Influences of Macro-economic Activity on Virgin Atlantic Airlines

This report analyzes the influences of macro-economic factors on Virgin Atlantic Airlines, including inflation, unemployment rates, GDP, and government intervention methods such as fiscal and monetary policies and the furlough scheme. It also discusses the current global challenges facing the airline and provides recommendations on how to overcome them. The report is based on the assessment 2 of BMP4003 Business Environment course.

BSc (Hons) Business Management
BMP4003 Business Environment
Assessment 2
Influences of Macro-economic
Activity
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Contents
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Introduction 2
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.) 2
How will the UK current growth rate impact on the chosen business
(give reference to economic life cycle, GDP, inflation,
unemployment rate)
3
How can the government current intervention methods affect the
selected busines? (e.g., fiscal and monetary policies, furlough
scheme etc) 5
What are the current global challenges facing by the chosen
business and recommendations on how to overcome them in this
current time? 6
Conclusion 7
References 9
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2

Introduction
The idea of business Surroundings is a unbalance environment that is
influence by the numerous factors present in the external environment. Such factors
influence the demand and supply of the economy and also influence the price of
commodity indirectly. These factor affect the business owner’s interest, financial
modification, state operate administration and the selection of work force (Andersson
and et.al., 2018). Macroeconomics contains various policies which help to analyses
the unemployment, there are Monterey, fiscal etc. this report taken Virgin Atlantic
Airlines into consideration that is formed in 1970 by Nik Powell and Richard Branson.
This organization run operation in various products and services such as Virgin
occasion, virgin media, virgin aircraft and so on. This report provides better
understanding about various factors that affect the working of the company. These
factors include expansions, Unemployment rates, UK developed rates, GDP and
Flows Circumstances etc.
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.)
The factor which can be used in the investigation of financial movement is Full Scale
Financial elements, for example- GDP, Expansion, financial rates and so on. The
three types of Large Scale Monetary Elements are Positive, Negative, and Non-
partisan. With the help of Large Scale Monetary policies, factors like unemployment,
expansion policies, can be represent. The factors that affect the management of
Atlantic Airlines with origination aids and designated goal in investigation. The global
courier started by Virgin Atlantic in 1984 from London to Falkland. Techniques that
adopted by the company and their working are affected by macro policies
(Eisenstadt and et.al., 2019). The factors that affect the Airlines business are as
follows: -
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 Inflation: - The situation in which prices are on the rise. This is the rate which
shows the increase in price of a commodity or services in a given period of
time. Due to this, the purchasing power of the currency of a country goes
down. The Economy has many parts, one of them is expansion which include
the rise in the price of goods and services. Inflation plays an important role in
preserving the growth of the economy and also affects the economic growth.
It rises the price of a commodity in economy which hikes the level of prices
relating to a range of everyday items for each and every individual. The given
price of travel of the Airlines will rise due to rise in the administration
expenses and labor cost which hikes the gross cost of company. The
difficulties faced by the administration of the company in management
services and supply of goods. Rise in the overall costs of the company,
indirectly rises the price of airlines tickets which will make the passengers of
flight to switch to another flight. The flight needs fuel for the journey which is
basic, also become expensive. For targeting the market to increase the sales
of the airlines, the company and its partners use to track their passengers by
their data (Supriyanto and et.al., 2022).
 Unemployment Rates: - It shows the percentage of individual in the economy
who are willing to do job or work but not getting their desired job among the
employed work force. This situation arises when the employment rate of the
economy slows down or the number of vacancies are limited in an
organization. Therefore, the other candidates remain unemployed. It
increased during recession like pandemic has a great impact on
unemployment rate, post Covid-19 many people are jobless who were
employed earlier because of the losses occurs in the company's. In the past
2-3 years, unemployment level has increased due to Covid-19. The company
has general expenses more than $531 million which increases the
employment cost of the organization in order to increase the number of
employees.
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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UK is a developed nation which has great expectation of growing and
develops at a higher peace. Various sources extract that the growth rate of the
economy of UK high by 7.5% in 2021 and the GDP rate also increased by 1%within
three months.
Impact of covid19 adversely affect all sectors of economy which shown from the data
that 9.4% market have effected in recent period. Effect has been seen in the
origination who works in wellbeing field and have increased their operations. In this
period other industries also affected adversely which seen from data that the market
decreases 9.4% in the recent times (Ouerk, Boucher and Lubochinsky, 2020).
Economic Life cycle: Generally, economy specified into four states that are
Construction, Incorporates, Pinnacle, Development and box.
According to the following case, Virgin Airlines has its own life cycle and it is helpful
for understanding better the environment.
