Influences of Macro Economic Activity on Virgin Atlantic Airlines

This report examines the macro-economic factors that influence Virgin Atlantic Airlines, including inflation, unemployment rates, GDP, and government intervention methods. It also discusses the current global challenges faced by the airline and recommendations to overcome them.

BSc (Hons) Business Management
BMP4003 Business Environment
Assessment 2
Influences of Macro-economic
Activity
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Contents
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 8-9
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Introduction
The concept of Business Environment is a variable environment which is
affected by the various factor present in the surroundings. These factors may affect
the demand and supply of the economy as well as the prices of the product
indirectly. This may indirectly influence the proprietor’s’ interest, financial change,
state run administration and the formation of workforce. Macroeconomics policies
considers various aspect which helps in gathering and identifying the unemployment,
monetary policies and rates in the economy. In the following report the company
taken into consideration is Virgin Atlantic Airlines, which is established in 1970 by Nik
Powell and Richard Branson. The origination is established deals in Virgin occasion,
virgin media, virgin aircraft and so on. In this report, it focuses on the examining the
wide range of element which influences the working of Virgin Atlantic Airline which
includes expansions, Unemployment rates, UK developed rates, GDP and Flows
Circumstances and so on (Akan, and Gündüz, 2021).
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.)
Full Scale Financial element is a factor which is related with the investigation of the
financial movement. For instance, Expansion, GPD, Financial rates, etc. Large scale
Monetary element is basically characterized into three type which are negative,
nonpartisan and positive. Large Scale monetary policies helps in determining the
expansion policies, Unemployment rates, etc. The management of Atlantic Airlines is
affected by various factors which will be designated goals and origination aids in
investigation. Virgin Atlantic has also started the global courier from London to
Falkland Island in 1984. Macro policies have affected the working of the airlines and
the techniques adopted by the company. Some of the factors are described below
which affected the business of the Airlines:
 Inflation: This rate is related with the relative increase in the price of the
product over the period of time. Expansion is the part of economy which
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involves increase in the price. Inflation effects the growth of an economy and
plays a significant part in maintaining the growth at a pace. It increases the
price in the economy of every product which will indirectly increase the cost of
living for every individual. In the following the price of travel of the company
will increase because of the increase in the labor expenses and administration
expense which will increase the overall cost of the company (Bartenev,
2019). There are many difficulties which are faced by the management in the
supply of product and administrative services, increase in the cost will make
the tickets of the airlines costly and which will ultimately cost in decrease in
the number of passengers in the flight. The basic need for any flight is the fuel
required for the journey which has also become costly. The data of the
passengers is used by the company as well as its partner will be helped with
the data by tracking where the passengers is and can use target marketing for
this purpose to increase the sales of the business.
 Unemployment Rates: It indicates the number which is ready to do job but not
likely getting the job. In general terms, it is the workforce which is likely to
work but not getting the job. This circumstances arises when the job in the
economy decreases or the available jobs in the organization are limited. Thus
the remaining candidates are unemployed. Covid has also increased the
number of job seekers as the one’s whom have already employed in the
organization have become jobless because of the pandemic. Unemployment
level has increased over the past 2-3 years because of the pandemic and the
market have also shown some disagreed indexes in the recent time. The
general expenses of the organization are more than $531 million. It has also
increased their cost of employment in order to increase the staff of the
company.
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 various sources it can be extracted that the growth rate of
the economy of UK has grown by 7.5% in 2021 and the rate of GDP has also
increased by 1% in the three months. UK is a developed nation which has superior
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expectation of growing and develops at a greater pace. Effect of pandemic can be
seen in that the origination which works in the field of wellbeing have increased their
operations and the other industries have been affected in this period adversely which
can be seen from the data that 9.4% of the market have decreased in the recent
time. Effect of UK has been enormous on the economy which can be seen from the
economy in the recent time (Dia and Di Bartolomeo, 2019).
Economic Life Cycle: The general economy is specified into 4 states which is
construction, pinnacle, incorporates development and box. In the following case,
Virgin Airlines has its life cycle which will help in better understanding of the
environment.
 Expansion: This stage helps businesses to expand at low interest rate, build
the inflationary and increase the production.
 Peak: In this stage the rate of interest hits the highest. This stage creates
imbalance in the economy.
 Contraction: In the following stage the growth of the company decreases as
compared with the other stages.
 Trough: In this step the level of the economy is at the lowest where the whole
economy has to recover from the scratch.
Gross Domestic Product: It measures the monetary value of goods over the periof
time. The GDP is measured on monthly basis in UK which is 1% in 2022 due to the
increase in the revenue in travel industry (Dookwah and Julien, 2021).
Inflation: It refers to increase in the cost of goods and service in the economy at
given period of time. It is the situation where the demand and supply of the goods in
the market increases in the market.
Unemployment: it is the situation where the fear of job arises and the economy is
going thorough bad phase. UK unemployment rates are increasing because of the
decrease in the jobs available in the market.
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How can the government current intervention methods
affect the selected busines? (e.g., fiscal and monetary
policies, furlough scheme etc).
