Influences of MacroEconomic Activity on Virgin Atlantic Airlines

This report discusses the macro-economic factors that impact Virgin Atlantic Airlines, including inflation rate and unemployment rate. It also covers the impact of UK's current growth rate and government intervention methods on the company. Additionally, the report discusses the current global challenges faced by the company and provides recommendations to overcome them.

Influences of Macro-
Economic Activity

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1............................................................................................................................................3
Macro-economic factors that are required to be consider by Virgin Atlantic Airlines and their
impact on the business outputs...............................................................................................3
TASK 2............................................................................................................................................5
Impact of UK current growth rate on Virgin Atlantic Airlines..............................................5
TASK 3............................................................................................................................................6
Impact of the government current intervention methods on virgin Atlantic Airlines............6
TASK 4............................................................................................................................................7
Current global challenges that are facing by Virgin Atlantic Airlines...................................7
Recommendation to overcome the challenges in current time...............................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment includes all such factors which have an impact on the performance
of an organisation. These factors that are involved in the business environment are uncontrollable
for the organisations and therefore, a company is needed to reach as well as make effective
strategies in order to face the adverse influences. A business is also needed to analyse the
international business environment in an effective manner so that it can recognise the
opportunities for enhancing its business at global level (Akhmad and et.al., 2019). Within this
project, Virgin Holiday is taken into consideration for demonstrating various aspects of the
report. It is a UK-based tour operator company that was established in the year 1985 by
Richardson Branson. The respective organisation offers a wide number of holiday packages to its
potential customers within marketplace. This report covers identification of macro-economic
factors that will be required to consider by the organisation and their impact on the performance
of its business. Along with it, there will be a description on the impact of UK current growth rate
on the chosen business. Moreover, this report also includes impact of government current
intervention methods on the respective organisation. Additionally, there will be discussion on the
current global challenges that are faced by the respective company along with the
recommendations to overcome such challenges in the current time.
MAIN BODY
TASK 1
Macro-economic factors that are required to be consider by Virgin Atlantic Airlines and their
impact on the business outputs
Macro-economic factors are those that have a great impact on the process of development
of country. This becomes significant for an organisation to take into consideration the growth
and development of the macro-economic factors for the purpose of developing focussed
approach (Awadallah and Elsaid, 2020). The study of such kinds of factors provide assistance to
a nation in concentrating on circulation of money supply for evaluating major economic aspects.
There are several macro-economic factors that play a major role in the process of developing
entire company. Virgin Atlantic Airlines should concentrate on conducting an analysis of macro-
economic factors for providing services to market share and serving manpower effectively and in
a precise way. Some of macro-economic factors are discussed as under in context to Virgin

Holidays which should be considered by company at time of framing business strategies and
policies:
 Inflation rate: This rate refers to the rate of increase within the prices of the goods or
service because of the change in economic condition of a nation over a specific time
period. It shows inverse relationship between product or service price and currency value
as when value of currency of decreased within global markets or there is depreciation in
currency value of a country then the price of products or services will get reduced and
vice-versa (Birbirenko, Zhadanova and Banket, 2020). Within United Kingdom, inflation
rate is high currently because of pandemic situation of COVID-19 as it has restricted
people to invest more on their vacation or tours that results in reduction in sale operations
of Virgin Holidays. Such inflation has impacted people's income level because this has
minimised their power to save as well as spend as before that leads to people save their
income for future time period that has reduced demand of services that are offered by
Virgin Holidays. When there is low inflation rate, people spend more in vacations, etc.
that results enhancement in demand of services of Virgin Holidays. When prices extends,
they experience rise within operational cost and other overhead costs that results in price
increment in services of Virgin Holidays and reduction in profit margin of organisation.
Employees of organisation also demanded more salary for meeting their needs at inflation
period within UK that results in minimising profitability level of company. In order to
overcome such situation, Virgin Holidays must frame effective strategies and create
innovative ideas for declining its cost and capturing a large number of customers towards
organisational services during inflation.
 Unemployment rate: It is a percentage of total work force within a nation that is
unemployed by willing to work and actively seeking job opportunities or employment
(Borthwick, Ali and Pan, 2020). In United Kingdom, when unemployment rate is high
then people have low disposable income that results in reduction in demand of services of
Virgin Holidays in UK marketplace. Whereas, unemployment rate in UK is low showing
more people have employment and are earning considerable income so they have more
disposable income for investing. At same time, opportunities of Virgin Holidays for
enhancing customers and revenue through providing innovative services for satisfying
customers needs and wants. Lower employment rate do not put pressure on organisation

