2016)
 The cost of labour in the UK is high, due to which the company has to limit the
workforce deployment
 The environmental impact of pollution caused due to aviation operation has been a
challenge for the company
 The taxation policy of UK is not in favour of the company and the employee, the VAT tax
is high as compared to other states (Pope and Waters, 2014).
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M3
PESTLE MODEL OF VIRGIN ATLANTIC
Pestle model drafts five factors that are most significant in the macro environment condition.
These factors are political, environmental, social, legal, and economic factors that affect the
company (Yüksel, 2012). The pestle analysis it helps to make a clear view of the current position
of the company and the scale of the challenge that the company is facing (Grant, 2016). The
pestle model of Virgin Atlantic will help us to identify the impact of these five factors on the
company, the Pestle model is:
PESTLE Analysis
Source: Barry, 2015
POLITICAL FACTORS
Due to Brexit, the aviation industry of UK has to undergo many negative impacts. The impact on
the aviation industry will directly affect Virgin Atlantic. Brexit may limit the scope of air travel
between inter European countries, this will have limited the market for the Virgin Atlantic. In
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addition to this, the new tax and policies implemented by the other European countries on UK
Airlines will add the cost of travel (Portes and Forte, 2017).Due to Brexit, the cost of aviation
fuel has increased due to which the company has to bear the additional cost. Uncertainty, in
the upcoming policy and the cost of changes in the aviation policy, will also affect Virgin
Atlantic.
ENVIRONMENTAL FACTORS
Virgin Atlantic has been facing environmental issues such as high amount of carbon emission
due to air travel and the operation of the business. In addition to the company has also faced
challenges due to waste disposal that caused by daily air travel and operation. The noise level
control has also been a point of focus for the company. To overcome this challenge the made a
sustainable policy, which supports the use of biofuel in aviation and use of upgraded engines
for, reduced noise level. Due to this, the company has been able to achieve reduced carbon
emission of 22% (environmental leader, 2017). Along with this, the company has taken some
other measure to control the impact the environmental challenges.
SOCIAL FACTORS
The social factors that influence the company are a change in the living style of the people of
UK, demographical changes in the UK and changing mindset of the citizen of UK. The living style
of people of UK centred towards leisure due to which the people are more inclined towards air
travel. The demographic changes in the UK also support the aviation industry. Moreover, the
social factors are positive for the Virgin Atlantic.
LEGAL FACTORS
The legal factors that affect the company are aviation laws of domestic and international travel,
employment laws, and environmental laws. Changes in the policy and procedure of laws also
affect the Virgin Atlantic; currently, the company has faced loss due to change in the policy of
aircrafts engines (Financial Times, 2017). Overall, it has the temporary impact on the company
and the company is easily able to manage the legal challenges that it faces.
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ECONOMIC FACTORS
The economic challenge the company is facing is due to higher interest rate and change in the
cyclic pattern of the business (Portes and Forte, 2017). In addition to this, the company also
have to face completion from the other companies in the aviation industry, this increaser the
costing on the company. However, the company is a part of Virgin group, which has a strong
economic position, and in addition to this, the company has been making profits.
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LO4
P5
ANALYSIS OF INTERNAL POSITIVE AND NEGATIVE FACTORS OF VIRGIN ATLANTIC
The internal factors are in control of the company; the company can take positive steps to
control and coordinate the negative factors and improve the advantage of the positive factors
by taking certain measures. The internal factors that affect a company are leadership, staff,
finance, organisation structure, culture, and management of the company. Analysis of internal
factors of Virgin Atlantic will help us to identify the condition of internal factors in the company
and their overall impact on it.
The positive factors that affect the company are as follows:
 The company guided and managed by strong leadership support; leaders like Richard
Branson and head of Virgin Atlantic Craig Kreeger provide this support.
