Influences of Macro-economic Activity on Virgin Holiday Company
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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.
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BSc (Hons) Business Management BMP4003Business Environment Assessment 2 Influences of Macro-economic Activity Submitted by: Name: ID: 1
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Contents Introductionp 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 (givereferencetoeconomiclifecycle,GDP,inflation, unemployment rate)p How can the government current intervention methods affect the selectedbusines?(e.g.,fiscalandmonetarypolicies,furlough scheme etc)p Whatarethecurrentglobalchallengesfacingbythechosen business and recommendations on how to overcome them in this current time?p Conclusionp Referencesp 2
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 factorse.g.,economicoutput,unemploymentrates, 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 3
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 occurredinthecaseofVirginholidaycompany.Inordertoincreasethe 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 4
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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(givereferencetoeconomiclifecycle,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 5
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. Howcanthegovernmentcurrentinterventionmethods 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- 6
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 couldtaketemporaryleavethatwouldbebythecompanyasaspecial request(Rehman, Ali and Shahzad, 2020). Whatarethecurrentglobalchallengesfacingbythe chosenbusinessandrecommendationsonhowto 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). 7
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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 aboutthemarketconditionswithrespecttotheairlineindustryinthecountry.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 8
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. 9