Understanding the Business Environment

This document provides an understanding of the business environment, including competitive analysis, stakeholder analysis, and the national economic system under which Virgin Atlantic operates. It discusses the company's history, purpose, vision, mission, and objectives. It also analyzes the competitive landscape using Porter's Five Forces model and identifies the stakeholders of Virgin Atlantic. Additionally, it explores the economic system of Europe and the impact of Brexit on the company.

UNDERSTANDING THE
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................4
Competitive Analysis.............................................................................................................4
TASK 2............................................................................................................................................6
Stakeholder Analysis:.............................................................................................................6
TASK 3............................................................................................................................................8
National economic system under which company operates...................................................8
Effect of economic system on company.................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Corporate History: Virgin Atlantic came into existence on 22nd June 1984, with its first flight
from London to US. It was from Gatwick to Newark. The company was founded by Sir Richard
Branson. It has flights connecting a number of destinations at world including North America,
South America, Africa and Asia (Kasemsap, 2018). This airline always keeps innovating for its
customers. They were the first to introduce Economy as well as Premium class tickets. They also
came up with Upper class cabins, fully flatbed seats and setback TVs.
Purpose- The major purpose of Virgin Atlantic is “changing business for good”. Changing
business for good for Virgin Atlantic means:
 Analyzing the long-term effects of all the business decisions that virgin Atlantic basin
present.
 They want to have a clearly calculated, embedded and a measurable purpose in all the
businesses of Virgin which drives all their decisions and also enables their success which will
result in positive impact for its employees, customers, communities and people.
 Virgin Atlantic wants to embed its purpose, values and principles in all the existing as well as
new business it invests in.
 They want to pioneer a systematic change which will go beyond the virgin group through the
help of Sir Richard Branson ‘s profile and his advocacy as global business leader through
rising to a number of challenges.
Vision Statement- Vision of Virgin Atlantic is to create a world in which every child has the
right to attain protection, development, survival and protection.
Mission Statement- Virgin Atlantic wants to make its brand well-known internationally for a
number of criteria like quality, innovation and sense of fun. This is what inspires virgin Atlantic.
Objective- Major objective of Virgin Atlantic is to become the most popular and unique airlines
throughout the globe. It aims at increasing its reach and airports in the maximum possible
locations throughout the world. For this they are using a number of long-term strategies with
many different approaches they concentrate on innovation of their products and service
development for new flights. They are also making joint venture with a number of other airlines
to increase their web globally.

TASK 1
Competitive Analysis
Company is focusing on differentiation strategy through providing a number of features in
their flight. This includes music, games and ice cream, child featuring as well as movie content
in their flights. Companies also using a number of low-cost generic strategies which is
remarkable for Virgin Atlantic as they are following other airlines in order to compete with them
and give them better offer for their customers (Chasdi, 2017). In order to remain in profits
company is focusing on core competencies. Company also focuses on sustaining strategy
through great quality service and maintaining their relationship with upper class customers
particularly.
Porters five force model for Virgin Atlantic:
Porters five forces model is an influential tool which is used to realise whether the control
of company is on a business or not. It helps in analysing both distance of company in the present
competitive market as well as its reach two global market. It also helps in analysing the company
it’s a porch unity for a particular situation as Willis trends. The progress of company in the
situations where it is weak in order to avoid any wrong steps can be drawn out through this.
Below mentioned is five major factors of Porter five force model:
Bargaining power of suppliers: There are a number of different manufacturers who are the
prime suppliers to the aviation company. The major suppliers for Virgin Atlantic are Boeing and
Airbus. Virgin Atlantic is well stab list company. Requirement for aviation fuel is another major
need for aviation companies including virgin Atlantic. The major key supplier of aviation fuel is
the basic necessity for operating an aircraft. Other than this there is need for engineering help as
well as IT solutions for virgin Atlantic. These many suppliers make the bargaining power of
suppliers in aviation market very high. Therefore, the bargaining power of suppliers for Virgin
Atlantic is high.
Threat of new entrants: The airline industry has five airlines which are mainly established for
providing the similar kind of services to the customers. They are not so interested in competing
with each other in the marketplace. When taking virgin Atlantic into consideration the company
have a good background within the air industry and is seen to be backed up with Singapore
airlines. Company have invested a very high fixed cost in its business. Other than this company
provides product differentiation which helps in entrant of new competition in the market place.

