Impact of Globalisation on Virgin Group

The assignment discusses how globalisation has affected Virgin Group, particularly in terms of cost reduction and competitiveness. It also analyses various external factors that impact the telecommunication sector using a part of Pestle analysis. The essay highlights the challenges faced by Virgin Group in developed countries and its efforts to remain competitive.

Contemporary Business
Issues in a Globalized
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
1. Globalisation...........................................................................................................................3
2. Arguments of external environmental factors ........................................................................5
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
Online........................................................................................................................................11

INTRODUCTION
The term globalisation refers to practices and regulations that are coordinated
internationally in regarding to environmental protection. (Asimakopoulos and Whalley, 2017) It
is also known as role of globally organised management institutions their knowledge systems
and monitoring and strategies that are coordinated which aims at resource, energy and
conservation issues. In this report, Virgin Group has been taken into consideration. It is a British
multinational venture capital founded by Sir Richard Branson who is listed in one of the
successful entrepreneurs and is listed in top ten in world. Virgin group is headquartered in
London, United Kingdom.
Thus, following report discusses about impact of globalisation on telecommunication
sector with a part of Pestle analysis. This report also highlights on reasons, advantages and
disadvantages of globalisation on telecommunication industry.
1. Globalisation
Globalisation is termed as a process of interacting and interaction of peoples, companies,
and governments all over the world (Coker, 2014). The main reason of growing globalisation is
due to advances in transportation and telecommunication. Due to growth in global interactions,
there is high increase in international trade, ideas and culture. Hence, globalization is an
economic process of interaction that is connected with social and cultural aspects. It has been
commonly included in financial markets like capital, money and credit's markets along with
insurance markets that includes commodity as oil, coffee, tin and gold. Globalisation involves
ongoing process of increasing mobility of goods, services, labour, capital, technology and
information and this basically depends on advanced technologies.
Thus, selected company Virgin group has moved into global markets that has been
facilitated in large part with help of formation in joint ventures that includes virgin mega store. It
also includes ventures such as health cubs, space fight and biofuels that were funded by
divestment.
Reasons for increasing Globalisation
 The complex financial products like derivatives has been developed that leads in rapid
increase of credit market (Curwen and Whalley, 2016).
 New electronic payment system has been raised that includes e-Wallets, prepay and
mobile pay which facilitates in increasing global trade.

 Rise in significance of global brands like Microsoft, Apple, Google, Sony acts as a
central that helps in emerging globalisation.
Advantages of Globalisation
There are number of benefits that globalisation brings for international producers and
national economies that includes the following-
 It provides incentives to countries in order to specialise and get benefit from application
of principle of comparative advantage.
 It helps in avoiding regulations by locating production having less rules as in less
developed countries.
 Flows of inward investment between countries has been increased due to globalisation
that leads in creating benefits for recipient countries. Benefits provided to countries
includes sharing knowledge and technology.
Disadvantages of Globalisation
Disadvantages of globalisation includes following terms-
 Globalisation can lead to increase in rate of de-industrialisation which is termed as slow
erosion of manufacturing base of an economy.
 Large organisations may also suffer diseconomies of scale, and these difficulties are
related with coordination of activities of subsidiaries that is based in several countries.
 Due to structural changes, there may be loss of jobs that which may lead to structural
unemployment and may increase the gaps between rich and poor of country instead of
bridging gap.
Impact of Globalisation on Virgin Group
Main issues that raised due globalisation for virgin group are as below-
 Growth- Globalisation is likely to increase growth of virgin in long term due to increased
exports the aggregate demand is likely to increase and due to high level investment,
aggregate supply is likely to increase (Evrard, 2017). Short term growth may become
more unstable as global economy becomes interconnected.
 Employment- Thus, by creating structural unemployment that widens the income gap
within countries therefore jobs get destroyed in manufacturing sector and created in
service sector.

 Prices- For traded manufactures increase in competition means to reduce price level of
product of Virgin Group. Thus, selected firm can source from around world where costs
can be held down which can be passed on in terms of domestic and export prices.
 Trade- With trade that represents and increased proportion of GDP, there is likely to
increase in volume of both imports and exports. Thus, effect on balance of payments
depends on relative growth rates, inflation, competitiveness and exchange rate which is
uncertain.
Thus, the first factor that shapes Virgin Group to their present condition is globalisation.
This group transports information at such speed that users stay connected without travelling on a
global scale. Telecommunication has become significant for every organisation available in
market whether its a large or small or else public or private (Ince and et.al., 2015). Furthermore,
globalisation provides risk diversifying opportunities that leads to general macroeconomic,
political industry, communications industry growth rates to vary across countries. Virgin group
provides services that are well established that brings values to the customers coming from
various background and cultures. Global customers mainly demand for well integrated services
in both technical and customer service dimensions across national borders.
2. Arguments of external environmental factors
Globalisation has far reaching effects on lifestyle and has led to faster access in terms of
technology, improved communication and innovation (Kimani and Ogutu, 2018). Besides
playing an important role in bringing people of different cultures together, it has included new
era in prosperity of economic and vast channels of development has been opened. Thus, some
area of concern has also been created by globalisation and important one is that which held its
impact on environment.
Furthermore, large number of environmentalists who are in support with these have based
their arguments that globalisation increases global demand and production. It refers to both
compression of world and intensification of consciousness of world. This indirectly leads to
depletion of natural resources. It has been discussed with help of pestle analysis as follows-
1. Socio cultural factors- The combination of increasingly advanced technology and
complex social structure those with the ideas of change has been sustained as progress
that is desirable speeded up social change as one of the major spheres of impacts of
globalisation. The life and work of people, families and societies have been impacted by

