This report discusses the impact of macroeconomic factors on Virgin Atlantic Airlines, including inflation, unemployment, government intervention, and global changes. It analyzes how these factors have affected the airline's business output and growth, and provides suggestions for future decision-making.
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Table of Contents INTRODUCTION..........................................................................................................................3 TASK..............................................................................................................................................3 1. Factors of Macro – economics which influences business Output of Virgin Atlantic Airlines:......................................................................................................................................3 2. Impact of UK current Growth rate on Virgin Atlantic Airlines.............................................4 3. Affects of government invention methods in Virgin Atlantic Airlines..................................6 4. Current Global Changes faced by the Virgin Atlantic Airlines..............................................7 CONCLUSION...............................................................................................................................8 REFERENCES................................................................................................................................9
INTRODUCTION In this below report, concept and role of macroeconomics are described for future decision making. Macroeconomics is a study of whole business economics such as entire group, total production, total sales, total profit, total income, total wages, etc. whereas microeconomics studies only individual people, single commodity, individual salary, etc. The following report is suggested that how microeconomics factors help the Virgin Group organization in the process of business growth and development(Amsari and Sari., 2022). Virgin Group is a very reputed and top ranker holding firm situated in United Kingdom which cover whole business areas from airlines to media. But after the COVID- 19 the founder of Virgin group Richard Branson faced many problems in generating income and running the smooth business specially in Virgin Atlantic Airlines. Virgin Atlantic Airlines is a well known airline in British, located on England since 1984. Currently this airlines setting up their flightsabout 32 places in the entire world. This report is prepared for the business board of directors and investors for influencing them. The below report is describes two factors of macroeconomics, impact of UK current growth rate on airlines, how present government invention method affected the Atlantic airlines and what types of challenges are facing the Atlantic airlines. TASK 1. Factors of Macro – economics which influences business Output of Virgin Atlantic Airlines: A macro-economics factor is an important for monetary or geopolitical event which widely affects a territorial or country national economy. In which monetary is termed for GDP, expansion, Financial rates, etc. There are three features of huge or wide range of monetary scale that are incorporates non-partisan, positive or negative. It is the type of economy which is generally focus on total population or total business rather than targeting a single person or commodity. Macro-economics consist various types of factors such as Economic Output, Unemployment rates and Inflation(Gerwe., 2021). These factors are the key for observing all the group of sector which play a important role in fluctuating the economic market such as government, customers and business organizations or firms. The two macroeconomics factors in context of the industry Virgin Atlantic Airlines which impacted the airlines position after the pandemic are discussed below
Inflation: It is the factor of macro-economics which describe how much the prices changes are made in the business goods and services. If inflation rate increases rapidly then it refers as economic is not stable or not balanced or if the rate of inflation decreases steady then it termed as normal economic factors. Hence, Inflation is also says that it a rate of inflates cost of trade good or services at expressed time structure. In context of Virgin Atlantic Airlines, the rate of inflation shows the result of increase cost of services. It is because there are several types of problem are comes at the time of pandemic which decline the products supply and administration(Gunay and Kurtulmuş., 2021). Due to this the demand of the labours and workers are decreases but supply are increases instantly. During the time of Covid, the government generated its guidelines and rules which stated the complete lockdown and no one is able to travel from one place to another. This regulations impacted the travel agency directly because their entire business is shut it down. After opening the lock down the price of every commodity is increases instantly specially the price of fuel. The increase cost of fuel impacted the Owner of the company. Hence it is suggestion for the business entity to increase price of ticket for covering the cost of fuel. Unemployment: It is the major problem of decline economic position of the country. It is refers to the situation where people are seeking the job but no one company or firm is ready to appoint them or to choose them as a employee. After the pandemic the totality of unemployment increases rapidly which effect the standard of living of the unemployment people. At that time most of the company discard the employees from jobs and some people are resign their jobs after looking the situation(Izzeldin and et.al., 2021). The Virgin Atlantic Airline also do the same with their employees where they exclude 45% of employees from the industry but it effects the company currently because now the company want employees. To overcome from this situation it is important for the company to appoint the skilled and knowledgeable employee and increase the existing employee salary. Due to this practice company is helpful in taking the decision and work effective and efficient manner. 2. Impact of UK current Growth rate on Virgin Atlantic Airlines According to the recent survey conducted, the rate of GDP in the year 2021 are increased by 7.5% and the GDP rate are continuously increased by 1% in recent 2-3 months. UK is a well
