Influences of Macro-economic Activity on Virgin Holiday Company

This report analyzes the macro-economic factors affecting Virgin Holiday Company, including inflation, unemployment, and government intervention methods. It also examines the impact of UK's current growth rate on the company and provides recommendations to overcome global challenges.

BSc (Hons) Business Management
BMP4003 Business Environment
Assessment 2
Influences of Macro-economic Activity
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Table of 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.).........................................3
How will the UK current growth rate impact on the chosen business (give reference to
economic life cycle, GDP, inflation, unemployment rate) ........................................................4
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? ......................................................................7
Conclusion..................................................................................................................................8
References..................................................................................................................................8
Introduction
Business environment is constituted with all the internal and external factors that affects the
functions of the business organization in one way or the other. Like, employees, suppliers,
changes in technology, societal changes, environment, competition in the global market,
government, economic changes and many more. It also helps in finding the business
opportunities in the various commercial areas. It also assists in strategising the business
framework in order to achieve the desired goal by raising the growth and development of the
business(Betti and Sarens, 2020). The business environment also helps in maintaining the
performance of the company as well as the profit maximization. Business environment can be
majorly categorized in two types, that is Macro and Micro environment. Macro economics
can be defined as that part of economics that performs an aggregate study of the economy of
the country,such as GDP, national income,unemployment, inflation, etc. It basically
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concentrates on the overall economic state of a country. It evaluates the variations in the
economic trends and how the fiscal and monetary policies impact the growth of the nation.
The company in the above case study is Virgin holiday company which was established in
1985 as a service provider. It deals in rendering the holiday packages to the customers for the
different holiday destinations around the globe. In furtherance, this report also gives an
overview regarding the growth rate of the United Kingdom in the recent times and how the
government policies and norms affects the business activities of an organization. It also
evaluates the global challenges undergone by the company and provides recommendations
for the same.
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 consequences of the various components of macro economics sometimes results in the
rise and fall of the economy of the state. This could be uncontrollable at certain point of time
which could be controlled by the government of the particular country. It identifies the exact
position of the economic condition (in terms of growth) of the country, that whether it is
fluctuating or is stagnant (Cepel, 2019) . It consists of various factors that influence the
soundness of the financial prospective of the country. They also impacts on the monetary and
the geopolitical situations. In terms of the virgin holiday company, there are different
elements that impacts the business output of the company-
 Inflation – it can be defined as a situation in which the prices of the goods and
services increased for a particular time. It usually dis-balances the economy of the
country. The reason behind this is the speedy growth of the inflation. But, in the case
of the slow rate of inflation, it can be calculated and foreseen at the same time.
Basically, the situation of inflation arises as the demand and the prices of the goods
and services increases(Cepel, et.al, 2019). It will create a hike in the cost of the
production of the company. This would result in the increased labor costs which
automatically influence the supply element of the company .
 Unemployment- It is the situation when there is less or no possibility of getting jobs
in the country. When there are no job opportunities available in the various sectors of
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employment. There are many eligible candidates who are searching the jobs but are
unable to get any. This is all because of covid 19 pandemic which has heighten the
problem of unemployment in the UK. It overall affected the employment structure of
the country. This has probably gave rise to another gross situation of recession under
which the existing employees are being terminated and the new individuals who are
job ready are failed to get any jobs. The economy of the country during the pandemic
is facing a lag in the economic condition of the country. Now, in order to serve the
future requirements of the economy, the company is required to make some possible
changes in its marketing structure by making a full fledged strategy. The company is
needed to hire the new workforce in the organization.
From the above discussion, it is clear that both the factors that is the inflation and the
unemployment has affected the business operations of the virgin holiday company in every
other way. It give rise to the prices of the goods and services which ended into an increased
cost of production and the non- availability of the workforce to work in the company(Dosi
and Roventini, 2019) .
How will the UK current growth rate impact on the chosen business (give
reference to economic life cycle, GDP, inflation, unemployment rate)
A developed country is able to provide a better living standard to the citizens or the people
who are residing in that particular nation. And the country is said to be developed when the
economy of that state is strong. UK also named under one of the fast developed nations. But
the situation of covid 19 has negatively affected the economic condition of the country. It can
be seen that in the year 2020, the economy has experienced a diminution of 9.4 % because
the movement of people and goods and services were prohibited at the time of pandemic. The
factors stated below affected the economic growth of the country-
Economy cycle – When the period between the expansion and contraction undergoes with
certain economical changes, then it can be termed as economy cycle. It analyze the state of
the economy of a country when it faces various economical phases in a cyclical manner.
There are different factors that determine the ongoing level of the economy, like,
employment ratio, GDP, interest rates, etc. So as to provide a benefit to the investors and the
business organizations, it provides a proper outcome which is raised by making a in depth
observation and examination of the economic situations. There are four stages of the cyclical
phase involved in the virgin holiday company, they are-
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 Expansion- At this stage the company encounters speedy growth rate along with the
hike in the production level of the company. The interest rates also reduces with the
factor of inflationary pressure on the business corporation.
 Peak- After the stage of expansion, the company attains its maximum level of
satisfaction in terms of the economic growth. But, with this, the state of imbalance
arises in the business activities.
 Contraction- The advancement of economic environment in this phase results in
reduction of the prices for various goods and services. The respective firm need to
update its actions take to ensure that this stage is survived.
 Trough- This is the last level of the cyclical phase of the economy. Basically, at this
stage the company starts rejuvenating itself and gets recovered from all the errors that
are being identified in the previous level. Slowly and gradually it starts grabbing the
speed so as to contribute in the increasing growth rate of the economy. The same is
followed by the virgin holiday company.
