Business Environment and its Impact on Virgin Holiday Company

This report discusses the impact of macro-economic factors like inflation and unemployment, UK's current growth rate, government intervention methods like fiscal and monetary policies, and global challenges on Virgin Holiday Company. It also provides recommendations on how to overcome these challenges.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Explain two macro- economic factors that your chosen business will need to consider and the
influences these could have on its business outputs (macro-economic factors e.g., economic
output, unemployment rates, inflation,). ...................................................................................3
How will the UK current growth rate impact on your chosen business (give reference to
economic life cycle, GDP, inflation, unemployment rate) .........................................................4
How can the government current intervention methods affect your chosen business? (e.g.,
fiscal and monetary policies, furlough scheme etc). ..................................................................6
What are the current global challenges facing by the chosen business and recommendations
on how to overcome them in this current time? ........................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
The business environment is made through all the external and internal factors which
affect the functions of business organization in one way or other. Like workers, suppliers,
technology change, social change, global market competition, government, changes in economy
environment and many more. This will assist to find the opportunities of business in different
commercial area. Also assist in making strategies of the business framework for achieving the
goal with raising the growth and development of the enterprise. The environment of business
will also helps to maintain company's performance and will maximize profit. The business
environment is categorized in two types, this is Macro and Micro environment. The Macro
economics is being defined in parts of economics which performs the aggregate study of
economy in the country, which is GDP, national income, inflation, unemployment, etc. this is
basically concentrates on overall economical state in the country(Wronka, 2021). The variations
is evaluated in the trends of economy and how these fiscal and monetary policies impact on the
growth of the nation. In the above case study there is Virgin holiday company which established
in year 1985 as the service provider. This deals with rendering the package of holiday to
customers for the different destinations for holiday around the world. In furtherance, the report
gives overview for the growth rate of United Kingdom in recent time and how these government
policies and the norms affect activities of the business in an organisation. This is also evaluating
the challenges in global which goes with company and recommendations for same.
MAIN BODY
Explain two macro- economic factors that your chosen business will need to consider and
the influences these could have on its business outputs (macro-economic factors e.g.,
economic output, unemployment rates, inflation,).
The consequences of different elements of macro economics will sometime
results rise and fall of the states economy. This is uncontrollable on some point of time which
will be controlled through government in a particular country. This will identify the exact
position of economic condition of country, this happen weather it fluctuates or stagnate. This will
have different factors which influence the soundness of a financial prospective for the country.
This will also impact on monetary and situation of geopolitical. As the terms of virgin holiday
company, there are many elements which have impact on the business output of the enterprise-

 Inflation – this is defined in the situation which have price of the goods and services
increasing for a particular period. This dis-balance country's economy. The reason for
this is speedy growth of inflation. But, if there is slow inflation rate, then this is to be
calculated and foreseen at same time. The situation of inflation increases when the
demand and the price of goods and services increase. The hike will be created in the cost
of production of the company. This results in increasing the cost of labour which is
automatically influence element of supply in the company.
 Unemployment- this is a situation in which there is very less possibility for getting job in
the country. When no job opportunity is available there in different sector of work. There
are many candidate who are eligible and searching for the jobs but they are unable to get
the job. This happens because of Covid-19 pandemic which raise the unemployment
problem in United Kingdom. This overall affect the structure of employment in the
country(Mehboob, 2020). This will probably give increase to other gross situation for
recession in which the employees were terminated and some new individual who were
ready and fail to get any job. The economy of country in the pandemic faces a lag in
condition of economic in the country. For serving the future requirement of the economy,
the enterprise have to make some changes in strategy of market. The company have to
hire new workforce in the business.
In the above discussion, this is clear for both the factors which is unemployment and
inflation and affect the organisation of business which operates the virgin holiday company in
other way. This will give rise to price of goods and services which will end in a increased
production cost and non-availability of workers for working in the company.
How will the UK current growth rate impact on your chosen business (give reference to
economic life cycle, GDP, inflation, unemployment rate)
The country which is developed is able to provide good standard of living for the citizens or
people who resides a particular nation and this country said to develop the economy of the state
is strong. UK is also named as one of the fastest developing nations. In the situation of Covid-19
this affect in negative way to the economic condition of the economy in the country. This is seen
that the year 2020, the economy have experience the fall of 9.4 percent because of the movement