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developed country in the world and its population are running their day to day life smoothly through maintaining the living standard. But after the pandemic all over the world economy are effected as well United kingdom. The business organization or industries are badly disturbed due to decline growth rate and overall profit(Kang, Diao and Zanini., 2020). Virgin Limited Airlines of UK are also impacted from this situations. To recover from this condition there are some certain sources of economics which are helpful for the company in developing the financial growth rate are as follows: 1.Economic life cycle: It is the cycle which is arise by the pressure of supply an demand – the motion of GDP – the accessibility of capital and assumption about the forecasting. This economic cycle are distributed into four stage, expansion, peak, contraction and tough. These all described in the below: Economic Cycle Expansion stage: Every economic cycle and the business development is depend upon the consumer behaviour if consumer satisfy then it buy the product or services quickly without any hesitation. They know everything like there will be future income from goods occupation, increased domestic goodwill, and higher prices of stock. Generally, business appoint more candidate when the demand increases of their products. The demand of the product or also increases when the consumer are satisfy from this products as well as when the income of consumer increases. Due to the changes in demand, rate of inflation is also changes by stimulating shopkeepers to purchase now before increasing the price(Lu and et.al., 2020). This is make disadvantage when the inflation rate increases more than normal then it turns into a most dangerous peak. The UK industry Atlantic Airlines also suffer from this situation due to high price of fuel and high demand of the industry. Peak Stage: It is the stage when the demand of the product or services exceed the supply. In simple words, the condition peak arises when the business hits the maximal limits of the economy. This is generally useful for the business to turn out the imbalance economy to balance economy. Virgin Atlantic Airline also make this peak for changing the position of business imbalance. After doing this practice company is helpful in future growth and expansion. Contraction Stage:There are three basic reason which arises the contraction stage that are: quick hike in interest rate, financial crises or improper inflation. It is the most
dangerous situation. At that time people are unemployed, sell their homes, etc. During the period of lockdown Virgin Atlantic faces many problem, to correct the future problem contraction is best possible phase. Trough: At this stage, the consumer retrieve self-assurance earlier the economy can get into a new enlargement state(Olivia, Gibson and Nasrudin., 2020). This changes is done after fulfilling the necessity interfere with monetary or fiscal policy both. It helpful for the Virgin Atlantic Airlines for observing the surroundings of business for implementing the business properly. 2.GDP: GDP is stands for Gross Domestic Product. It is helpful for the country economic to measure the value of manufacturing products or services during the given period of time. In UK the estimated GDP is released on month to month basis which is generally known as short-term indicators(World Bank, 2020). The Virgin Atlantic Airlines are also impacted in 2022 after increasing the rate of GPD as 1%. 3.Inflation: It is arises when the price of goods and services are increases in a definite period of time. Inflation is basically a broad approach which contain entire rise in price or rise in the cost of living in the particular country. There are three types of inflation: Demand – Pull, Cost – Push and Inbuilt-in inflation(Piltch-Loeb, Merdjanoff and Meltzer, 2021). The demand of the industry Virgin Atlantic Airlines are also increases when its keeping the huge price in the economic market. 4.Unemployment Rate: The calculation of unemployment is derived by subtracting the total labour force to the number of labour currently working. It is the stage where people stayed at home and suffering for food and shelter. The rate of unemployment is increases rapidly at the time of Covid because at this time companies or firm discards its employee due to loss and generating less income. Similarly, Virgin airlines do the same with its workers. 3. Affects of government invention methods in Virgin Atlantic Airlines The changes in every country economy is depend on its government polices or rules and regulation because government is the leader which have a power to fluctuate both fiscal or monetary policy of the particular nation. It takes decision only in favour of the business market such as increasing the currency rate and generating more profit or interest rate. The UK
government also uses several techniques that affect the business of Virgin Atlantic Airlines are as follows: Fiscal Policy: It is basically useful for government for managing the expenses and taxation to influence the country economy. Government keep the fiscal policy to encourage powerful and sustainable growth of economy or for declining the country poverty rate(Reardon, Bellemare and Zilberman, 2020). In context of the Virgin Atlantic Airlines, the industry faces many loss during 2 -2.5 year because of the pandemic. At this time government also suffered by the loss of gross domestic products in the market. This tool helps in analysing the debt and current budget status. If debt rule is distributed three times in the year then it is said to be Primary Fiscal rule. Monetary Policy:The main activity of monetary policy is to control the both volume of money available in market and channels which are regulating the new money in the economy. It is generally differentiate in two parts either expansionary or recession. Monetary policy is helpful in most of the business in most of ways such as encourages a balance global economy, more transparent, lowering inflation rate and hike the exports. Central bank have a power to control the monetary policy(Uddin and et.al., 2021). The airlines industry doing several activity for doing the activity effectively and efficiently because of enlarging the business in other parts and it also uses these policy to observe the cash flow of the business enterprises. Furlough scheme:This scheme is owned and control by the company or the employer of the company. It is activity which is performed by the firm for giving the temporary leave to the the employee on behalf of the company needs. The main reason behind this practice is condition of economy of a particular leader or in an entire society. The leave policy is short as well long period is based on the situation(Saleh., 2020). The Virgin Atlantic Airlinesalso uses this policy in the year 2020 when the government of UK introduced this scheme for both employer and employee. 