There are a number of reluctance by new entrants in the market due to high investment of capital
required in this business. Therefore, the threat of new entrants for Virgin Atlantic is very low.
Bargaining power of buyers: The virgin Atlantic airlines have developed a reputation in the
market and its brand is well known for providing quality service to its corporate customers. They
are always focused on the ability of customers to offer their services and they also offer a
number of discount and cheap airfare for their customers (Hamilton and Webster, 2018). They
provide booking of tickets directly to the company without any middlemen or agent between
them and customers. This makes the bargaining power of customers very low as company have
also developed distribution channel in a number of places so that they can cope up with their
competitors. They have a number of different offers to provide to their customers and provide
product differentiation which can be called its core competency as well. So the company do not
have to face any challenges of bargaining power of their buyers or customers.
Threat of substitutes: It is seen in the marketplace that for every company, products as well as
services provided by them there are a number of potential substitutes available in the market.
When considering Virgin Atlantic it is seen that the cost of switching to another company for
customers is very low major substitutes are British Airways and United routes. British Airways
provide long and short haul flights in the similar destinations and United Airways provide almost
similar destinations as virgin Atlantic. However virgin Atlantic give major priority to their
upper-class customers. There for, Virgin Atlantic high threats from substitutes in the market.
Competitive rivalry: When talking about competitive rivalry for Virgin Atlantic, it is seen that in
Europe the power of Virgin Atlantic is same as that of south-west airlines for United States.
There are a number of equal competitors for Virgin Atlantic and they also offered equally
satisfying services and products as Virgin Atlantic. However virgin Atlantic have major priority
for their upper class and premium level of customers which makes it different from other
airlines. Virgin Atlantic also comes up with different dealers as well as offers for their customers
from time to time. No other competitor in market can copy these offers of Virgin Atlantic which
makes it a strength for the company. Major competitors for Virgin Atlantic car British Airways
and United Airways. Therefore, the threat from competition in the market for Virgin Atlantic is
the medium.

TASK 2
Stakeholder Analysis:
All the internal people of an organisations as well the external teams or communities
whether governmental or non-governmental affected by functioning of a company are called its
stakeholders. Whereas, stakeholder analysis is referred as a process in which all these people are
identified from the time a business starts (Bhagra and Sharma, 2018). It starts by grouping
everyone as per their level of contribution in the organisation, participation, interests as well as
influence.
In order to determine the stakeholder’s analysis, it is important to identify the stakeholders
of company first. Stakeholders for Virgin Atlantic are:
 Employees
 Engineers
 Government
 Customers
 Shareholders
 Community
 Management
 Competitors.
After the grouping and identification of stakeholders is done, they are categorized based
on their influence interest as well as their level of participation in organisation. Below mentioned
is Power- Interest grid of stakeholders for Virgin Atlantic:
High power, low interest: It is necessary for a company to keep these people pf company
satisfied. It is because they have invested in society. It is necessary for organisation to make sure
that they are informed even if they do not show any interest. Government of the place we’re ever
virgin Atlantic is operating its business or the stakeholders falling into this category. There are a
number of rules and regulations to be followed by companies in aviation industry. If they do not
abide by these, they might have to face legal proceedings which might cost them high losses.
They are the stakeholders with high power and low interests. They have a lot of influence on
functioning and operations of a business. They do not get involved in the functioning directly.
High-power, high interest: these are the most important stakeholders for any organisation. It is
needed by organisations to prioritise these stakeholders keep them happy for well-being of the

organisation. Shareholders of the company as well as employees fall into this grid (Strandberg,
2017). It is seen that shareholders invests a lot in company therefore they expect return which is
also necessary. Similarly, employees of an organisation work hard towards making it a success
which makes them fall into this point. They get wages and salary in return of their efforts
towards company. It is important for Virgin Atlantic to keep them aware of everything going on
in an organisation. These stakeholders with high power and low interests are those with whom
company wants to engage and keep them collaborated with them as well.
Low power, high interest: A company keeps a check on these shareholders. They keep them
informed. It is necessary for company to make sure that these stakeholders are not experiencing
any problem. The community and customers are often falling into this category. They do not
have any control but the strategies, pricing and conduct of company highly influences them. The
competitors of a company can also be said to be falling in this point. The steps of company in
market highly influences its competitors as well. These low power and high interest stakeholders
have a lot of influence on a business. They can provide business with a lot of ideas, innovation
and insight. Employees also sometimes falls into these sections as employees as lower level do
not usually have much power in an organisation.

