Impact of Global Factors on Virgin Atlantic

The importance of maintaining a single culture at the workplace cannot be overstated, as it is essential to creating a friendly environment where all employees feel valued and respected. This can be achieved by promoting diversity and inclusion, eliminating sex discrimination, and providing equal opportunities for all employees, including those who identify as transsexuals, gays, or bisexuals.

BUSINESS
ENVIRONMENT

CONTENTS
Introduction......................................................................................................................................3
Task 2...............................................................................................................................................3
2.1 Role of economic systems in allocating resources effectively..............................................3
2.2 Impact of fiscal and monitory policies on business activities of organization......................4
2.3 Impact of two macroeconomic policy on the organization...................................................4
Task 3...............................................................................................................................................5
3.1 Impact of market structure on the pricing and out decisions of business..............................5
3.2 Impact of market forces on the practices of organization......................................................6
3.3 Impact of business strategies on the organization.................................................................6
Task 4...............................................................................................................................................7
4.1 Significance of international trade in case of Virgin Atlantic...............................................7
4.2 Impact of two global factors on the business activities of organization................................8
4.3 Impact of two European Union policies on organization......................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

INTRODUCTION
Business environment includes a range of internal and external factors that may have
huge impact on the business activities of an organization. Internal factor includes various types
of stakeholders including customers, employees, shareholders, government, suppliers and
investors. While, external factor includes political, legal, economic, environmental, technological
and social factors. Both types of factors influence the growth and development of business entity
in the market to a higher extent. In accordance to this, the present report is focused on describing
the various types of economic systems available in the market as well as the impact of fiscal and
monitory policy on the business strategies of company. Along with this, it will include the
description about the different types of stakeholders and various kinds of macroeconomic
policies. For better understanding of this report, Virgin Atlantic has been selected.
TASK 2
2.1 Role of economic systems in allocating resources effectively
There are mainly three types of economic systems that assists organizations to allocate
resources in an effective manner. These economic systems are as follows:
Command economy
In this economy, government is responsible for taking all types of business decisions
including budget, strategies, marketing, accounting as well as allocation of resources (Baldwin
and Scott, 2013). Along with this, government tales decision about that nature and type of
products and services which they need to be produced. Further, customers to whom they need to
deliver services and the market where in they need to lunch product are also decided by the
government. This type of economy focuses mostly on the welfare of society as well as human
being.
Free market economy
In this economy, government has no right to interfere in the business strategies and
activities of company as this economy allows management of commercial entity to take business
decision 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 market
through rendering high quality of products and services to customers.
Mixed economic system
Virgin Atlantic comes under this category in which both company and government have
equal rights to take decisions related to business practices and strategies. As compare to
command economy, there are less intervention of government in terms of fiscal and monitory
policy (Trebilcock and Howse, 2005). In this economy, it is decided by both company and
organization that what type of good will be produced and which type of customers will be
targeted. With the availability of this system, organization can enhance its reputation in the
market as well as its level of profitability and revenue because conducting business with
government is the best way to gain the trust of public.
2.2 Impact of fiscal and monitory policies on business activities of organization
Fiscal policy
Fiscal policy can be defined as the level of taxation that is taken by government from the
businesses as per their annual revenue and profitability (Palmer and Hartley, 2008). Amount of
taxation taken form the business organizations are spent by government to support the economy
and Aggregation Demand. This demand refers to the various types of planned expenditures exists
in the economy. Fiscal policy aids in maintaining the growth of businesses and economy in the
recession times. In case of Virgin Atlantic, Fiscal policy puts its impact on the cost of company
by increasing and decreasing the tax rate.
Monitory policy
Monitory policy is controlled by the Central Bank of country that is focused on ensuring
the level of interest rate and exchange rate. It can be defined as macroeconomic policy that
includes practices related to money supply for fulfilling macroeconomic objectives such as
consumption, inflation, liquidity and growth (Hajkova and et. al., 2006). This policy puts its
impact on Virgin Atlantic by increasing its cost by increasing the level of interest rate as well as
exchange rate.