Some people are observed to play a major role in the marketplaces the reason being they
have the capability and capacity for changing the policies and work environment which
would consider monetary and fiscal which would also take in account the overall operation
based function in the economy. It is also helpful in boosting of the currency and the rise in
profit and interest rate as well. In context of Virgin Atlantic Airlines there are various sort of
policies of government authorities which would impact the business. The methods are as
under:
 Monetary policy: It is also being referred as a set of action which would help in
controlling their quantity of funds which is available in the economic environment
and would also control the channel who will be supplying new money. In other
words, it can be defined towards the instruments which can be controlled under the
central banking for maintaining the rates such as supply, demand, money and interest
rates as well. It can be explained as a money supply which reduces when the rates get
altered. It is set by the central banks and alter the interest rates and money supply as
well. Virgin Atlantic Airlines focus on effective functioning and working which
would help the business by larger variation of monetary based policies. Virgin
Atlantic Airlines would measure the improvements in working which can predict the
interest rates of individuals which can be examining the flow of fund in right
directions (Febrianti, Sugiyanto and Fitria, , 2020).
 Furlough scheme: It infers towards the leave which are temporary and are taken by
the workers and employees for specific needs or situation or it can be due to economic
situations of workers. It can be for long term or short term. Such program has been
setup and developed for supporting employees and working in a COVID-19 related
situations, where workers are being able to take temporary based leave as per rising
situations. In context to Virgin Atlantic Airline, they would be providing such scheme
for top level workers and employees where they can be able to take the leave on
temporary basis. It would also help the business by leading the company. It is also
useful for Virgin Atlantic Airline to access better working and functioning from their
employees which would be beneficial for the organization. This is the approach being
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followed where employee is being able to take leave and would further improve their
working as well as profitability for the business.
Fiscal policy: It can be stated as a policy or strategy which is used for government tax
based policies and spending for creating the economic related conditions which takes in
account inflation, growth, good and services and demand for employment as well. The
present budget balance post, the rules is the combination among the two or three which have
been predicted the overall GDP exceeding by 3% where the government authorities meet the
rule by 5% of GDP. The policy has been observed to target the government debt and also help
in examination of government current budget (Hagood, 2019).
What are the current global challenges facing by the
chosen business and recommendations on how to
overcome them in this current time?
Present global changes are referred for the modification and changes in economic
environment, which can be defined as global issue. Such issues consider and take in account
the alteration in change of pollution, climate, lack of education and unemployment etc. these
issues and problems would also effect on better functioning of economy in long run. During
the Covid times it has been analyzed that Virgin Atlantic Airlines faced obstacles, challenges
and issues which a business is expected to overcome. There are few suggestions given for the
business that would result to be helpful for Virgin Atlantic Airlines for overcoming from it
which is as under:
 Fuel: It is defined and determined that the overall rate and price of fuel is rising on a
daily basis which can be said to be extra cost of the business. It further can affect the
finance related operations of Virgin Atlantic Airline. It can be stated as a major issue
and problem for the organization by raising the cost of the fuel. It would also affect
the overall profitability of airline company. As there are so many airlines over the
globe so the rising of fuel cost is also basic. In relation to Virgin Atlantic Airline, they
can minimize the profitability and can attain revenue or income for the business. It is
thus a major problem which is being faced by every airline or any other industry as
well (Kruchten, Nord and Ozkaya, 2019).
 Experience of passengers: For any company which deals in airline areas, passenger
experience and comfort level would be playing a significant, important and vital role
because of clients in the overall industry which are working and functioning. Virgin
Atlantic Airline gives and provides better services to their workers and passengers
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that would be useful to satisfaction of passengers and would also help for attracting
more and more clients as well. The services which are provided by the business would
be measuring whether the safety of a passenger would matter or not. The company
must also help their clients by determining their needs, wants and demands for
providing services accordingly. It further would provide guidance in assisting the
organization in the growth of revenue and also in future growth as well.
Unemployment: It is being defined as an employee or labor who are at present not working
anywhere or are jobless. The effect of COVID-19 would be impacting and affecting people
who have lost their jobs due to larger amount of unemployment. It is examined that the loss
in unemployment would minimize the overall profit of the business. There are lack of
opportunities present in the environment but when observed in present time duration there are
many changes and modification required which would be useful in employee’s perspective
for serving better result and would also be able to render expected results well in time
(Oulton, 2021).
Conclusion
The report prepared as under can be explained as Macro financial aspects is
indicated as that part of investigation which is focused and concerned with the economic
yields, loan costs, joblessness prices, loan related expenses and costs and so on there are
various sort of effects as what would be influence the business in general sense. In the
above prepared report there is a company chosen which is helpful for assessment of general
economy of business that can be measured by its GDP, development of economy. The public
authority current mediation tools and techniques would affect the economy policies and
strategies which would incorporate monetary based approach and financial arrangement.
There is various additional numerous type of Global changes that would impact and
influence the company through natural issues which is due to environment changes,
contamination and climate as well. Such progressions can also affect the company by
expansion of fuel expenses which can be stated as misuse of cash or funds for organizational
related services and activities as well. The review has also recommended the powerful
administrations which are being stated by the companies helping the business for better
functioning and working of products and labors. The financial decision would help in
investigation of companion's chance and working on the abilities, capabilities and exhibition
for future development as well.
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References
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