Influences of Macro-economic Activity on Virgin Atlantic Airlines

This report analyzes the macro-economic factors and practices that impact Virgin Atlantic Airlines, including unemployment rates, inflation, GDP, and government intervention methods such as fiscal and monetary policies and furlough schemes. It also discusses the current global challenges facing the company and provides recommendations on how to overcome them.

Business Management
BMP4003 Business Environment
Assessment 2
Influences of Macro-economic
Activity
Submitted by:
Name:
ID:
Contents
1

Introduction 3
An explanation of two macro-economic factors that the 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 etc.) 3 - 4
How will the UK current growth rate impact on the chosen business
(give reference to economic life cycle, GDP, inflation,
unemployment rate) 4 - 6
How can the government current intervention methods affect the
selected busines? (e.g., fiscal and monetary policies, furlough
scheme etc) 6 - 7
What are the current global challenges facing by the chosen
business and recommendations on how to overcome them in this
current time? 7 - 8
Conclusion 9
References 10
2

Introduction
In the below report, Macro-economic factors and practices are analysed and
discuss on behalf of the company Virgin group. A Virgin group is a well known
business organization in UK which cover all the field from Virgin Atlantic airlines to
Virgin media. It is owned and control by the founder of the business named Sir
Richard Branson. During pandemic, the company liquidity position has badly
impacted. Hence, the owner need to prepare a report with the help of macro
economics activity. Macroeconomics are the type of practice which only concentrate
on the action of economics such as fluctuation in economic output, charge of interest
and foreign exchange, inflation and the equilibrium of cost (Abardeh and et.al., 2022).
The following report critically analyzed the Virgin Atlantic Airlines business which is
foreign airlines situated on England over the period of 1984. After observing this
business, all the economic factors, present intervention of government and the day
to day challenges which is facing by a specific business firm currently along with
some recommendations are explained.
An explanation of two macro-economic factors that the
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 etc.)
Microeconomics is play a vital part in every organization to measure the
surrounding and consumer behavior on the basis of a particular goods or services. It
is also termed as a key aspects of government events and authoritative financial
which are impacted the tradition and domestic economy of United Kingdom. There
are two factor especially which effect the macro-economic: unemployment and the
inflation are listed below:
Unemployment Rate: It is the major drawback of every people or population
of the country because it is the situation when people are trying to be employed but
it not works at all (Ampountolas, 2019). In simple words, it can be says that the
candidate are searching the job but not hired by a single business organization. Due
this factor the economy condition of a particular company are effected. This situation
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is increased highly at the time of Covid-19, Due to this employment people of UK are
automatically placed on a position of unemployment people within in a 2-3 months.
The Virgin Atlantic Airlines also faced this type of situation (Button, 2018). At the time
of Pandemic, the flights are all strictly prohibited by the government which decreases
and stop the company all over income or growth and capability of paying the
employee. After this airlines decided to dismiss half of the workers and employee
from the business operations by which the cost reduction of more than $520 million
are taken place. By analysing these ups and down, the activity or business
forecasting necessary so that the organization is helpful in changing the plan of
action according to meet the economic changes. Before the lock-down they provide
the large amount of wages to their talented or skilled workers but during the wave of
covid most of the people quit their jobs that properly explain the degree of issue for
the Atlantic.
Inflation: It is the process which describe the degree of increasing cost during
a specific period of time. It is generally a wide measure that consist hike in the price
and rising cost of living in the country economy. The result of basically justify that the
decreasing in demand of a particular product also decrease the price of this product.
The owner of the Virgin Atlantic airlines are also shows the declining rate of inflation
in the market economy. In the modern world all the prices of each and every activity
are increasing rapidly which is also create a problem in this business by challenging
supply, increasing per day labour cost, flying price sustainable will also be felt during
the pandemic period, the customer or passengers are also foot the bill. The company
CEO order that raising the whole cost collection fuel that is present 4 to 5 times
costly then the normal fuel and it directly effect the CEO income. It is also describe
that the airlines are setting the bill to fly on the sustainable fuel it taken place after
discussing the shareholders and investors (Fornell and et.al., 2020).