globalisation to a large extent. Thus, their aspects are beyond the employment, working
dimensions, income, social protection etc. it has been become a dream of social justice to
be accomplished. Furthermore, if gender has been taken into consideration, the women
participation in all fields has been seen. Globalisation has brought major change in
women being employed but it has not reduction in gender inequality.
Social factors also has deep and wide influence on telecommunication industry and its
profitability (Krugman, 2017). Being connected is very much important in so many things
including work and entertainment. Social and cultural globalisation that involves movement of
cross border of cultures and openness of media may have increased perception of population of
supposed benefits of foreign lifestyles. Higher number of people are using social edia in order to
have fun or do business. So they need network of full range and this is the reason which has
increased the use of 4G network all over globe. The part of their lifestyle is to stay connected
with everyone globally. Thus, it has increased use of telecommunication industry which needs a
very good connection which leads to globalisation. Thus, there are various trends that provides
highly favourable for telecom industry. Thus, social dimension refers to impact on life and work
of people (Mowforth and Munt, 2015). As virgin has a wide brand he trades with different
countries all over the world. Thus, to trade positively in terms of getting success, they has to
provide various schemes to local customers as languages understandable by them, local themes
etc. so that it helps customers of that particular country tto easily attract towards their brand that
leads in increasing productivity and efficiency. Thus, cultural globalisation influences human
world majorly. Since, globalisation is uneven, major part of traditional societies reacts in form of
counteracting process defensively against it.
2. Economic factors- This factor is full of risk for telecom sector. It includes inflation rates,
price of goods and services, interest rates charged on capital and investments, economic
growth and development and foreign exchange rates (Muegge and Reid, 2018). Factors
relating to formation of regional trade blocks and participation in various international
treaties, may have played a role by acting as precursor to economic integration at greater
level. These are one that are related with regulations, network licensing, national radio
spectrum's and trade barriers in certain case. One factor that was with favour of telecom
industry that was privatization and deregulation. It enjoyed complete freedom in terms of
globalisation. However, there were entry of various threats in telecommunication industry

which meant political factors affecting into higher rate. Governments across world
controlled and monitor communication by launching various measures that were
motivated by political and security reasons. This factor plays an important role in
telecommunication industry. Thus, recession has hurt this sector very deeply. As due to
globalisation, virgin trades its product to different countries for increasing its brand
success, but recession affects its price strategy. Due to recession in other countries, virgin
has to lower the cost of product in order to increase the sales. The sales mostly depend on
pocket of customer. If economy of a particular country is at higher level, then consumer
can spend more and high cost on products. Recession has affected virgin group to large
extent. But if trading during lack of recession, it helps Virgin group to sale large number
of products that in turn helps in increasing productivity and economy of a country
(Custom PESTLE Analysis for Virgin Group Essay, 2018). Thus, virgin group has been
faced with the stiff competition from other industries. If other countries are selling
products at lower price due to low production cost, they will also have to sell products at
less price that leads to low profitability and loss. Thus, globalisation brings new
potentials for development and wealth creation. Some says that problems of
unemployment, inequality and poverty has been increased due to globalisation and some
says it has been reduced. Thus, globalisation s main aim is to meet peoples requirements
and increase their standard of living, freedom and liberty and have prospered life.
Therefore, gap between rich and poor has been increased due to this which has lead to
marginalizations of certain sections of society. The changed strategy of economic
transaction and trade with different countries has helped to developing countries due to
investments from other countries that provides labour and income for great number of
populations. Despite of these economical challenges, virgin Group has been successful
because of its brand image which has been created by them between customers all over
the world.
3. Technological factors- The entire telecommunication industry is based on technology
refers to main drive behind globalisation. Thus people can share ideas easily from all
over the world through internet that helps in enhancing communication and connectivity.
Due to globalisation economic growth of UK has been impacted in both positive and
negative ways. Which has been discussed as pert below context-

