Influences of Macro-economic Activity on Virgin Holiday Company

This report analyzes the influences of macro-economic factors such as inflation, unemployment, GDP, and government intervention on Virgin Holiday Company. It also discusses the current global challenges faced by the company and provides recommendations to overcome them.

BSc (Hons) Business Management
BMP4003 Business Environment
Assessment 2
Influences of Macro-economic
Activity
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Contents
Introduction p
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.) p
How will the UK current growth rate impact on the chosen business
(give reference to economic life cycle, GDP, inflation,
unemployment rate) p
How can the government current intervention methods affect the
selected busines? (e.g., fiscal and monetary policies, furlough
scheme etc) p
What are the current global challenges facing by the chosen
business and recommendations on how to overcome them in this
current time? p
Conclusion p
References p
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Introduction
The term business environment can be defined as the factors or the constituents that
influence the business operations and the decision making process of the different
business organizations. These elements majorly affects externally which cannot be
controlled by the businesses, such as change in technology, buyers, competitors,
government interference, social, political and legal changes, suppliers, etc. They
influence the businesses in direct as well as indirect manner. The business
enterprises cannot change the external factors but can adopt certain techniques
which can reduce the risk out of the same. Macro economics is a branch of
economics that includes the economic factors which is concerned with wide range of
large scale businesses. It analyze the performance of the business enterprises of a
specific country. It evaluates that how the various market trends, fiscal and monetary
policies affects the commercial activities of the business. In the context of this report,
Virgin holiday company has been selected. It is a service based organization which
is formed in the year 1985. Basically, the company deals in providing the holiday
packages to the customers(Alabid, Bennadji and Seddiki, 2022). This report includes
the various macro economic elements that influence the business operations of the
company. It also provides the idea of the growth rate of the United Kingdom by
analyzing the situations emerging in present scenario. It also talks about the various
government policies and rules that is affecting the business. Further, the report
provides the clear view of the different challenges faced by the company and also
suggests certain recommendations to overcome those problems.
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 elements of macro economics results in the changing of economical structure of
the country. The business organizations cannot exercise their control over such
factors but the government can. It show that the the economy of a particular country
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is developing or not. It consists of different constituents that impacts the overall
financial system of the economy along with the geopolitical situations. In context of
the Virgin holiday company, various factors that affects the business are stated
below-
 Inflation- Inflation arises due to the increase in the prices of goods and services for a
particular period of time. It creates a kind of dis balance in the economy. The factor of
inflation can be calculated or predicted and in order to face this situation, the
companies must undertake some techniques which can help them to reduce the rate of
risk. The cost of the goods and services hikes because the demand of the products or
services increases in the market which results in inflation. This will ultimately
increases the production cost of the business enterprises. The same situation has
occurred in the case of Virgin holiday company. In order to increase the
manufacturing process or production of the goods, the business enterprises requires
more labor or workforce to accomplish the market requirements. This will create
imbalance in the financial structure of the company that will directly affect the supply
network of the business organization(Alanazi and Hassan, 2018).
 Unemployment- Unemployment increases when there is no or less employment
opportunities lies in the particular country. There are various reasons behind the
increase in the unemployment ratio, one of them is Covid 19. There are people who
are ready to get placed but not getting any chance to prove their worth. The pandemic
is the biggest reason behind the growth of unemployment. It has affected the
employment sector of the country to a great extent. This gave rise to the situation of
recession, under which the existing employees of the country are loosing their jobs
and the those who are in need of the jobs are not getting employment. The economy
go to the lowest point at the time of the pandemic. The business organizations must
adopt better marketing plan or perform the changes in the existing strategies in order
to fulfill the market requirements and the other market trends that are taking place in
the current economic scenario. Due to this, the company needs more labor force in
terms of increasing the production of the various goods. This will increase the rate of
employment(Cross, et.al, 2021).
The company Virgin holiday is influenced by the two elements of the macro-economics that
is inflation and unemployment. It increases the cost of the services provided by the above
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mentioned company which gave a hike to the cost of production and low availability of the
workforce in the business organization.
