Influences of Macro-economic Activity on Virgin Atlantic Airlines

This report discusses the role and impact of macro-economics on Virgin Atlantic Airlines, including factors such as inflation and unemployment rates, the UK's current growth rate, government intervention methods, and global challenges faced by the industry.

Business Management
BMP4003 Business Environment
Assessment 2
Influences of Macro-economic
Activity
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Contents
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) 4-5
How can the government current intervention methods affect the
selected busines? (e.g., fiscal and monetary policies, furlough
scheme etc) 5-6
What are the current global challenges facing by the chosen
business and recommendations on how to overcome them in this
current time? 6-7
Conclusion 7
References 8
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Introduction
In this report, the role and impact of macro-economics in the business field
are discussed with the help of sort of elements. Macroeconomic is the word which
indicates the study are related to the whole economy, entire savings, total profit etc.
Companies uses these economy to analyze the entire production, consumption, raw
material and future planning and setting the budgets. The following report is
conducted on behalf of the airlines industry of Virgin group which are situated in
England by Sir Richard Branson in 1984 (Aquino Chavez., 2018). This industry is
known as Virgin Atlantic Airlines limited or Virgin Atlantic Atlantic International limited
which main work is to carry the passenger from location and drop them according to
their necessity and travel tickets. The below report, determine the factor of macro-
economic which the Virgin Airline need to implement in the present time along with
the influences. The main objective of this report is, to overcome and maintain the
business position and performance after the impact of Covid -19 pandemic. The
report include the effect of UK current growth in this business concern, present
intervention of government in the Airlines industry and what type of global issues are
suffered by the Atlantic airlines are explained and observed.
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 economic contain two branches: Micro-economic and macro-economic
where both play a separate role in the business organization. For example if the
company wants to see the employee working individually it selects the micro-
economic branch and is its need to know the total management system working it
consider macro-economics respectively (Lisciandra, Martini and Herfeld., 2022). The
macroeconomics contain two factors basically that are full scale and large scale
whereas, full scale is particularly a financial substance useful in observing the fiscal
motion and their measurement tool are Gross domestic products, financial rate and
expansion and the large scale monetary system is a factor which helps the economy
of the country to observe the unemployment rate and inflation, expansion policy, etc.
and this factor is distinguished into three kinds: Positive, non-partisan and negative.
The Virgin Atlantic airline of England also affected from several factors of macro-
economics during the covid-19. The two factors of macro-economic are explained in
context of this industry are as follows:
 Inflation : It is the factor of macro-economic that generated at the period of
time when sudden increases in prices of goods are taken place. Inflation
affected the economy in two different ways: positive and negative. If the
percentage of inflation are increased by 2 then it is refers as higher rate of
inflation or negative impact or harmful and the rate of inflation shows 2 or
lesser then two than is said to be maintained economy of the region or
positive impact (Khairullah., 2020). It is measured by 2 because the policy
maker generally thought that it is best acceptable rate. It is easy to says that,
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inflation play a vital role in maintaining the growth of the country economy.
Economic justify that if any specific goods price increase, cost of living of the
person are also increases. Virgin Atlantic Airline follow these concept, when
its labour increases its per day prices than they rise its traveling ticket price.
The costly ticket decreases the number of customer. It is taken place by the
industry because after the pandemic the company face large spending due to
increases in price of every products or services and labours. It is also faced
problem in delivering and supplying of goods and increasing price of petrol or
diesel. The fuel is the major component of the airline to travel from one region.
Now, industry uses a type of tracking system which helps the shareholders
and business management to track the customers and it also trying to attract
the more customer through better service.
 Unemployment Rate: It is the rate which define how many adult population of
the country are not employed. This rate is increased when the large number
of people are seeking for the job but there is no outcome is coming. Higher
rate of inflation rate effect the economy of the region and the living standard of
the people (Nachane., 2018). The effect covid -19 from past years raises this
rate highly in every country even in the UK, who have the most powerful
economy in the world. The Virgin Atlantic Airlines are also increases this rate
at pandemic time because it eliminate huge workers. The reason behind is,
decreasing profit rates, facing losses and reducing passengers volume. It is
high time for the company to appoint the candidate for better working in the
management system.
How will the UK current growth rate impact on the chosen
business (give reference to economic life cycle, GDP,
inflation, unemployment rate)
According to the recent survey, it can be analyzed that percentage of growth
rate in the United Kingdom economy are grown up by 7.5 in previous year and gross
domestic rate are also risen up by 1% from last 3 months. As we know, UK is the
well developed and strong nation around the world because they have all huge
number of tool and techniques as compare to another region. But the covid impacted
this nation also very badly, the population are suffered from lack of source of income
and maintaining the living standard (Wang., 2020). The companies or industries are
also suffered from this condition adversely which slows the growth rate as 9.4%.