Positive effects in technological factors-
It has been experienced with help of demographic segments as follows-
 Global market- Positive effects of globalisation has been expressed with help of rising
transactions across borders (Nolan, 2014). It has resulted in forming of multinational
companies. The corporation's concentration in geographical economies led to the further
investment in geographical areas that includes high competition in markets. Due to these
competitions it helps virgin group to enlarge their market to enjoy economies of scale.
Thus, economies compete in fair manner at all levels with help of globalisation that leads
in attracting investors.
 Competition- globalisation rises competition in the markets. Global competition leads in
producing high quality product that makes competition visible in market. Thus,
production approach of customer demand and services helps in enhancing quality of
goods and services. Virgin group is living on their goodwill in order to survive in
competition. Thus, global product must have goodwill when it enters into new country.
 Culture- it has also resulted with positive effects on culture. UK has no single civilization
all having good practices. The cultures have converted world into better place.
 Legal effects- due to globalisation human rights has improved and leaders address
inequalities since information and openness gets promoted. It is also the fact that if
countries would not have depended on each other than the deadliest conflicts would have
formed.
Negative effects of Globalisation in telecommunication factor-
 Fluctuation in prices- Globalisation has increased market competition that further leads in
price fluctuation (Ogbonna, 2017). Virgin Group has forced to lower the price of the
products they are offering because of other countries that are selling their products at
particularly cheaper price, which greatly affects economy of a country. Other countries
who are selling cheaper rate products have low cost of production than UK. So virgin
group has to lower the price even if production cost is high in order to attract customers
towards product and company.
 Job insecurity- Jobs in Virgin group are insecure due to globalisation. It has affected
mainly to developed countries as they can outsource cheap white collar and

manufacturing jobs. Thus, it affected people in virgin group as they are having fewer
jobs.
Thus, telecom industry is basically based entirely on technology. Therefore, technological
changes may affect Virgin group. Technology is the centre to every things that includes business
and productivity. In addition to this, it is only telecommunication sector that stands in gaining
best from these trends. The sales of smartphone and tablets have grown extremely. So virgin
group has to increase their productivity in order to attract potential customers towards their
brand. Further, variety of aspects such as quality and level or stage of technological advancement
leads in affecting performance of Virgin group. Thus, if company uses low developed
technology, it may lose competitive advantage. So company has to adopt advanced machinery in
order to meet requirements of customers and enjoy high profitability. Customer loyalty base is
important in every type off business (Sinclair, 2017). So maintaining it is an essential part for
them. They have to match business with advanced technology and various changes required in
particular business.
CONCLUSION
Thus, from above report, it has been concluded that Virgin group is owned by Richard
Branson and it is a wide range enterprise having revenue of 19.5 billion euros in year 2016.
Furthermore, it has been analysed that globalisation has positive as well as negative effects on
telecommunication sector that affects virgin group to a large extent. This assignment also
highlights on various external factors that affects telecommunication sector with help of a part of
Pestle analysis.
Thus, Virgin group is affected by globalisation as they have to lower the cost of their
product as compared to other countries to attract customers towards them. The cost of production
is high in developed countries so they have to face high loss which affects their profitability.

REFERENCES
Books and Journal
Asimakopoulos, G. and Whalley, J., 2017. Market leadership, technological progress and
relative performance in the mobile telecommunications industry. Technological
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Coker, C., 2014. Globalisation and Insecurity in the Twenty-first Century: NATO and the
Management of Risk. Routledge.
Curwen, P. and Whalley, J., 2016. Mobile telecommunications in a high-speed world: Industry
structure, strategic behaviour and socio-economic impact. Routledge.
Evrard, A.Y., 2017. Modernity at Large: Cultural Dimensions of Globalisation. Macat Library.
Ince, A. and et.al., 2015. British jobs for British workers? Negotiating work, nation, and
globalisation through the Lindsey Oil Refinery disputes. Antipode. 47(1). pp.139-157.
Kimani, G.K. and Ogutu, M., 2018. THE EFFECT OF EXTERNAL ENVIRONMENT AND
FIRM SIZE ON THE RELATIONSHIP BETWEEN KNOWLEDGE MANAGEMENT
AND COMPETITIVE ADVANTAGE. European Journal of Business and Strategic
Management. 2(9). pp.71-84.
Krugman, P., 2017. Crises: The price of globalisation?. In Economics of Globalisation (pp. 31-
50). Routledge.
Mowforth, M. and Munt, I., 2015. Tourism and sustainability: Development, globalisation and
new tourism in the third world. Routledge.
Muegge, S.M. and Reid, E., 2018, August. Richard Branson and Virgin Galactic: A Case Study
of Entrepreneuring as Emancipation. In 2018 Portland International Conference on
Management of Engineering and Technology (PICMET) (pp. 1-10). IEEE.
Nolan, P., 2014. Globalisation and Industrial Policy: The Case of C hina. The World Economy.
37(6). pp.747-764.
Ogbonna, C.A., 2017. GLOBALISATION OF THE MOBILE TELECOMMUNICATION
INDUSTRY IN NIGERIA. EBSU Journal of Social Sciences and Humanities. 4(1).
Sinclair, J., 2017. Globalisation of advertising: an overview of trends and issues. In Global
Advertising Practice in a Borderless World (pp. 30-39). Routledge.

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