Inflation- Inflation is the rise in prices of the goods and services in a particular economy. It
further results in the increase in the production cost of the company. The virgin holiday
company has also increased the prices of the holiday packages. Due to this, the customers has
to face huge changes in the prices at domestic as well as the global level. Like, with the
increase in the prices of fuel, the prices of the air tickets will also increase(Goodhart and
Pradhan, 2020).
Rate of unemployment- The employment ratio of the country is affected by the pandemic that
is covid 19, where the individuals who are ready to get placed in the different employment
sectors , remained unemployed for a long period of time. The economic condition of the
country is not at par and because of this only, there were less or no employment opportunities
left in the country.
How can the government current intervention methods affect the selected
busines? (e.g., fiscal and monetary policies, furlough scheme etc).
The necessary alterations or modifications in the monetary and fiscal policies of the state
could be done by the government of that country, and for this purpose, government has to
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intervene in the financial matters of the country(Huang, et.al, 2022). The main concern
behind this intervention is the betterment of the commercial sector and the individuals who
holds any kind of involvement in the business sector. In order to attain the level of efficiency
in the functioning of the business organizations, maintain the position of the currency in the
international market and to ensure the equal distribution of income all over the country, the
role of government is very important. It also enhance the spirit of competition among the
other international powers present in the open and global market. In context with the virgin
holiday company, there are different methods of government interventions that influenced the
company-
 Fiscal policy- The fiscal policy measures are used to build a structure which helps in
maintaining the growth of the country sustain-ably. The level of inflation in terms of rise in
the prices of goods and services can be examined with the help of these measures. By
applying these policies, the government makes the required transformations in its expenses
and the tax slabs and policies with the purpose to ensure a positive impact on the country's
economic condition. It will further affects the market situation in which better quality of
goods will be made available for the consumers.
 Monetary policy- The monetary policies ensures the proper flow of money in the
market. It also determine that in what quantity, money is available in the market and
the different sources which ensures its supply in the money market. Such policy is
said to be furnished when the individuals are able to access money without any
difficulty(Grimstone, 2019). It creates a proportionality in the context of consumption
rate, inflation, economic growth and development, GDP growth, etc. To encourage
the investment operations whether national or international, the government modifies
the tax policies or rules accordingly. The major concern of the virgin holiday
company is on the necessary changes made in terms of the monetary policies which
can ensure efficiency and the effectiveness in the business activities. The company
has also started doing reductions in the interest rates.
 Furlough scheme- During the period of pandemic, every commercial reciprocation has
put on hold and restrictions are being put on the migration of goods and the individuals in the
whole world. The workforce of the different business organization are waiting to join their
concerned companies as soon as possible. Besides that, the virgin holiday company renders a
scheme to the employees in which they can pursue with the temporary leaves and continue
their work in their respective places. But it could be processed by making a special request to
the company. The virgin holiday company sets an example for the other companies who are
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planning to terminate certain employees or workers from the job. By permitting to work from
home, it basically reduced the extra cost and expenses of the business activities if it is being
done in a formal manner.
What are the current global challenges facing by the chosen business and
recommendations on how to overcome them in this current time?
There are various global challenges that are faced by the business organizations. With the
same context, the virgin holiday company also experienced certain challenges at the global
level, they are-
 Importance of foreign politics, policy and relations- The decision making process of
the company is affected by the different rules, norms and policies formulated by the
government and the political changes that takes place in the surroundings also
influence the overall business structure of the company(Gromenko, 2018) .
 Unemployment – The ratio of unemployment has increased in the pandemic period
where the companies are unable to provide any employment options to the individuals
of the country. There were no job opportunities available in the service as well as the
business sectors of the country which forced the population of the state to remain
unemployed. Because the companies have failed to yield profits from the respective
businesses and undergoing high amount of losses. But, at present, the situation is
totally changed and the effects of the pandemic are losing its grip from the economy
of the world. The business organizations all over the globe initiating their work with a
new pace and strategy. Now, the existing employees are also getting back their jobs
and the companies are creating new job opportunities for the other individuals.
 Fuel effectiveness- The companies are required to become a cost effective business
unit because the cost of production directly impacts the administrative functions of the
airline industry. For example- if the prices of the fuel increases, than the prices of the
air tickets will also tend to increase. In relation with the virgin airlines, they are
experiencing the similar problem which has resulted a diminution in the profitability
of the company.
 Experience and comfort of the passengers – A satisfactory feedback from the
customers will boost the performance of any business organization, specially in the
case of airline industry, passenger's response towards the services provided by the
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company is very crucial. Virgin airlines has failed to acquire the same. There are
certain area of disinterest which has affected the performance of the company to an
extent(Khan, Çera and Nétek, 2019) .
The recommendations in this context are that, the company is needed to re formulate the
services from a new perspective by conducting a necessary evaluation of the likes and
dislikes of the customers. The major requirement is for a strong customer support and
security standards(Kirikkaleli, Adedoyin and Bekun, 2021). The financial institutions are
there to provide the necessary assistance related to funds so that the company can make a
fresh start. Along with this, the companies must include the point of employment generation
while designing the business structure. This will enhance the availability of jobs in the
country.
Conclusion
The above report concluded that the business environment influence the business
organizations both internally and externally. The factors that affects the companies are the
suppliers, consumers, inflation, economic growth rate, etc. The change in the prices and
demand of the goods and services, fiscal and monetary policies, unemployment, etc. impacts
the management of the businesses. The airline industry is facing a hike in the competition in
the global market with the existing well established companies. Further it provides with
certain suggestions to the company to maintain the level of efficiency and profitability in the
market. This could be possible when the company starts working for the satisfaction of the
customers by providing them proper assistance and other necessary services.
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References
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