Global Business Environment Analysis

This assignment requires an in-depth analysis of the global business environment. Students must examine the influence of various factors like political, economic, social, and technological forces on firms operating internationally. The analysis should draw upon relevant academic literature and real-world examples to demonstrate a comprehensive understanding of the complexities and challenges within the global business landscape.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASKS.............................................................................................................................................1
P 1 Different types and purposes of organisations & P 2 Size and scope of a range of different
types of organisations (SUMMARY).....................................................................................1
M 1..........................................................................................................................................2
D 1..........................................................................................................................................2
P 3 Relationship between different organisational functions.................................................2
M 2 .........................................................................................................................................4
P 4 Positive and negative impacts the macro environment ...................................................4
D 2..........................................................................................................................................6
P 5 Internal and external analysis of Virgin Atlantic.............................................................6
M 4..........................................................................................................................................7
P 6 How strengths and weaknesses interrelate with external macro factors.........................8
CONCLUSION................................................................................................................................9
REFERENCES .............................................................................................................................10

INTRODUCTION
Any business cannot perform in vacuum. It perform in an environment. But there are
some factors or a set of factors that can be or cannot be controlled by the enterprise but it can
influence the performance of their business. These factors are political, economical, social,
technological, environmental as well as legal factors (Aterido and et. al., 2011). These are known
as macro factors that are present outside the boundary of organisation. On the other hand certain
macro environment's factor also exits. They tell the strength, weaknesses, threats and
opportunities of the corporate. The present report is based on the business environment of
different sectors of organisations that are private, public and voluntary. In this report, the size,
scope and functions of all these sectors of organisation are described. The positive as well as
negative impacts of macro factors on them are also explained. Additionally, this report is
focussing on stakeholder analysis and explains their importance in a business.
TASKS
P 1 Different types and purposes of organisations & P 2 Size and scope of a range of different
types of organisations (SUMMARY)
There are different types of organisations which is having different purposes. The first
one is private sector which is run and controlled by single or group of people. All the risk are
managed by them only and at the same time they are enjoying total profits of them. Virgin
Atlantic is a private venture which is not controlled by UK government and is having the purpose
or aim of earning high sum of profitability. They are having approx 35000 consumers and 8875
workers. Thus, making income of 155.7 million Euro by serving people of England, Caribbean,
London , Africa, etc. On the other hand, public sector organisation is governed by government of
UK and are not having the motto of earning money but their purpose is to offer services to public
at low prices. For example, Emirates fall under public sector. They are possessing workers of
around 64768 and has 39000 customers. Thus, earning income of 140.5 million Euro by
operating their business in Dubai, UK, United Arab, etc. The third sector is named as Voluntary
sector whose also aim is to provide social services to poor people and they do not focus on
making profits. These all companies consist of different stakeholders who invest money in their
business and interest with their business strategies like customers, workers, suppliers and
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investors. They all can use stakeholder mapping for finding out roles and significance of
stakeholders in their ventures.
M 1
The aims and objectives of Emirates and Virgin Atlantic are fully depends on its size ,
scope and functioning. As company will set their goal as per the number of customers and
available employees. If they have less number of worker than it is impossible for them to achieve
their defined objectives. As they will have low work force to complete such a large amount of
task. Some of the functions of private companies like profit maximization, report transparency,
etc. aids in achieving their aim. The functioning like transformation of economy, redistribution
of income and wealth, achievement of balanced regional development, etc. all are done to
according to the number of workers as they play key role in achieving these.
D 1
There are different types of business structures namely Sole proprietorship, Limited
liability company, General partnership, partnership, etc. The functionalities of different
organisations are depending on their structure. According to Bharadwaj and et. al.(2013) Sole
proprietorship is such a structure that are operated by a single person. They are only responsible
for their assets and liabilities. On the contrary, Blanchard, Tolbert and Mencken (2011) says that
in Limited Liability partnership, partners do not have personal possession for the carelessness of
other partners. Boons and Lüdeke-Freund (2013) tells that general partnership is made up of two
or more persons who are contributing in money, labour and skills in their bushiness.