How will the UK current growth rate impact on the chosen
business (give reference to economic life cycle, GDP,
inflation, unemployment rate)
Being a developed economy among all the nations of the globe, United Kingdom has
served opportunities to the various business industries or enterprises and gave them
a chance to grow in order to raise better living standards of the country(Hussain, Salia
and Karim, 2018). The pandemic has laid negative impact on the economy of the
country. UK has faced the downfall of 9.4 percent in the year 2020. The reason
behind this is the restriction on the movement of people and goods and services
across various countries around the world. There are some factors that influenced
the growth of the economy-
Economic life cycle- It denotes various changes in the economy between the period of
expansion and contraction. It defines the situation when the economy of the nation experience
various phases in a cyclical manner. The factors that affects the economy are interest rates,
employment ratio, GDP, per capita income, etc. In order to get a better understanding of the
economic structure of the country, an in depth study is being undertaken in terms of the
economy of the country. There are four different phases of the economic cycle which has
been evaluated in the context of the Virgin holiday company. They are given below-
 Expansion- This phase of the economy makes the company experience reduction in
the interest rates and growth of the production level. There is a slight pressure of
inflationary force over the company.
 Peak- At this phase, the economic growth of the country is at par where it reaches to
the maximum level of growth and development. The company experience a hike in
the profit maximization. But with all this, the company sometimes faces the dis
balance in the business activities with respect to Virgin holiday company(Mathur,
et.al, 2020).
 Contraction- Contraction period basically provides an idea that in which area the
company needs improvement. Basically, it is a period in which the company faces the
slowdown. The employment ratio decreases and the prices of the goods and services
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remains unchanged. With the help of it, the company can eliminate the problems by
adopting certain measures in order to do the required corrections.
 Trough- This is termed as the last stage of the economic cycle. The company after
making the necessary improvements in the prior phase, the growth starts getting
recovered by the passage of time. The Virgin holiday company also initiated the
process of recovery by analyzing the overall business environment(Nason and Smith,
2021).
Inflation- The process of inflation takes place due to the increase in prices of the goods and
services. The Virgin holiday company was undergoing with the same situation where it has
increased the prices of the holiday packages which is directly influenced by the rise in prices
of the air tickets and fuel. The customers were facing high level of fluctuations in the prices
at the domestic and international level.
Rate of Unemployment- Unemployment ratio is measured by the number of people who are
not getting employment in the country and who deserves to get placed in one or the other
sectors. It can be said that the rate of employment of the particular country is low if the
economy of that nation is facing a downfall in terms of generating employment opportunities
for the people. Covid 19 pandemic is one of the main reasons behind the increase in the
unemployment ratio of the country.
How can the government current intervention methods
affect the selected business? (e.g., fiscal and monetary
policies, furlough scheme etc).
The regime of the nation is an vital part for formulating and regulating the policies of money
in the state. The government plays a very big role in the economy of the country. The
government of the country helps in dispersing the incomes to all the sections of the society. It
also helps various backward classes in improving their financial status in the society. It
provides various opportunities for developing the people in the society. Moreover, the
companies has to abide the policies of the government in all the conditions. The intervention
of the government helps in increasing the competition in the market(Petrella, Santoro and de
la Porte Simonsen, 2018). This would give positive feedback to the company. With reference
to Virgin Holidays, there are different methods to intervene in the business of the company
by the government of the country that are discussed below-
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 Fiscal policy : The fiscal policy analyses the government policy that would render a
framework that would support the sustainable growth of the country. It would also aid
in the decrements of the poverty. It would also aid in measuring the gravity of
inflation with reference to the prices and demands of the various merchandise and
services. Moreover, it would also measures the governmental tries to form a certain
essential improvements in the expenses of the company.
 Monetary policy : It requires that in what quantity, the money is available in the
system . The monetary policy relates to the money that is being available in the
marketplace. It also requires that these money has to be assessed by the individuals.
The proper management of monetary policies assist in keeping a balance with respect
to the inflation and growth of the economy along with the ratio of consumption, etc.
 Furlough scheme : The entire world is being ceased and all the individuals is being
restricted from complying with any kind of activities such as business, social,
political, etc. due to the reason of pandemic and lock down at global level. The
workers are in the hopefulness that this phase would come to an end soon. Moreover,
by the end of this, they would be able to start their jobs again in the organizations.
