Impact of Global Factors on Virgin Atlantic
Added on 2019-12-03
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BUSINESSENVIRONMENT
CONTENTSIntroduction......................................................................................................................................3Task 2...............................................................................................................................................32.1 Role of economic systems in allocating resources effectively..............................................32.2 Impact of fiscal and monitory policies on business activities of organization......................42.3 Impact of two macroeconomic policy on the organization...................................................4Task 3...............................................................................................................................................53.1 Impact of market structure on the pricing and out decisions of business..............................53.2 Impact of market forces on the practices of organization......................................................63.3 Impact of business strategies on the organization.................................................................6Task 4...............................................................................................................................................74.1 Significance of international trade in case of Virgin Atlantic...............................................74.2 Impact of two global factors on the business activities of organization................................84.3 Impact of two European Union policies on organization......................................................8Conclusion.......................................................................................................................................9References......................................................................................................................................10
INTRODUCTIONBusiness environment includes a range of internal and external factors that may havehuge impact on the business activities of an organization. Internal factor includes various typesof stakeholders including customers, employees, shareholders, government, suppliers andinvestors. While, external factor includes political, legal, economic, environmental, technologicaland social factors. Both types of factors influence the growth and development of business entityin the market to a higher extent. In accordance to this, the present report is focused on describingthe various types of economic systems available in the market as well as the impact of fiscal andmonitory policy on the business strategies of company. Along with this, it will include thedescription about the different types of stakeholders and various kinds of macroeconomicpolicies. For better understanding of this report, Virgin Atlantic has been selected. TASK 22.1 Role of economic systems in allocating resources effectively There are mainly three types of economic systems that assists organizations to allocateresources in an effective manner. These economic systems are as follows:Command economyIn this economy, government is responsible for taking all types of business decisionsincluding budget, strategies, marketing, accounting as well as allocation of resources (Baldwinand Scott, 2013). Along with this, government tales decision about that nature and type ofproducts and services which they need to be produced. Further, customers to whom they need todeliver services and the market where in they need to lunch product are also decided by thegovernment. This type of economy focuses mostly on the welfare of society as well as humanbeing. Free market economyIn this economy, government has no right to interfere in the business strategies andactivities of company as this economy allows management of commercial entity to take businessdecision its own without involving government (Czinkota and et. al., 2009). In this economy,
main objectives of company is to gain more profit and enhancing its position in the marketthrough rendering high quality of products and services to customers. Mixed economic systemVirgin Atlantic comes under this category in which both company and government haveequal rights to take decisions related to business practices and strategies. As compare tocommand economy, there are less intervention of government in terms of fiscal and monitorypolicy (Trebilcock and Howse, 2005). In this economy, it is decided by both company andorganization that what type of good will be produced and which type of customers will betargeted. With the availability of this system, organization can enhance its reputation in themarket as well as its level of profitability and revenue because conducting business withgovernment is the best way to gain the trust of public. 2.2 Impact of fiscal and monitory policies on business activities of organizationFiscal policyFiscal policy can be defined as the level of taxation that is taken by government from thebusinesses as per their annual revenue and profitability (Palmer and Hartley, 2008). Amount oftaxation taken form the business organizations are spent by government to support the economyand Aggregation Demand. This demand refers to the various types of planned expenditures existsin the economy. Fiscal policy aids in maintaining the growth of businesses and economy in therecession times. In case of Virgin Atlantic, Fiscal policy puts its impact on the cost of companyby increasing and decreasing the tax rate. Monitory policyMonitory policy is controlled by the Central Bank of country that is focused on ensuringthe level of interest rate and exchange rate. It can be defined as macroeconomic policy thatincludes practices related to money supply for fulfilling macroeconomic objectives such asconsumption, inflation, liquidity and growth (Hajkova and et. al., 2006). This policy puts itsimpact on Virgin Atlantic by increasing its cost by increasing the level of interest rate as well asexchange rate.
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