2.3 Impact of two macroeconomic policy on the organization
Competition policy is one of the macroeconomic policies that influence Virgin Atlantic to
render better quality of services by performing its practices in a legal and fair manner. In UK,
major competitors of Virgin Atlantic are British airways, Air France and Lufthansa. In the
modern era, it is essential for the management of Virgin Atlantic to adopt innovative strategies in
order to get competitive advantage (Kelliher and Bernadette Henderson, 2006). Further to make
competitive in the market, organization needs to consider the regulation of government including
Competition Act 1998 as well as Enterprises Act 2002.
According to Competition Act 1998, management of company should focus on
identifying and dealing with restrictive practices of business in order to maintain position in the
market with the help of ethical consideration. While, Enterprises Act 2002 is focused on
providing the proper guidance to deal with insolvency, acquisition, merger and bankruptcy.
Further, Fiscal policy and monitory policies are also the macroeconomic policies that influence
organization by increasing and decreasing the level of tax rate, interest rate and exchange rate.
Increment in these rates leads company to enhance the amount of its prices that may have impact
on the level of customer satisfaction (Lall and Mengistae, 2005). While, decrement in these rates
leads to minimize the cost of company so that remaining finance can be used for the
advancement of services.
TASK 3
3.1 Impact of market structure on the pricing and out decisions of business
Market structure is focused on describing the nature of market and used for defining the
level of competition in the respect of products and services available in the market. It includes
various types of factors including products, services, area, buyers, sellers and competitors.
Different types of market structures are as follows:
Perfect competition market
In this market, same types of products are sold and purchased by the large number of
sellers and buyers (Type of economic systems, 2015). There is no artificial restriction as it
provides complete freedom to both buyer and seller for entering and leaving from the market.
Monopoly market

In this market, single seller is exists which provides unique and high quality products and
services to its customers. This market includes no competition so that bargaining power of
customers is very high (Lambsdorff, 2007). Therefore, company can rule on the customers as
demands of customers will remain always high when single seller is available in the market.
Oligopoly market
In this market, homogeneous products and services are provided to customers by the less
number of firms (Hill, 2008). Oligopoly market includes the factors that affect the practices of
businesses that are related to pricing system, level of competition demand curve and
advertisement.
3.2 Impact of market forces on the practices of organization
There are following market forces which are focused on shaping the practices of Virgin
Atlantic in order to get better advantage. These forces are as follows:
Demand
Management of company needs to set their prices of ticket according to the demand. In
season time, company should focus on enhancing the prices of its services so that they can earn
more profitability as demand of customers is very high in the seasonable time (Cherbakov and et.
al., 2005). On the other hand, company needs to reduce the prices of its services at the time of off
season due to availability of less demand.
Supply
Supply is directly proportional to demand as both are increased together according to the
market condition. In case of Virgin Atlantic, there are two kinds of demand, elastic and inelastic.
Elastic demand relates to economy passengers and inelastic demand refers to the business class
customers (Johnson, Lenartowicz and Apud, 2006). For the fulfillment of inelastic demand,
company needs to set short routes for them and in case of economy passengers, long routes can
be considered but with the reasonable price.
Customer perceptions

In order to understand the customer perception, compliant procedure is used by company
that is available of the website of company. Customers can send their queries and complaints on
it through using the official website of company (Trkman, 2010).
3.3 Impact of business strategies on the organization
There are various types of business strategies that can be used by company to perform its
business practices in an effectual manner. These are mentioned below as:
Cultural environment
In case of Virgin Atlantic, thousands of employees are working in the company who
belong to different culture, religion, principles, nationality and languages. Different types of
diversity may lead to increase the chances of conflict at workplace (Carroll and Shabana, 2010).
So that, organization needs to maintain single culture at workplace so that friendly environment
can be developed. Further, management of company provides equal opportunity to all types of
employees including transsexuals, gays and bisexuals in order to eliminate the chances of sex
discrimination.
Technology
In the present era, technology plays a crucial role in the development of company by
enhancing the effectiveness of its business practices and services (Baldwin and Scott, 2013).
Availability of advanced technology leads Virgin Atlantic to gain competitive advantage by
attracting more number of customers towards its services.
Joint venture
Through conducting joint venture, company can enhance its number of resources in terms
of finance, human, machinery and strategies by combining its business activity with the other
company.
Outsourcing
With the help of outsourcing, company can enhance the level of its revenue and
profitability through importing and exporting its products and services in the international market
(Trebilcock and Howse, 2005).