of people for goods and services which is prohibited at time of pandemic. The factors were stated
below which affect in economic growth of the country-
Economy cycle – when there is a period within expansion and contraction in the certain
economical changes, this is to be terminated as the cycle of economy. This will analyse the
economic state of the country which face many economic phase in cyclical manner. This have
many factors which determines the level of ongoing economy, such as ratio of employment,
GDP, rates of interest, etc(McConalogue, 2021). this will provide benefit for investors and
organization of the business, this will provide proper outcome for increase and making some
depth observation and the situation examination of economy. This have four stages of cyclical
phase which involves virgin holiday company, these are-
 Expansion- in this stage a company will encounter speedy growth which rate with the
increase in level of production in the company. The rate of interest will reduce as the
factor of inflationary pressure of the enterprise.
 Peak- after expansion stage, the company will reach the maximum level of satisfaction
for growth of economy. But in this the imbalance state arises in the activity of business.
 Contraction- the growth in this economy slow down the pace at a particular stage. With
the employment ratio this face incline and the price of goods and services become
stagnant. The company also have a chance to realize the facts in the operation of business
and this is to be averted from making reasonable restriction.
 Trough- This is the final level of this phase of the economy. On this stage the
organization starts change itself and recovery from the errors is being identified in the
previous level. This start slowly and gradually grabbing the pace so this will contribute
increase in growth rate of the economy. This is followed through the virgin holiday
company.
Inflation- Inflation is nothing but the increase in prices of goods and services in a particular
economy. As per the results of increase in cost of production in the company. The virgin holiday
company also have to increase the price of packages of holiday. Because of this the client will
face big changes in price at domestic and global level(Luiz, Ganson, and Wennmann, 2019).
As, the increase in price of fuel, surcharges of hiring vehicles will also increases.

Rate of unemployment- the ratio of employment in the country is also affected through
pandemic, the place where people are ready to get placed in sector of different employment,
remaining people unemployed for long period of time. The economic condition of country is not
at par because of this only, there is very few or no employment opportunity left in country.
How can the government current intervention methods affect your chosen business? (e.g.,
fiscal and monetary policies, furlough scheme etc).
The necessary changes or modifications in the monetary and fiscal policies of the state could be
made by the government of that country and for that purpose the government has to intervene in
the financial affairs of the country. The main concern behind this intervention is the
improvement of the commercial sector and the people involved in the business sector in any way.
In order to achieve efficient functioning of business organizations, maintain the currency’s
position in the international market and ensure an equal distribution of income across the
country, the role of the government is very important(Liu, 2021). It also encourages the spirit of
competition among the other international powers present in the open and global marketplace. In
connection with the virgin vacation company, there are various methods of government
intervention that have affected the company. Fiscal Policy – Fiscal policy measures are designed to build a structure that will help
sustain the country's growth over the long term. With the help of these measures, the
level of inflation can be examined using price increases for goods and services. By
applying these rules, the government makes the necessary changes in its spending and tax
records and rules to ensure a positive impact on the country's economic condition. It will
further influence the market situation in which consumers will be provided with better
quality goods. Monetary Policy – Monetary policy ensures the right flow of money in the market. It also
determines how much money is available in the market and the various sources ensure its
supply in the money market. Such a policy is said to be in effect when people have easy
access to money(Köhler, and Zerfass, 2019). It creates proportionality in terms of
consumption rate, inflation, economic growth and development, GDP growth, etc. In
order to encourage investment activities at national or international level, the government
changes tax policy or rules accordingly. The primary concern of the virgin holiday