 EXPANSION – This is the stage which helpful for the business to grow and
expand at low rate of interest, where build inflationary and increase the
production.
 PEAK – This is the stage in which the rate of interest highest hit which destroy
the balance in the economy and that creates imbalance in economy.
 CONTRACTION – This is the stage where the growth and development of the
company decreases as if we compare with other stages.
 TROUGH – This is the stage at which the economy level is at the lowest and
where the whole economy recover from scratch.
GROSS DOMESTIC PRODUCT – GDP is a monetary measure of market
value of all goods and services over a period of time. GDP in UK measures on the
monthly basis in UK and in 2022 it is 1% because if increase in revenue in travel
industry Also fell in the production and construction by 0.6% and 0.4% on
respectively. GDP grow in the three month to April 2022 by 0.2% with contributing
0.2% in construction while production and services broadly flat (Iacobuta and et.al.,
2019).
INFLATION – Inflation is a rate at which currency value is falling and the
general level of goods and services starts raising. It can be positive or negative
depending on the rate of change or individual’s viewpoint. There are two most
common inflation indexes that is Consumer Price Index and Wholesale Price Index.
In April2022 UK Consumer Price Index rise by 9.0% in the 12 months, 7.0% in march
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and on monthly basis rise by 2.5% in April 2022 as comparing with rise of 0.6% in
April 2022
UNEMPLOYMENT – Unemployment refers to a situation where an individual
actively seeking for a job but enable to find a job. Unemployment with a high rate
sign of economic distress while
unemployment with low rate sign of overheated economy. Jobless rate in UK is high
to 3.8% in three months to April2022 from 3.7% I the three months. In the last three
months this is the first increase in jobless rate.
How can the government current intervention methods
affect the selected busines? (e.g., fiscal and monetary
policies, furlough scheme etc).
There are various market experts or businessman available in the market which have
power to influence the market operations and environment. They can control the
demand and supply of the products in the market with considering fiscal and
monitory policy. By the help of these policies
government can change the interest rate to control the inflation. These policies can
also help in growing of the economy of the country as well. In the context of Virgin
Atlantic Airline these kinds of policies can affect the organization. Some of the
policies are given below-
Monitory policy- This policy helps the government to control or manage the
money which is present in the economy of the country. Monitory policy is maintained
by the central banks by the help of which inflation rate of the country can be control
and economic growth can be improved which can lead to development of the country
as well. Central Bank control the policy so that they can maintain the economy of the
country stable. Virgin Atlantic Airline have done their operations efficiently and
effectively so that they can estimate the Interest rates which will help them to sustain
in feasible monitory policy (Delgado and et.al., 2020).
Fiscal policy- Fiscal policy mainly focus on the expenditure of money in the
country so that the government can reduce the poverty and improve the
infrastructure of the country by the help of which unemployment will also reduce.
Fiscal policy is also controlled or managed by the central banks if there is a
recession in the economy of the country then central bank can decrease the interest
rates by the help people of the country raise the money from bank which result in
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increasing in demand and the recession affect can be removed. Central bank do this
activity in the situation of inflation also in this situation central bank increase the
interest rate so that people can raise the funds easily from the banks which can lead
to decreasing in demand and helps in controlling of inflation. Virgin Atlantic airline
have an very good impact of this policy because by the help of this policy the
company can easily improve their growth and profit earning ability (Dovern, and
Zuber, 2020).
Furlough Scheme-A furlough is a temporary leave which is imposed by the
companies on
their employees for a particular period of time. This scheme is adopted by the
companies in situation of financial crises for reducing the cost by the help of which
the companies can maintain their position stable in the market. Virgin Atlantic airline
can also use this scheme if they face this kind of situation in the business journey it
will help them to bring back their position in the market and also helps in growing the
income of the business. After bring back their position company can call back there
old and trained employees again so that business operations can run smoothly.
What are the current global challenges facing by the
chosen business and recommendations on how to
overcome them in this current time?
Global changes can be classifying as the change and modification in the
economic environment, and that can be consider as a global issue. This such issue
can be change of climate, pollution, unemployment and also it could be lack of
education. These problems and issues effect our economy functions in a long run. It
has been see that during the Covid times Virgin Atlantic Airlines see many issues,
challenges and obstacles which a business expected to overcome (World Bank,
2018).
Some of the suggestions which are helpful for the Virgin Atlantic Airlines to
overcome from policies are as follows:
FUEL – The Overall price and rate of the fuel increases on a daily basis which
can be considered as an extra cost of the business. It can also affect the finance
related operations of the business and also the profitability of the company. Raising
of fuel prices is basic because there are so many airlines over the globe. According
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to the Virgin Atlantic Airlines they can attain revenue or income for the business by
maximize the profitability. All of these are the major issues faced by the airlines or
any other industry as well.