P 3 Relationship between different organisational functions
There are different functions of organisation of Virgin Atlantic and Emirates but they
have the similar goal to make large profits. Their inter-connection are explained below:
 Production: Virgin Atlantic wants to give best quality services to their consumers by
providing them luxurious sitting as well as sleeping facilities, giving tasty and spicy
foods. They offer additional facilities to Islamic group of people in the month of
Ramadan (Bryman and Bell, 2015.). For example they make them available variety of
foods or beverages items. Because of this large number of people give attention towards
their business. Emirates have the same motive to offer quality services to their clients
without having the aim to earn more profits.
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 Research & development: Surveys are being conducted by the Virgin Atlantic in order
to identify the need or demand of customers. They also examine their lifestyle and
concentrate on their holidays as at those days large number of people used to travel their
homes. For example in the month of Ramadan, Christmas, New year, etc. They invest a
large sum of money in this regard (Cai and Yang, 2014). They will get benefit on such
days. Emirates on the other hand concentrates on the income of their users so that they
can offer services to all rich section of society, middle one and also people of low level
income. They take care of all types of citizens that is why all prefers them.
 Purchasing: Both enterprises used to purchase raw materials at minimum prices so that
they can make available services at low cost to their clients. Along with the price, they
also focus more on the quality of resources like they purchase fresh food items, buy high
speed aeroplanes, etc. Additionally, they are providing online business by offering online
booking of tickets in advance. This provide ease to their customers as now they have not
to visit airports for the purpose of booking flights.
 Human resource management: Both organisations are using human resource in making
of their pillars. They are responsible of recruiting skilled workers. They hire those
workers who have best communication skills, good personality, having attractive
interpersonal as well as intra personal skills, can speak more than three languages and
one who are comfortable in doing day as well as night shift and can easily work for 8
hours. They also do recruitment on the basis of experience (Cavalcante and Ulhøi, 2011).
If some having experience of one or two years are easily selected in their organisation. It
is the duty of human resource managers to hire skilled pilots as thousand of lives depend
on them only. Also air hostess should have a charming or attractive property and should
behave politely with travellers. They all should provide a full fledged training
programmes in which they are making learn about the basic work. This is for a time
period of minimum 1 year. They can also select their employees by their interviews
online. This saves their money as well as time.
 Accounting and finance: To calculate a large number income, expenditure and profits of
a company is a rigid as well as risky job. A small mistake can cause the failure of
corporate or their strategies. So, for this purpose they are using modern techniques or
technology. Spreadsheet, Ms-excel, etc. are the tools that are used for doing fast and
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accurate calculation work. This also removes the physical errors and reduces the time
involved while calculating (Chow and et. al, 2011). Communication can now easily be
done among clients, employees and their heads by using social media such as Face book,
What's app, twitter, emailing, messaging, etc. video conference are used by employees
while attending meeting of their superiors without physically present at the meeting
location.
M 2
Functionalities of organisation have its own merits and demerits that totally affect the
structure of corporates. For example, in arranging training and development plans by human
resource takes large sum of money as well as time. This will be removed by hiring only
experienced holder workers in their business by avoiding freshers. Research and development
also takes a lot of time and money. There is no need to conduct surveys. An alternate option is
examining the past information or data. This will also aids in making policies. Use of modern
techniques like social media also negatively impacts as employee take its advantage in sending
personal messages. This hampers the time as well as breaking the discipline of work location.
But all of them are also advantageous for the company as it make the work easier and increases
the working quality.
P 4 Positive and negative impacts the macro environment
virgin Atlantic is a one of biggest airlines company in the world. It is famous for its best
aviation services throughout the globe. There are various external factors that are responsible for
performance of this airlines company are explained below:
 Political factors: These factors reduce expansion plans of any organisation like if two
countries do not have good relation then direct flight to these countries cannot be
possible. Two countries political relation helps in establishing transportation network
between those two. Due to the political conflict between two countries there can chances
of terrorism to other countries. Virgin group has lot of flights to Islamic state countries
which is in severe threats of terror attacks. Other governmental factors that influence
airlines working is labour laws, taxation, trade restrictions in different countries. Flight
tariffs imposed by the government can be sometimes higher that effect enterprise
negatively as higher tariffs leads to higher ticket rates and services (Commander and
Svejnar, 2011). In 2006 there were some restriction that was posed by UK government on
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airlines industry affected working of Virgin Atlantic in a negative way. Deregulation
policy imposed by UK government made pathway for easy entry of new companies in
this industry. There are many subsidies that are being provided by the UK government to
virgin group any change in these policies effect the working.