for generating more employment and recruit more candidates that reduces wage cost and
increases profitability. There is moderate unemployment rate within UK and it also relies
on economic condition such as in pandemic situation of COVID-19, unemployment rate
was high that adversely impacted sales operations of Virgin Holidays and its profits.
Managers within company make policies such as generating employment with fixed rate
each year for contributing in country's GDP that facilitates it in rising market value and
future development (Early and Peksen, 2019). As Virgin Holidays can recruit skilled and
talented personnel within business that enable it to enhance its sales operations within
global marketplace with innovative strategies and ideas.
TASK 2
Impact of UK current growth rate on Virgin Atlantic Airlines
Rate at which Gross Domestic Product (GDP) of a nation changes positively or grows
from one year to next year then it refers to Growth rate. Within UK, it consist of different factors
such as GDP, unemployment rate, inflation rate and economic life cycle that assists an
organisation in ascertaining influence of these on business.
GDP: This states how a nation grows within a year in comparison to prior year and possible
growth in future. There is positive growth rate in UK's GDP in each year that shows effective
employment, rise in national income, backward area development, people spending capacity, etc.
also expresses rise within tourism industry. If nation's GDP is more then government offers
multiple opportunities to grow businesses like Virgin Holidays. Also it spent more in
infrastructure that facilitates organisation in capturing more tourists. Country having more
growth rate then currency value will be more that enable Virgin Holidays for business expansion
within global markets with less investment.
Economic Life Cycle: There are four key stages that each nation go through like expansion,
peak, contraction and trough showing growth rate of country (Elangkumaran and Navaratnaseel,
2021). Expansion and peak growth stage shoes there are more opportunities for nation and
organisations to grow economy. When there is low inflation rate, there will be full employment,
more growth opportunities and good literacy rate. People have more income to invest and money
supply is also more in economy that improves economic condition and thereby can be used by
Virgin Holidays to grow business internationally. Contraction and trough situation states there is

high inflation rate and slow economic growth rate of nation that adversely impacts productivity
and profitability of Virgin Holidays. Also, there is less money flow within economy of UK that
minimised demands of services of respective organisation.
TASK 3
Impact of the government current intervention methods on virgin Atlantic Airlines
Government Intervention Methods consist of fiscal policy, monetary policy, furlough
scheme and so on that greatly impacts entire operations, performance and productivity of
business. Current government intervention policy within UK has influenced favourably and
adversely the profit margins and outcomes of Virgin Holidays (Fedotova and et.al., 2018). If
there are any amendments in the fiscal, monetary policy and government's furlough scheme
relating to credit flow, subsidies, taxes, expenditure, expenditure, interest rate etc., which have
affected the expansion strategy, operation of Virgin Holidays.
 Monetary Policy: It is defined as the operations of a central bank within a country which
are directed towards the process of maximisation of the amount of credit as well as
money within an economy. This is a sort of fiscal apporoach whch can be used by the
central government and the bank of the United Kingdom in the process of managing,
regulating, controlling and monitroing the flow of the cash, money, currency as well as
the rate of interest. Favourable impact of monetary policy on Virgin Holidays as when
government and the central bank of the respective nation has decided to invest more
amount of money within economy that has generated more and more opportunities for
them. With the support of this, they can take loans and advances at minimised rate of
interest for enhancing the operations of business. The market share of the country has
also much amount of money to invest in the vacations that resukts in enhancement in the
demand, sales and revenues of Virgin Holiday (Jacob, 2019). The adverse impact of the
monetary policy on the chosen organisation at time of pandemic situation is that there
ishigh rate of inflation within the country and therefore, the central bank increases credit
rate of the rate of inflation for the process of controlling as well as managing the flow of
credit or cash. This leads to the less availability of the financial resources within the
operation or market share spent small because of the less income. In consequence of that,
it spend less money on the purchasing of the products or services that results in