Virgin Atlantic Airlines one of them which effected from this issue and some issue
are explained below:
1. Economic Life Cycle: It is the cycle which moves the Gross domestic
product in both upward and downward direction for observing the entire long
term growth of an region or country (Caraiani., 2018). This cycle is basically
classified into four stages that are enlargement, limit, contraction and trough.
This cycle is also helpful for the industry Virgin Atlantic Airlines to observe the
business surrounding or operation.
 Expansion: It is the stage where economy undergo relatively speedy growth,
increase interest rate tend to be minimum or low, manufacturing rises, and
builds the pressure of inflationary.
 Peak: Peak is normally refers the maximum level or maximum stage and in
business or economic point of view peak is the stage of economic cycle where
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the growth across its maximum limits. It creates the problematic situation for
the economy such as it creates instability in the economy.
 Contraction: A rectification of imbalance economy are implemented by the
country or business concern through contraction when unemployment rate
increases, growth rate slow down and price are unstable.
 Trough: It is the recovery stage of country economy. At this time economy
hits a lower point.
2. Gross Domestic Product (GDP): It is the type of tool which measured the
monetary vale of a specific goods and services during a given period of time.
In UK, GDP is basically measured on monthly basis and in recent survey it is
resulted that 1% of GDP are increased (Cao and Illing., 2019). The main
reason behind this is increasing sales in travel industries.
3. Inflation: Inflation is the rate which is depend of the changes in product of
service price during a given time period. It is generally arises when the
demand of a particular goods or service are extremely high in the market
place.
4. Unemployment: It is the stage when a person is jobless and faces number of
issued of income and living standard. If this rates increases in the country
then economy of that country are decreases automatically.
How can the government current intervention methods
affect the selected business? (e.g., fiscal and monetary
policies, furlough scheme etc).
In every country there are some specific person or sector which have a power
or capacity to control the whole country or economy and regulated its rules and
regulation to cover up and maintain the environment of the region. Generally,
government play this role by regulating its monetary policy and fiscal policy that
helpful in accounting the entire business management in term of economy function.
These policy increases the rate of currency, profit and level of interest rate (Capelle.,
2020). The Virgin Atlantic Airlines affected form these government policies which
effected its business industry during the pandemic period. These are methods are
explained are as follows:
 Monetary policy: This policy is termed as a group of activity that would help
in controlling the volume of finance which is currently accessible in the
economic environment of the country. It also observe and control the
transmission channels who are supplying new cash. In simple words, it a tool
or method which is wholly control by the country central bank of an economy
for managing the degree of demand, supply, quantity of money and many
more. The main purpose of this policy is to maintain the stability in a country
economy. It helpful in improving the exchange rate through increase interest
rates. In economy, it is Monetary policy generally targets the inflation and
impacted the borrowings. The Virgin Atlantic Airlines also impacted from this
monetary policy at the time of pandemic (Rancan., 2019). Due to this industry
is helpful in doing the practice effectively and efficiently by doing some
changes in monetary policy. It also empower its operation working for
measuring the percentage of interest of a particular department.
 Fiscal policy: Fiscal policy is the financial method which is owned and control
by the central government of the country in maintaining tax receipts and rules
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or regulation which are belongs to the spendings for the advantage of the
particular resign economy. This policy is managed by the finance ministry of
an economic system. It main goal of this policy is to maintain or improve the
growth of the entire market and decrease the rate of poverty from the
economy (Aparici Escrig., 2018). Fiscal policy is largely impacted the deficit
budget. There are four elements of this policy that are spending reform, sales
mobilization, deficit financing and analysing the movement of upper to lower
government. In context of virgin Atlantic Airlines, they are helpful in observing
the government present budget and debts in the economy and how much they
are helpful for them in maintaining the growth and development.
 Furlough scheme: Furlough scheme is the scheme which is regulated by the
British government for business enterprises and its employees. This scheme
helps the labours or employees to get short term leave as per their
requirement and particular needs. Some companies also gives long period
and short period leave both for its management system (King., 2021). It is
implemented by the government for the poor economic condition time. It is
adopted by the business concerns and employees at the time of covid-19
pandemic when the population suffers from the viruses. The Virgin Atlantic
Airlines of UK also regulated this scheme in its organization workers and
employees. They provide leave according to the position of the employees in
the organization such as they provide more leave to its top management and
less leave to its lower level employees. It helpful for them in smooth
functioning and better working of business industry. The employees are also
satisfy from this scheme and resulted the efficient works because they leave
according to its needs.