Both the factors of macro-economic shows the Company Virgin Atlantic
Airlines economy and it also shows that company is raises the prices of its activity
before analysing that the rate of cost of production are increasing and it is also
decreases the knowledgeable employee availability.
How will the UK current growth rate impact on the chosen
business (give reference to economic life cycle, GDP,
inflation, unemployment rate)
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United Kingdom having the one of the developed and international trading
economy that was constructed from the late 19the century. The people of UK are
living their life comfortably and also their income are well. But during Covid – 19 UK
people also faces many problem just like the other countries population. In the year
2020 their business economy fall in percentage of 9.4 because of health issue and
lockdown. The annual GDP of UK increases in the year 2021 by 7.5% during the
month of October to December (Li and et.al., 2018). They do many attempts to hike its
economy and growth rate which is also seen in the Virgin Atlantic Airlines. Following
are some activity which has been taken place:
Economic life cycle: It is the practice which is done by the organization basically
when they wanted to know the overall business surroundings. This is proceed with
the help of 4 elements such as Expansion, peak, Contraction and trough. Due to this
business organization is helpful in determining the GDP, Rate of interest, spending of
consumers and sum of employment which are supporting in observing the present
position of economic cycle. For better understanding and analyzing the Virgin Atlantic
economic cycle are explained along with its stages:
 Expansion: In this stage of economic life cycle, the growth are taken place
rapidly, rate of interest incline to be low, manufacturing of goods increases
and also it construct the pressure of inflationary. Virgin Atlantic airlines faces
the expansion in terms of inflation when its market demand and the cost of
the fuel are increased.
 Peak: The economic life cycle reached at the stage of peak when the growth
touch its supreme rates. Due to this company faces many problem like
instability in the economic market (Oxford Analytica, 2021). This is need to be
solved in a certain time limit. It is also happen in the Virgin Atlantic Airlines
when the gain more profit.
 Contraction: It is the stage which comes after the peak when correction
happen in a given time period of contraction when the growth rate,
employment falls and change in cost. The Virgin Atlantic Airlines also uses
this tool for correction and removal of practices.
 Trough: It is the position of economic life cycle when the business economy
hits a low point and starting to recover the growth. In context of Virgin Atlantic
Airlines, it a point of time when they begins its betterment by observing the
surroundings.
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Inflation: It is taken place in the economic environment of UK when both the
manufacturing cost and finished goods are increases rapidly. It is clarify when the
company of Virgin Atlantic Airlines rises its travel or ticket price after the Covid -19
period. This will leads inflation in an economic market e.g. Populations are
struggling from this fluctuation prices (Sharma, 2020). The main reason behind UK
economy inflation is maximal price of petrol and diesel for increasing ticket price.
Unemployment: It is the current problem of the slow economic growth
because the talented, skilled and dedicated people are not employed. Due to
pandemic the company impacted huge by placing in a economic position of peak.
Now, the company tries to take a right step for consideration in the market.
How can the government current intervention methods
affect the selected business? (e.g., fiscal and monetary
policies, furlough scheme etc).
A government play a important role in every business sector for regulating the
proper rules and regulation. It is also have a power to make any type of changes in
fiscal policies and monetary policies, including increasing or decreasing the rate of
interest. This create a large effect on the business organization activity. The
government interfere at the time when the whole department of the business and the
country economy are unsuccessful, or terrifying to undermine the entire system of
economic by giving the rescue. The changes capability of government in context of
Virgin Atlantic Airlines are as follows:
Fiscal Policy: The interest rate is one of the major term which is helps in
preventing the inflation because it works in stimulating the economy on an individual
basis through inflation. It also play a major part at the time of giving the better
services to the consumers, they help in dropping the rate of interest across the
federal reserve that is against to increase them (Waelbroeck, 2019). After the
pandemic repose the government used eventuality funds including for emergency
wellness necessity such as building the examination labs, making the special wards
to rise hospitalization, care capacity and acquiring important medical products. In
simple words, fiscal policy is the term by which is helpful for the government in
adjusting its degree of expenses and tax rates to analyze and influence a county
economy.