Low power, low interest: They do not have much power or interest in the business of company.
It is not necessary for company to keep them informed. Companies just keep these people
informed periodically and do not over do it for them (Rendtorff, 2017). There are very less
stakeholders who fall into this category. There are some employees who are not interested in
their work and also do not have a set future goal for their career development. Such employees
can be said to be falling into this zone. These low power, low interest stakeholders are also
known as crowd. They are the least considered stakeholders of all. They just require really less
communication.
It can be concluded that there are a number of people in an organisation from which
company needs guidance, participation as well as approval. If these stakeholders do not accept
the practice and functioning of a company they may often turn into obstacles for company.
Therefore, it is necessary for virgin Atlantic to work alongside all its stakeholders.
TASK 3
National economic system under which company operates
Virgin Atlantic comes under the economic system of Europe. The market and economy of
Europe can be in many ways said to be similar with that of USA. These economies are
considered as free economies when talking about the movement of capital in it. The GDP od
Europe is approximately 20 trillion USD and it has a population of 700 million. There are 50
different countries included in this continent. The economic policies and system in all these
countries of Europe are different (McGraw and Sweatman, 2017). There are a certain countries
which are combined together in Europe to strengthen their economy as far as possible. They are
called as European union and it consist of 28 European countries to work together on the
economic and political issues which also includes free trade between all the member countries of
European Union.The employees, products, services as well as capital move freely between all
these countries of European Union. These countries have also switched to a common currency to
deal with convenience, it is called the Euro. This has made exchange between these countries
easier and also exchange rate is not an important factor to consider for them. There is also some
downside to this monitory policy which is set for all of the Eurozone this means that all the
decisions are made by European Central bank which turns out to be good for some of these
countries I do not good or bad for the other countries. however, it is seen that not all the

countries of Europe are using euro as their currency. You are not all the member countries
included in european union use this as their currency. The decision on which currency to use and
whether to switch to Euro or not is dependent on the individual countries. It is seen that mostly
the trade between Europe goes on internally and in addition to this there is also trade between
Europe and China, United States, Russia and Japan.
Effect of economic system on company
BREXIT refers to a memorandum passed by public vote in June 2016 where United
Kingdom decided to withdraw from European Union (Lewis and et. al., 2017). In this 52% votes
were to words leaving the European Union where is 48% voted in favour of remaining in the
European union. The British government then formally announced this decision of countries
good travel from European Union in March 2017. This was the beginning of process of Brexit.
This basically means British exit from European Union.
Virgin Atlantic faced losses for continuously two years in a row due to Brexit. They were
also in our fear that they would no more make profits for the coming two years as Brexit had
highly hit the fuel cost for company. The company had to face losses before tax Road health
there were also many exceptional items of €26.1 million in the year 2018. There was also seen
fall in the value of pound after United Kingdom voted for leaving the European Union. Hello
with Virgin Atlantic there were also a number of companies who had to face challenges due to
the introduction of Brexit. The process of Brexit for company have been chaotic and they have
only seen significant downside for the company as well as the economy of United Kingdom as a
whole.
The government between United Kingdom and United States came under an agreement in
2018 and started in existence bilateral a service agreement with the other markets existing in
different countries that will be sure that all the flights or Virgin Atlantic will operate normally
check out in the future relationship of United Kingdom and European Union and changes made
in them due to BREXIT. There was no status quo transition period decided till 31 December
2020 which was made to ensure that all the customers of the company could continue to travel
with it along with full confidence even when United Kingdom have left the European Union.
Virgin Atlantic had made a number of clans strategically to keep all its plane flying and all the
customers of it moving and providing them with the required services and features for them
alongside.

CONCLUSION
From the above report it can be concluded that Virgin Atlantic is a successfully run business
in aviation industry in whole of Europe as well as world at large. The above report clearly
signifies the mission, vision, purpose, objectives and aims of the Virgin Atlantic. There are a
number of key stakeholders related to this business whose acceptance of business is very
necessary for the company to run without any barriers. The above report clearly signifies the
roles and importance of all these stakeholders in the company. There is a lot of complication
present in the aviation industry for Virgin Atlantic as it runs globally. All these complications
and strategies followed by virgin Atlantic to face these competitions specifically is also
mentioned in this report. Differentiation strategy is followed by company in order to differentiate
their products and services from that of their competitors which provide them with a benefit in
the market. Hectic and the report also specifies about the economy in which company is wrong
with you. The fracture of Brexit when virgin Atlantic and all of techno me of United Kingdom is
also explained in this report in detail. There are a number of steps taken my company to
overcome the losses by Brexit. The management of company states that they will soon come out
of all these losses.

REFERENCES
Books and Journals:
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business. In Global Business Expansion: Concepts, Methodologies, Tools, and
Applications (pp. 76-96). IGI Global.
Chasdi, R.J., 2017. Corporate Security Crossroads: Responding to Terrorism, Cyberthreats, and
Other Hazards in the Global Business Environment. ABC-CLIO.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Bhagra, A. and Sharma, D.K., 2018. Changing paradigm of employability skills in the global
business world: A review. IUP Journal of Soft Skills. 12(2). pp.7-24.
Strandberg, C., 2017. The role of human resource management in corporate social responsibility.
Rendtorff, J.D., 2017. Cosmopolitan business ethics: Towards a global ethos of management.
Routledge.
Lewis, H. and et. al., 2017. Global Business Today Asia-Pacific Perspective.
McGraw-Hill Education.nd Sweatman, A., 2017. Design+ environment: a global guide to
designing greener goods. Routledge.