 The company has highly trained and skilled staff, which effectively handles the
operations of the company
 The company is finically supported by the Virgin Group, which make the position of the
company strong
 The company has very strong research and development team, which help it to provide
unique facility and product diversification in the Airline industry
 Virgin Atlantic has been able to reduce its carbon emission and maintain its growth
simultaneously
 The company has a good brand image in the UK and the entire region of operations
The negative impacts that influence the company are as follows:
 The company has faced loss due to the need of up gradation of the old Boeing engines
in the aircrafts
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 Virgin Atlantic has to face completion from airlines such as Lufthansa, British Airways
and American Airline
 The location of operation of the airline is limited to thirty-three places only, which is
very less as compared to other competition
 The rising price of aviation fuel and the operating cost of aircraft is a challenge for the
company
 Due to less number of aeroplanes the company has limited operational ability to add
new routes
 The company has limitation to expand its international operations, due to internal
challenges
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M4
SWOT ANALYSIS OF VIRGIN ATLANTIC
SWOT analysis used to find the comparative quantification of the strength and opportunity the
company is having with the weakness and threats the company is facing. The SWOT analysis
also helps to find the current position of the company (Campbell et al., 2011). The SWOT
analysis of Virgin Atlantic is as follows:
STRENGTH
 The company has a good brand image
in the UK and other countries
 Virgin Atlantic gets financial support
from the Virgin Group, which makes its
position strong
 The company has received many
awards from the aviation industry
(Virgin Atlantic, 2018)
 The marking and branding of the
company is the unique skill of the
company
 Currently, the company has modified
most of its aeroplanes (Syrrakos, 2017)
 The products offered by the company
are unique in the industry
WEAKNESS
 Virgin Atlantic is having less number of
aircraft, due to which its scope of
expansion is limited
 The company operates only at limited
location, which limits are customer
reach
 Usability to perform well in the market
of USA as compared to the markets of
other developing nations
OPPORTUNITY
 The company has sufficient scope for
expansion in the international and
domestic market
 The company can also develop its
cargo unit, to improve the profit share
THREATS
 The company is facing completion in
the international market
 Policy changes due to Brexit
(Walgenbach, 2017)
 Any of loss to the business or brand
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 The shift to biofuels will help the
company to reduce the cost of flights
image of Virgin Group may limit the
operations of the company
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P6
RELATION OF STRENGTH AND WEAKNESS WITH THE MACRO ENVIRONMENTAL FACTORS OF
VIRGIN ATLANTIC
One of the main strength of the company is having financial support form the Virgin group,
which is a business group established in the UK .the stability and business of this group is a
result of positive political factors that support business in the county. Due to this, the group got
sufficient opportunity to grow and progress. The other strength of the company is product
diversification, which is a result of core research and development in the company. This
research and development in the company have been possible due to the social condition of
the UK that supports innovation and development (De Wit and Meyer, 2010). The company also
got support in research and development from the top companies in the UK, which have been
operational in the UK due to positive macro-environmental factors such as technological factors
and political stability. Use of Biofuels as an aviation flue and achievement in environmental
sustainability is the result of the political policy of UK, to support sustainable development in all
the industry that is working (Anger, 2010).
The weakness of the company such as operational limitation and less number of aircraft is
because of the reason that the inflation in the UK and the legal facts that support aviation
growth are strict (Puscinska, 2018). Other threats that the company is facing due to Brexit have
been an impact of the political change that companies in the UK are facing. The completion that
the local aviation company like Virgin Atlantic is facing is due to the economic condition of UK.
As the UK is an open economy is does not restrict the expansion of business of other
international brands in the county.
Overall, the internal factors connected with the macro factors in which the company operates.
A positive and negative change in macro factors affects the growth and development of the
company. The company also related to the political risk of instability and war that a county may
face anytime. The UK is stable politically and protects by war, which limits this uncertainty of
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the company. Any changes in the macro environmental factors of the county are likely to
influence the company.
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CONCLUSION
This assignment focus on business environment and various aspects related to the business
environment. It highlights the size, scope, and legal structure of public, private, and voluntary
organisation along with the interrelationship between different types of organisation function.
This assignment also helps to perceive the utility of different tools used for internal and
external analysis of the company. The assignment also helps us to understand more about
Virgin Atlantic and the aviation business in the UK. Study of Virgin Atlantic helps to develop a
clear vision of the challenges and the advantage the company possess. The information gained
in this assignment is very helpful to apply the principals of the business environment.
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