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Monetary Policy: It is the policy is also termed as activity of central bank
because it manageable towards influencing the volume of money and credit in an
economy market. The main focus area of this policy is to make stability of an
economy. It is also helpful in improving the exchange rate when the interest rate are
more higher. The Monetary policy major target is inflation in an economy and it
basically impacted on the borrowing (Wittmer and Noto, 2020). Virgin Atlantic Airlines
also regulate this policy for concentrating on working activities through ensuing the
proper rate of interest to the people so that the money flow can be float in its orbit or
correct path and also assure the distribution of money in all potential investors or
stakeholder are taken place correctly or not for developing their venture capital or
issuing the adequate amount of funds to the Atlantic airlines.
Furlough scheme: During the time of Pandemic government takes several steps for
maintaining the economy of the country because it effected the whole business organizations
and population. Some organization follow the furlough scheme by which they provide the
provide temporarily leave to the employees because of giving especial needs. The employer
of UK have been put forward government permit to cover 80% of the employee wages which
are not working at the time of pandemic. This scheme of government not set the limit on how
many employee can be furloughed, but it is implemented only when a particular employee
agree to do it (Wunder, 2021). The business owner of Virgin Atlantic Airlines also do the
same with the help of assuring that work should be done in a effective or efficient manner by
reducing the unnecessary expenditure to the company. If company done this practice in a
good way then it helps them in increasing the profit.
What are the current global challenges facing by the
chosen business and recommendations on how to
overcome them in this current time?
The business are faces many problem during the time of covid – 19 because
the people are frightened and not ready to work. The company Virgin Atlantic Airlines
also faced many challenges at the time of pandemic, now they wanted to corrected
the errors of the company. There are some factors which is helpful for the company
in fulfilling the minimum needs are as follows:
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Variation of Foreign Politics, policy and relations: This tool is basically influenced
by the politics, policies, rules and regulation and a better relationship is being create by
follower or leader which effect the labour, unfinished material, delivery products and
educational system (Zhao, Gopalakrishnan and Narasimhan, 2021). The company Virgin
Atlantic Airlines are also faces many problems during the pandemic lockdown. They
regulate this practice for the organization for ensuring that work should be done in proper
manner but it is also important to decline the entire work of the business.
Unemployment: The unemployment hits the company virgin Atlantic Airlines badly
when the Covid – 19 starts in the UK. The company take a strong decision in context of the
company by eliminating and discarding the employee from the company because during that
time the company struggling from the huge losses and reduction in the entire profitability of
the industry of aviation (Oguntona, 2020). The people who are working in this sector are now
unemployed and struggling for earnings and better living life. It is the suggestion for the
company to regulate their work effectively and appoint the candidate which are skilled and
knowledgeable and keep their employee in the company. By this activity the company is
helpful in earning more profit and expanding the business in other parts of the UK.
Fuel efficiency: It is the major problem which effect the both airlines and
population because the increasing price of the fuel also increases the company
expenses and by covering this situation company increases its ticket price which
effect the passengers directly (Zhou and et.al., 2020). The company also facing the
issue of decreasing overall profitability and sales of the business economy
Passenger comfort and experience: All the companies and business
organization are depend on the customer satisfaction because customer play a
major role in every successful or unsuccessful business organization. In context of
Virgin Atlantic Airlines, they also earn the profit by giving facilities, comfort and good
experience to the company but because of the impact of Covid – 19 the customer
are satisfied by the airline because of the ticket charges and facilities. The industry is
trying to maintain and satisfy the customer by providing them special and necessary
facilities.
Recommendation: The above report is recommended that the industry of
Virgin Atlantic Airlines are implementing several essential service for the customer
favor so that the customer is happily purchase the ticket and travel in a airlines of
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virgin group. The investors and shareholder are also encourage the industry by
providing more funds to the company for regulating more good and useful services
and provide employment so that the employee are helpful in living a better life.
Conclusion
From the above report, it can be concluded that macro-economic factors
usefulness in context of the industry of Virgin Atlantic Airlines. There are two factors
of macro-economics are discussed such as unemployment and inflation. The report
gives brief discussion on how the Covid-19 impacted the UK growth rate in the
airlines industry and what type of measures are intervention method affects the
business. This above report also provide the current challenges which are faced by
the business organization along with recommendation.
References
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