TASK 4
4.1 Significance of international trade in case of Virgin Atlantic
International trade can be defined as a process which is focused on exchanging goods and
services in between the different counties. In UK, there are several professional bodies that helps
company to perform its practices in a legal manner in the national and international market.
These bodies are as follows:
International Civil Aviation Organization
This organization assists Virgin Atlantic to adopt standard principles and procedures for
promoting its air services in the international market (Role of International Civil Aviation
Organization, 2015). This association allows organization to run their flights freely in the whole
country and it is also responsible to give permission to airlines for lending and taking off their
flights in the international land. Further, it allows organization to load freight and passengers
from the various countries.
World Trade Organization
Main role of this organization is to make trade policies and rules in order to ensure the
effectiveness of business between two or more countries. It has the objective of minimize the
level of dispute and tension between companies as well as the cost of living (Lambsdorff, 2007).
Along with this, it is focused on ensuring the availability of peace among countries as well as
companies and maintaining stability in terms of healthy competition.
4.2 Impact of two global factors on the business activities of organization
Economic and technological are the two major global factors that influence the business
activities of Virgin Atlantic.
Economic factor
In case of economy, recession is the major factor that mostly affects the growth and
development of company as customers do not prefer unnecessary purchases in the recession
times. Along with this, it includes tax rate, interest rate and exchange rate that put its huge
impact on the expenses of business entity (Hill, 2008).
Technological factor

This factor influence company to adopt new and innovative technology in order to gain
competitive advantage. New technology adopted by competitors leads customers to switch
company in order to get better facilities as well as security (Trkman, 2010).
4.3 Impact of two European Union policies on organization
Two European Union policies are mentioned below as:
Single market
European Union allows Virgin Atlantic to conduct its business practices in the single
market where in concept of free movement of products and services is used and very few
regulations and rules are needed to be followed. In this market, two or more companies can
freely share its goods, capital, services and labor with each other (Johnson, Lenartowicz and
Apud, 2006). With the help of this policy, company can freely expand its business in the national
and international market.
Freedom of movement of people
According to this policy, human resources of company has right to apply in organization
for the job and it also give right to that person to leave that job (Hill, 2008). Along with this, this
policy allows individuals to move freely from one country to another and to leave one country as
well as to come return in that country.
CONCLUSION
From the above study, it can be said that business environment may have both positive
and negative impact on the development of organization. Along with this, it has been evaluated
that stakeholders plays an important role in every organization. Therefore, it is essential for
company to fulfil the objectives of stakeholders that can be related to products, services, profit as
well as finance.

REFERENCES
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Palmer, A. and Hartley, B., 2008. The business environment. McGraw-Hill.
Hajkova, D., Nicoletti, G., Vartia, L. and Yoo, K.Y., 2006. Taxation, business environment and
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Lall, S.V. and Mengistae, T., 2005. The impact of business environment and economic
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Cherbakov, L., Galambos, G., Harishankar, R., Kalyana, S. and Rackham, G., 2005. Impact of
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Johnson, J.P., Lenartowicz, T. and Apud, S., 2006. Cross-cultural competence in international
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Carroll, A.B. and Shabana, K.M., 2010. The business case for corporate social responsibility: a
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Online

Role of International Civil Aviation Organization. 2015. [Online]. Available through.
<http://www.icao.int/Pages/default.aspx>. [Accessed on 12 December 2015].
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<http://www.shmoop.com/economic-systems/types.html >. [Accessed on 12 December 2015].