minimsing the demand or the sales operations of the tour operator services of Virgin
Holidays.
 Fiscal Policy: It has been prescribed in the form of decisions relating to government
plans, strategy and expenditure on expenditure as well as taxation for the welfare of the
society. UK fiscal policy includes the central government's tax policy, spending and
spending which has a great impact on the profitability and operations of a business. The
favourable influence of fiscal policy on business operations of respective organisation as
the government cuts tax rates and spends more on infrastructure, then UK people have
disposable income for spending more on their vacations or pleasures which results in
increasing demand for services of Virgin Holidays (Nguyen and Su, 2021). In addition,
modifications in fiscal policy as a result of an increase in the tax rate on organisation's net
profit reduces their profitability as well as negatively impacts future funds of business.
 Furlough Scheme: This is associated with adding temporary retrenchment, involuntary
leave to other sequence of normal job hours without payment of remuneration for specific
period. Due to certainty, natural disasters and other country issues, UK government
declared certain restrictions, guidelines and regulations as most of the buisnesses have to
stop their work for a less time period. They also have to give involuntary leave for their
manpower for a certain period of time. The most positive influence of such scheme
within Virgin Holidays is that they can employ their skilled and talented workforce at
time when things get better instead of recruiting freashers and new manpower that saves
their cost and time. In addition, this situation arises during COVID-19 within UK, where
most of the company must do their work under this scheme, which adversely impacted
their business operations and slowed down their work.
TASK 4
Current global challenges that are facing by Virgin Atlantic Airlines
There are many challenges that are faced by Virgin Holidays at time of enhancing business
operations within international markets (Nielsen, Asmussen and Goerzen, 2018). Such
challenges are concerned with policies, rules and regulations of particular nation, currency rates,
international accounting, exchange rate, shipment method and so on. In context to Virgin
Holidays, there are different challenges that organisation is facing while performing business

functions internationally. Some of these challenges include cultural differences, high inflation
rate, language differences, unemployment rate and many more. In case, if Virgin Holidays is
uncapable to face such kinds of challenges then it can adversely impact the organisation's
reputation. The company can also suffer a huge amount of loss within such kind of situation.
Initially, management of respective company is required to conduct great research regarding
economic policy, currency rate, regulation process and banking system of nation in which it
wants to enhance its business (Pan, 2019). This will provide assistance to company in getting
clear understanding that will further facilitate in performing business operations in an effective,
efficient and precise way. In case, if respective company can not perform its business practices
as per rules, policies and laws of a country then it creates a great number of losses, penalties,
legal case and permanent ban on services within certain nation that impact its image within
global markets. Taste and preferences, culture, ethics, values, traditions, languages, expectations
and demands of customers differ from region to region that is needed to consider by Virgin
Holidays prior to offer holiday packages within global markets.
Recommendation to overcome the challenges in current time
From above discussion, it is recommended to professionals of Virgin Holidays as if they
want to enhance its operations within the international markets in an effective and successful
manner. This will provide assistance to them in gaining appropriate and correct information as
well as knowledge regarding latest trends within marketplace.
 Navigating new legislations: Every country has various laws, rules and regulations
about business operations, employment and strategies, taxes and many more (Reddy,
Nayak and Nagendra, 2019). Therefore, specialists of Virgin Holidays are required to
collect all essential information from census report of nation's government for
accomplishing all key formalities in an appropriate manner. In order to do so, they can
appoint local lawyer of specific country for achieving best and effective suggestions
associated with policies and laws of the government of nation.
 Harnessing local market expertise: Searching for an organisation within new nation or
international markets needs local information or knowledge regarding trends,
technology, bank rates, market structure and credit systems for specific industry. The
management of Virgin Holidays must conduct appropriate research regarding latest

trends in local markets of the country in order to obtain valuation of data to create an
effective expansion strategy
CONCLUSION
From above discussion of the report, it has been concluded that macro-economic factors
that are involved in the business environment greatly impact the development and growth of a
country. In order to overcome the adverse impact of such kinds of factors, an organisation is
required to make sure that that it will majorly concentrate on such factors so that it can identify
the opportunities for achieving its growth and development. Within this report, there has been a
discussion on the macro-economic factors which are needed to be taken into consideration by
the organisation and their impact on the outputs of business. Moreover, this report has also
covered influence of the current growth rate of UK on the performance of the organisation. In
addition to it, there has been an explanation on impact of government current intervention
methods on business. Furthermore, current global challenges have also been mentioned that are
facing by company along with recommendations to overcome such challenges.

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