 Economical factors: economical factors influence the whole economy of the company.
Various economic factors include inflation rate, economic growth, capital investment,
foreign exchange rates effect performance of an organisation. Due its competitors like
Fly emirates and British airways it was forced to lower its ticket prices. Fuel prices are
increasing day by day which is a major concern for this industry. In certain countries fuel
prices posses bigger threat to low air ticket prices. Since this airlines company has a plans
of expansion in other countries so it need to buy more air-crafts which will apply extra
burden on the financial department of this company (Cuervo‐Cazurra, 2011). UK
economy is fragile after its lowest in 2009. unemployment remains high which restricts
amount of customers (especially in tourism ) to airlines industry .
 Social factors: In today's world, economy is changing and there are higher number of
customers that are availing this transport medium. Consumers have become more
demanding and expectations have increased in terms of services provided by the airlines
industry. Consumers are getting more aware about their rights and business profitability.
This industry are highly effected by the tourism sector which is expansion in last few
decades and hence effecting Virgin groups performance positively (Granger and
Schroeder, 2013). Trends of using aircraft instead of other transportation methods have
increased as it saves time of the travellers which they can invest on sight seeing.
 Technological factors: In past decade this industry was a witness to a very large change
in technology. With new technologies of navigation and radar systems, airlines needs to
upgrade its working aeroplanes. Since technologies have innovated to larger extent
commercial flights are getting cheaper so Virgin group has to change its equipments of
work. Increasing popularity of the internet services people now a days have shifted to E-
ticketing and booking systems. Use of internet has provided Virgin group a chance to
reach to larger audience (Hamilton and Webster, 2015). Where as the customer have
more choices with them and can easily compare the prices of two airlines which results
negatively on the working of these organisations. Virgin Atlantic can use social media for
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their promotion of any packages or offers which it intends to launch at a very minimum
costs.
 Legal factors: There are many legalities in different countries that are associated with
the working of airlines industry and moreover these are different in different countries.
Virgin group has to undergo all the legal aspects and then can plan their expansion policy
and connectivity on newer routes. Airlines have to focus on customer services as it could
lead to legal filing of suits against the organisation.
 Environmental: Global warming is a matter of concern for this industry. Use of
renewable fuels are being promoted. Natural hazards not forecasted well before leads to
failure of connectivities to these places.
D 2
The macro as well as micro factors are influencing in achieving the
aims and objectives of Virgin Atlantic. For example government are
increasing the taxation rates , due to this large sum of money of company
are going in paying such taxes only. Also, as corporate is operating their
business world-wide, so there is a issue of currency fluctuation in several
countries. The value of money gets decreases some times, due to this firm
has to suffer from losses. But at the same time if it gets rises, it also gives
profit to the company. There are certain rules and regulations like child
labour that are responsible for maintaining fair work at corporate.
P 5 Internal and external analysis of Virgin Atlantic
The SWOT analysis of corporation are described below:
 Strength: Virgin group is one of largest airline service provider in UK. It enjoys a strong
brand image and have been recognised in the Top 10 airlines company of the world only
British airlines to enter into this league. It has reputation in terms of punctuality, speed of
dealing and quality especially in Europe and America. Employee of this organisation
posses excellent communication skills and their services are of the best in the world
(Harrison, 2011). Its joint venture with Delta provided more choices for customer of this
organisation. It has very strong financial umbrella that provides company a better
financial leverage. Use of modern technologies like mobile app helped in making
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ticketing and travel plans easier for Virgin Airlines. Innovation in terms of technology
has became strength for this airlines over others in market.
 Weakness: lack of scale as compared to competitors like Fly emirates, British airways,
Qatar airways. This airlines firm is dependent on subsidies provided by UK government
which allows government interventions in policy making of the organisation hence
leading to slow decision making process. Limited routes is one of the prime concerns for
Virgin group. This airlines lack fleet size as compared to other competitors in market.
 Opportunities: There is a higher chances of expansion for this company in the Asian
market where new airports are coming up. There is a very high population density in
these Asian pacific countries which can act as a large customer base to this organisation.