company is the necessary monetary policy changes that can ensure the efficiency and
effectiveness of operations. The company has also started cutting interest rates.
 Furlough Program – During the time of the pandemic, all commercial consideration has
been put on hold and the movement of goods and individuals around the world is being
restricted. The workforce of the various business organizations are waiting to move to
their affected companies as soon as possible. In addition, the virgin vacation company
offers employees a program where they can continue with the temporary vacations and
continue their work in their respective locations. But it could be edited by making a
special request to the company(Bini, Bellucci, and Giunta, 2018). The virgin furlough
company is an example of other companies planning to fire certain employees or
workers. Allowing people to work from home has essentially reduced the additional costs
and expenses of doing business when done in a formal manner.
What are the current global challenges facing by the chosen business and
recommendations on how to overcome them in this current time?
There are various global challenges that business organizations must face. In the same context,
the virgin holiday company also experienced certain challenges on a global scale, they are-
 Importance of Foreign Policy, Politics and Relations – The company’s decision-making
process is influenced by the different rules, norms and policies formulated by the
government, and the political changes taking place in the environment also affect the
overall business structure of the company.
 Unemployment – The unemployment rate has risen during the pandemic period, which
has left companies unable to provide employment opportunities to the country’s people.
There were no employment opportunities in the service as well as in the country’s
economic sectors, which forced the population of the state to remain unemployed.
Because the companies have not made any profits from the respective deals and have
suffered heavy losses. But currently the situation has completely changed and the effects
of the pandemic are losing control of the global economy. Business organizations around
the world are taking off at a new pace and with a new strategy. Now the existing
employees are also getting their jobs back and the companies are creating new
employment opportunities for the other people.

 Fuel Efficiency – Companies need to become a cost efficient business entity as
production costs have a direct impact on the airline industry’s administrative functions.
For example, if fuel prices increase, airline ticket prices will tend to increase as well.
Regarding the virgin airlines, they are experiencing a similar problem that has led to a
reduction in the company’s profitability.
 Passenger Experience and Comfort – Satisfactory feedback from customers will enhance
the performance of any business organization, especially in the case of the airline
industry, passenger response to the services offered by the company is very crucial.
Virgin Airlines has failed to acquire the same(Azmat, and at el., 2018). There are certain
areas of disinterest that have hampered the company’s performance to some extent.
The recommendations in this context are that the company needs to reformulate the services
from a new perspective by making a necessary assessment of the likes and dislikes of the
customers. The main requirement is strong customer support and security standards. The
financial institutions are there to provide the necessary assistance in all aspects of financing so
that the company can get off to a good start. At the same time, when designing the corporate
structure, companies must include the issue of job creation. This improves the availability of
jobs in the country.
CONCLUSION
The above report concluded that the business environment affects business organizations both
internally and externally. The factors that affect the companies are suppliers, consumers,
inflation, economic growth, etc. The change in prices and demand for goods and services, tax
and monetary policies, unemployment, etc. Affect the management of the company. The aviation
industry is facing increased competition in the world market with the existing, well-established
companies. In addition, there are certain suggestions for the company to maintain the level of
efficiency and profitability in the market. This could be possible if the company starts working
for customer satisfaction by providing them with proper support

REFERENCES
Books and Journals
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Bini, L., Bellucci, M. and Giunta, F., 2018. Integrating sustainability in business model
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pp.1161-1170.
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benchmark study in the UK, the USA, and Germany. Journal of Communication
Management.
Liu, X., 2021. Chinese multinational enterprises operating in Western Economies: Huawei in the
US and the UK. Journal of Contemporary China, 30(129), pp.368-385.
Luiz, J.M., Ganson, B. and Wennmann, A., 2019. Business environment reforms in fragile and
conflict-affected states: From a transactions towards a systems approach. Journal of
International Business Policy, 2(3), pp.217-236.
McConalogue, J., 2021. Understanding UK strategic dependence on Chinese investment: the
case for ‘Partial Decoupling’.
Mehboob, D., 2020. UK budget curbs short-term business uncertainty. International Tax Review.
Wronka, C., 2021. Anti-money laundering regimes: a comparison between Germany,
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