Experience of Passengers: - For any service and commodity provider,
customer's experience is very important, through their customer's experience
company can improve and enhance their services and advanced their products.
Customer's satisfaction impacts the business in both ways positive and negative as
well. In case of tour and travel firms, customer is always looking for safety and
security, comfort, convenience, and helpfulness. Virgin Atlantic Airlines makes sure
that they would provide better services to their customers so that, before buying the
ticket of Virgin airlines, passenger does not think twice. They provide best facilities
and assurance to their passengers and focuses most on improving the quality of
their services or provide services according to the needs, wants and demands of the
consumers. They ensure the safety of customers, provide good quality and hygienic
meals. This attracts more and more customers and also helps in increasing the
number of satisfied passengers travelling from Virgin airlines. It further gives
guidance to the company in terms of assisting the organization's future growth and
also to increase the revenue (Ramli, 2021).
Unemployment: - This term referred to the individual who are willing to do job
or actively looking for a job but unable in finding a desired work or when the job
requirement does not match with the employee qualification. It is important in
measuring the health of an economy. The situation when the employment slope
goes down. Mainly unemployment arises at the time of recession. Covid-19 impact
the overall economy and also raise unemployment. During pandemic many people
lost their job due to the losses and ends of many businesses. It also minimizes the
gross profit of the organizations. Industries are lacking in terms of employment
opportunities. But this is the time when companies are adopting technical advances
and employees need to enhance their knowledge and work on their abilities so, that
they could get their desired job or organization and companies get better and
knowledgeable workforce, it also helps the employees and businesses as well in
increasing their productivity, producing better results in future (Cosar and Yavuz.,
2019).
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Conclusion
From the above report it can be concluded that the macro financial facts are
termed as the part of study that is aimed and concerned with the economic output,
loan costs, joblessness prices, loan related expenses and costs etc. there are
various elements available in the market that influence the market environment. This
report is mainly depending on the taken company which help to measure the effect
of economy of company and it is evaluate by the GDP, economic development. The
people dominance, present mediation method and techniques would influence the
economic policies and schemes that will incorporate monetary policy and financial
requirement. Due to change in the environment company suffer from huge losses,
unemployment etc. Due to COVID pandemic the prices of air fuel is increase which
also increase the value of airfare and also reduce the sale of air tickets. Company
suffer from huge losses and due to pandemic company fire employees. The financial
decision would help in inquiry of companion's chance and operative on the abilities,
ability and presentation for future development as well.
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References
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future?. Financial Stability Review. 2.
Cosar, and Yavuz, 2019. Is There Asymmetry between GDP and Labor Market Variables in
Turkey under Okunï Law. (No. 1927).
Delgado and et.al., 2020. Institutional and economic determinants of regional public debt in
Spain. Public finance review. 48(2), pp.212-249.
Dincer, 2018. HHI-based evaluation of the European banking sector using an integrated
fuzzy approach. Kybernetes.
Dovern, and Zuber, 2020. How economic crises damage potential output–Evidence from the
Great Recession. Journal of Macroeconomics. 65, p.103239.
Eisenstadt, and et.al., 2019. National environmental policies as shelter from the storm:
specifying the relationship between extreme weather vulnerability and national
environmental performance. Journal of Environmental Studies and Sciences. 9(1),
pp.96-107.
Hamaguchi, 2020. Dynamic analysis of bribery firms’ environmental tax evasion in an
emissions trading market. Journal of Macroeconomics. 63, p.103169.
Iacobuta, and et.al., 2019. INSTITUTIONS AND SUSTAINABLE DEVELOPMENT: A
CROSS-COUNTRY ANALYSIS. Transformations in Business & Economics. 18.
Naseem, S., 2018. Macroeconomics determinants of Saudi Arabia’s inflation 2000-2016:
evidence and analysis. International Journal of Economics and Financial Issues. 8(3),
p.137.
Ouerk, Boucher and Lubochinsky, 2020. Unconventional monetary policy in the Euro Area:
Shadow rate and light effets. Journal of Macroeconomics. 65. p.103219.
Ramli, 2021. Analysing robust macroeconomics factors that influence the gold price changes
using fuzzy logic (Doctoral dissertation, Universiti Teknologi Mara Perlis).
Supriyanto, and et.al., 2022. The Effect of Investment Risk, Macroeconomics on Stock
Prices in IPO Companies during the COVID-19 Pandemic. Reference to this paper
should be referred to as follows: Supriyanto. pp.17-29.
World Bank, 2018. Global Economic Prospects, January 2018: Broad-Based Upturn, but for
How Long?. The World Bank.
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