Developing economies of world which is dominated by local airlines companies can act
as new market for Virgin Atlantic (Klapper and Delgado, 2011). Proposed expansion of
Heathrow airport will lead to lesser operating cost for Virgin group. Due to Brexit there
will be few more markets that will be available for this organisation from where they can
start connectivity with.
 Threat: With new policies of British government it has become easier for new airlines
companies to enter into this market. Brexit certainly a threat to every industry including
airlines business. Increasing strikes of workers in the field of aviation industry after there
clash between employee union has posed a threat to proper working of the Virgin group.
Digital disruptions continues to posses risk for this company. Climate change like
adverse weather especially in winters effect the continuity of flights and unprocessed
delays. Increasing conflict between different countries have effected the connectivity
from one country to another. It is reducing the market for civil aviation. Terrorism poses
one of biggest threats to operations of Virgin group and has to expend a lot on safety of
passengers.
M 4
The strength, weaknesses, threats and opportunities are some factors of Virgin Atlantic
that are impacting the decision-making policies. If there are some weakness of company, then
they need to remove that by taking certain steps. Firm have to make policies like taking
competitive advantage to handle some threats like rising competition. There are several
opportunities too like company can expand their business in other nations also. For this they also
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to take appropriate decisions so that a successful plan can be made and executed to achieve this
future goal. Company have to strengthen their potentiality and use this while handling with their
competitors.
P 6 How strengths and weaknesses interrelate with external macro factors
External macro factors effects strength and weakness of an organisation in both positive
and negative way. Here we are concentrating about how external factors are effecting the
characteristics of a company.
Positive political effect:
Virgin group made treaties with UK government where they helps in funding for the
organisation.
Increasing political alliances of a country (like making visa rules easier ) supports travel and
tourism which indirectly effects aviation market.
Negative political effect:
 Rising conflicts throughout the world has made several barriers for aviation industry.
 Increased taxations and tariffs has reduced Virgins profit margin and lead to deteriorate
financial condition (Onetti and et. al., 2012).
Positive economic effect:
 Developed countries provides assistance to any business financially.
 Developing countries with unstable economy has a risky environment for working but it
can be beneficial in terms of expansion policy.
 Increasing local business partners can be beneficial sometimes as it gives reach to larger
part of the country (Popescu, 2013).
Negative economic effect:
 Expansion policies is hindered by slower economy.
 Unstable economy can result in financial losses.
 If inflation rate it creates a mindset of reducing expenditures and they intend to move
towards cheaper modes of transportation (Welford, 2013).
 Unemployment, lower wages of employee may lead to reduction in number of customers
to aviation industry.
Positive social effect:
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 society is changing and they want comfort and less expenditure of time in transportation
so they are opting for flights instead of trains or bus facilities.
 Travelling has become trend and people are expending a lot on tourism hence effecting
aviation industry directly.
 Interest in increasing knowledge about various culture promotes tourism hence effecting
in more number of customers to aviation business.
Negative social effect:
 society is becoming demanding more and more, they want many facilities at lower rates.
 People are doing a large number of comparisons between fares of different airlines
company hence Virgin Aviation faces a large pressure of reducing ticket prices to lowest
level.
Positive technological effect:
 use of technology helped the industries in reaching to new customers and wider range of
people and helps in increasing base customers.
 Consumers now want more efficient way of booking tickets and booking of online tickets
are making this process easier.
Negative technological effect:
 use of technology helps customers in comparing rates of different companies and
choosing cheaper offers so bigger airlines faces stiff competition from local airline
companies and are in peer pressure of reducing the cost (Weske, 2012).
Positive environmental effect:
 Good environment helps in growth of company at a faster rate.
 Responsible citizens always helps in reducing use of non renewable resources and can be
utilized by these airlines company so as to reduce ticket fares.
CONCLUSION
From the above based report, it has been concluded that business environment affects the
performance of organisations at large extent. This may be positive or negative based on the
factors. There are three sectors of firm namely private, public and voluntary. Private are owned
by an individual having a motive to earn large benefit while the public sector is run by
government only and voluntary sector are neither run by government nor individual but it is
operated by a group of people and having an aim to do social welfare.
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