The Virgin holiday company has provided its workers with a scheme by which they
could take temporary leave that would be by the company as a special
request(Rehman, Ali and Shahzad, 2020).
What are the current global challenges facing by the
chosen business and recommendations on how to
overcome them in this current time?
It is very vital to understand that the global challenges are faced by the business organization.
With reference to the company Virgin holiday, there are various challenges on the worldwide
level that is being managed by the above mentioned unit are discussed as follows-
 Importance of Foreign Politics, policy and relationships : The different policies,
rules and regulations that are being made by government. The political environment
that is being created by the various leaders that affects the decision making process of
the establishment by the way of transport and overall economical structural of the
organization(Slater and Claydon, 2020).
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 Unemployment : The unemployment is the main problem of the country. This has
adversely increased in the period of pandemic. This is because all the businesses has
been closed and there were lack of job opportunities to the individuals in the country.
But slowly and gradually the condition has been transformed now. This can be seen as
the effect of Covid is reduction day by day.
 Fuel efficiency : The cost of the institution is considered as the major aspects that
would affect the management of the overall airline industry. Moreover, if the prices of
the fuels enhances, then it would automatically accelerate the increase in the prices of
the tickets of the airline business. With reference to the Virgin airlines, it is being
influenced by the leading issues in relation with the similar difficulty./ this is because
it has caused a high level of reduction in the net income and revenue of the institution.
 Travelers comfort and experience : The airline business are
wholly dependent on the amount of adequate feed backs it receives from
its tailored. With this regard, the establishment, Virgin airlines is not
capable to attain the contentment of the customers. There are various
areas by which the tailored are always remained dissatisfied in the
organization(Sutherland, et.al, 2018).
Conclusion
The above report concludes about the management of the airlines industry. It explains
about the market conditions with respect to the airline industry in the country. The
managerial functions of the businesses are influenced by fluctuations in the prices of the
merchandise and services, monetary flow, economic growth, etc. It also summaries about the
Airline industry that faces a cut throat competition with respect to the existing companies in
the market. It also discusses about the governmental impacts on the airline industry of the
nation. This also concludes about the various policies that effects the productivity of the
airline businesses.
References
Books and Journals
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Alabid, J., Bennadji, A. and Seddiki, M., 2022. A review on the energy retrofit policies and
improvements of the UK existing buildings, challenges and benefits. Renewable and
sustainable energy reviews, 159, p.112161.
Alanazi, T.M. and Hassan, H.S., 2018. Roles of Islamic Business Ethics in the Formation of
Internal Organisational Culture: A Qualitative Approach of Muslims’ SMEs in the
UK. International Journal of Economics, Business and Management Studies, 5(1),
pp.16-30.
Cross, S., et.al , 2021. Bioenergy development in the UK & Nordic countries: A comparison
of effectiveness of support policies for sustainable development of the bioenergy
sector. Biomass and Bioenergy, 144, p.105887.
Hussain, J., Salia, S. and Karim, A., 2018. Is knowledge that powerful? Financial literacy and
access to finance: An analysis of enterprises in the UK. Journal of Small Business
and Enterprise Development.
Mathur, R., et.al , 2020. Urgent actions and policies needed to address COVID-19 among UK
ethnic minorities. The Lancet, 396(10266), pp.1866-1868.
Nason, J.M. and Smith, G.W., 2021. UK inflation forecasts since the thirteenth century.
Petrella, I., Santoro, E. and de la Porte Simonsen, L., 2018. Inflation Dynamics and Price
Flexibility in the UK. Centre for Economic Policy Research.
Rehman, M.U., Ali, S. and Shahzad, S.J.H., 2020. Asymmetric nonlinear impact of oil prices
and inflation on residential property prices: a case of US, UK and Canada. The
Journal of Real Estate Finance and Economics, 61(1), pp.39-54.
Slater, A.M. and Claydon, J., 2020. Marine spatial planning in the UK: a review of the
progress and effectiveness of the plans and their policies. Environmental Law
Review, 22(2), pp.85-107.
Sutherland, D.et.al , 2018. How do quality of teaching, assessment, and feedback drive
undergraduate course satisfaction in UK Business Schools? A comparative analysis
with nonbusiness school courses using the UK National Student Survey. Journal of
Management Education, 42(5), pp.618-649.
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