What are the current global challenges facing by the
chosen business and recommendations on how to
overcome them in this current time?
Every country population are suffering from the global challenges from last 2-
3 year because of the impact of the covid-19 pandemic. Global issue are the type of
issue which effected the overall country economy and population. Generally, it
divided into three parts social issue, environmental issue and economic issue. But in
present time impact of environmental challenges hits the larger in every country or
resign. This will also effect the country, United kingdom which is well developed and
powerful such as they decrease the economy rate and stability. Virgin Atlantic
Airlines industry also effected from this global issue because it effected its income
and savings but now the industry want to overcome from it (Cachanosky., 2018). By
following this there are some advice and scheme on behalf of the industry are
explained below:
 Unemployment: It is determine the condition where people are not employed
in any company or factories. The rate of unemployment are increases rapidly
during the time of pandemic because it increases the health issue in the
population. Due to this fear people discarded himself from jobs and some of
companies are also eliminated its employees from jobs (Bartenev., 2019). The
virgin Atlantic Airlines also effected from this situation because the loss of
employee effects its entire organization income or profit. But now company
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are doing much better because appoints knowledgeable employees and give
them a security and insurance cover to work within organization.
 Fuel: In current days the price of fuel are increasing heavily which increases
the additional expenditure or cost of the companies. It is also effects the Virgin
Atlantic Airlines collected finance and net gains. The fuel are main substance
of this airline industry, if its prices cost automatically increases at high level. It
is suggestion for this company to utilize its natural resources effectively.
 Passenger experience: In airlines industry, passengers play a most vital role
because they generate the profits for the company that why industry always
try to provide the better experience and satisfaction to the passengers. The
Virgin Atlantic Airlines also give the good services and security to this
passengers for attracting them. After the covid the volume of passengers are
decrease because of fear of health problem and this effected company profit.
For defeating this situation, the airline need to be follow some government
guidelines and fulfill the needs and demand of the customers.
Conclusion
From the above report, it can be concluded that how macro-economic factors
are helpful of the organization or firms to maintain the business decision making or
planning. It targets the subdivision of survey which focuses or observed with the help
of degree of economic production, costs of loan, unemployment rate, inflation rate
and Gross domestic product. There are different types of impact are also explained
such as influence of business concern in general way. The above report is prepared
on the behalf of the Virgin Atlantic Airlines which is part of virgin group. The industry
helpful in observing the rate of GDP and growth of the economy market. The
government present mode which are effected the economy policy and techniques
that includes the monetary policy, fiscal policy and furlough scheme. The report is
also determine the current global challenges which effected the company growth
rate and profitability position and also explain type of global challenges are
presented in the economy from the past 2-3 years. It also indicates that the fuel and
other raw material cost are increases in the economy and effects the income and
savings of the company. It also suggest the company that how to defeat this situation
by following some types of functions and tools. At last these helps the airlines to
make good financial decision and gives them ability and way for future recovery.
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References
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Aparici Escrig, R., 2018. The Spanish crisis from a macroeconomics point of view.
Aquino Chavez, J.C., 2018. Essays on Incomplete Markets and Macroeconomics.
Bartenev, V., 2019. Physical Macroeconomics: Part VII-Demand Function and Its
Applicability. Available at SSRN 3451731.
Cachanosky, N., 2018. Open Roads in Macroeconomics. Available at SSRN
3156711.
Cao, J. and Illing, G., 2019. New Keynesian Macroeconomics. In Money: Theory and
Practice (pp. 121-143). Springer, Cham.
Capelle, D., 2020. Essays on the Roles of Financial and Higher Education
Institutions in Macroeconomics (Doctoral dissertation, princeton university).
Caraiani, P., 2018. Introduction to Quantitative Macroeconomics Using Julia: From
Basic to State-of-the-Art Computational Techniques. Academic Press.
Khairullah, A.S., 2020. The impact of macroeconomics factor on money supply.
King, K., 2021. The Macroeconomics-of Debt-Europe’s blind spot-ANTON
BRENDER FLORENCE PISANI.
Lisciandra, C., Martini, C. and Herfeld, C., 2022. Soul of Economics: Special issue
on the state of the art of Microeconomics/Macroeconomics/Policy 10 years
after the financial crisis. Journal of Economic Methodology.
Nachane, D.M., 2018. Towards a New Synthesis: New Consensus Macroeconomics.
In Critique of the New Consensus Macroeconomics and Implications for
India (pp. 83-108). Springer, New Delhi.
Rancan, A., 2019. Empirical Macroeconomics in a Policy Context.
Wang, Y., 2020. Essays in Macroeconomics and Behavioral Economics (Doctoral
dissertation, The Chinese University of Hong Kong (Hong Kong)).
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