4. Current Global Changes faced by the Virgin Atlantic Airlines In every country or organization, when it comes to business, everyone is interviewed. It means all the business are faced global challenges in the economy market. The global challenges contain everything such as weather, pollution, jobless, low level of education and many more. The UK business firm Virgin Atlantic Airlines also faces several global issues during and after
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the pandemic. To recover from this situation company needs several method and techniques. These tools and techniques are as follows: Unemployment: It is the situation where people have no job and no other substitute to generate the income. If this situation arises in the people life then they lost its capability of consuming the things and maintaining the standard of life. During lockdown the rate of unemployment is increases huge because at that time most of companies outside the employee from jobs and few business are closed(Sharma, Talan and Jain, 2020). It is suggestion for the company to give employment to the unemployment people who are skilled and knowledgeable. Fuel: In the current economy fuel is also play a big role because generally people uses automobiles to travel from one place to another but after the impact of pandemic the fuel prices increase at a very huge level which effect the company profit. The Virgin Atlantic airline also effected from this situation because fuels are essential in airlines(Taufik and Ayuningtyas,2020). To overcome from this situation it is a proposal toraise the ticket price of travel. This small activity helps the company in balancing the profitability position. Passenger experience:The customers play a most important part in increasing the profit of the company. The Virgin Atlantic Airlines provide good services to the passenger by providing them security. Due to this customer are happily expend its amount in travel. CONCLUSION The above report is concluded that how the macro-economics is helpful for the business to recoup the firm in track after the pandemic along with the suggestion. It contain the unemployment rate, Inflation, Fiscal or monetary policy, Furlough Scheme and many more. This report is created for the business Virgin Group board of directors or investors. The report is particularly based on the company Virgin Atlantic Airlinesfor observing the economy of the business organization and also the value of business is measured by its current GDP rate and economy growth. The causes and impacted which is faced by the industry at the time of Covid are determined with the help of macroeconomic factors. It is also explain how much UK economy is impacted after pandemic, affect of government intervention functions and present
global challenges in the business airlines. Moreover, this report creates a framework for the company for future planning and expansion. REFERENCES Books and Journals Amsari, S. and Sari, D.P., 2022, March. Consumer Factors In Deciding To Purchase Online At Shopee E-Commerce During The Covid-19 Pandemic. InProceeding International Seminar Of Islamic Studies(Vol. 3, No. 1, pp. 174-182). Gerwe, O., 2021. The Covid-19 pandemic and the accommodation sharing sector: Effects and prospects for recovery.Technological Forecasting and Social Change.167, p.120733. Gunay, S. and Kurtulmuş, B.E., 2021. COVID-19 social distancing and the US service sector: What do we learn?.Research in International Business and Finance.56, p.101361. Izzeldin, M. and et.al., 2021. The impact of Covid-19 on G7 stock markets volatility: Evidence from a ST-HAR model.International Review of Financial Analysis.74, p.101671. Kang, J., Diao, Z. and Zanini, M.T., 2020. Business-to-business marketing responses to COVID- 19 crisis: a business process perspective.Marketing Intelligence & Planning. Lu, Y. and et.al., 2020. The perceived impact of the Covid-19 epidemic: evidence from a sample of 4807 SMEs in Sichuan Province, China.Environmental Hazards.19(4), pp.323-340. Olivia, S., Gibson, J. and Nasrudin, R.A., 2020. Indonesia in the Time of Covid-19.Bulletin of Indonesian economic studies.56(2), pp.143-174. Piltch-Loeb, R., Merdjanoff, A. and Meltzer, G., 2021. Anticipated mental health consequences of COVID-19 in a nationally-representative sample: Context, coverage, and economic consequences.Preventive Medicine.145, p.106441. Reardon, T., Bellemare, M.F. and Zilberman, D., 2020. How COVID-19 may disrupt food supply chains in developing countries.IFPRI book chapters. pp.78-80. Saleh, Y., 2020. ICT, social media and COVID-19: evidence from informal home-based business community in Kuwait City.Journal of Enterprising Communities: People and Places in the Global Economy. Sharma, G.D., Talan, G. and Jain, M., 2020. Policy response to the economic challenge from COVID‐19 in India: A qualitative enquiry.Journal of Public Affairs.20(4), p.e2206. Taufik, T. and Ayuningtyas, E.A., 2020. Dampak Pandemi Covid 19 Terhadap Bisnis Dan Eksistensi Platform Online.Jurnal Pengembangan Wiraswasta.22(01), pp.21-32. Uddin, M. and et.al., 2021. The effect of COVID–19 pandemic on global stock market volatility: Caneconomicstrengthhelptomanagetheuncertainty?.JournalofBusiness Research.128, pp.31-44. World Bank, 2020. Global Outlook: Pandemic, Recession: The Global Economy in Crisis.