BSc Business Management: Macro-economic Impact on Virgin Group

This report assesses the influence of macro-economic factors on Virgin Group's business operations. It explores the impact of inflation and unemployment rates, analyzing how the UK's current growth rate, economic life cycle, GDP, and government intervention methods such as fiscal and monetary policies affect the company. Additionally, the report identifies current global challenges faced by Virgin Group, including foreign laws, regulations, and currency rates, offering recommendations to overcome these obstacles. This analysis provides insights into the external factors shaping Virgin Group's strategic decisions and overall performance.

BSc (Hons) Business Management
BMP4003 Business Environment
Assessment 2
Influences of Macro-economic
Activity
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Contents
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Introduction p-3
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-3
How will the UK current growth rate impact on the chosen business
(give reference to economic life cycle, GDP, inflation,
unemployment rate) p-4
How can the government current intervention methods affect the
selected busines? (e.g., fiscal and monetary policies, furlough
scheme etc) p-6
What are the current global challenges facing by the chosen
business and recommendations on how to overcome them in this
current time? p-7
Conclusion p-9
References p-9
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Introduction
Businesses environment is the collections of all individuals, institution and
other factors that are not in control of a business organization but it depends on
those factors because they impact the performance of the business activities and its
sustainability(Shi, Zhuang and King, 2022). It has great importance because it
enable the business to identify the opportunities with the help useful resources so
that it can be able to cope up with the changing environment. In this report, Virgin
group has been taken into consideration which is multinational venture combined
founded by the Richard Bronson and Nik Powell. It involves in several business like
travel & leisure, health & wellness, music & entertainment, telecom & media and
financial services. The report will cover macro-economic factors which have great
impact on the business of a concern. Further, it will explained current growth rate
and government intervention methods that may affect business. Apart from this, it
will discuss the current global challenges that may impact the business.
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.)
Macro economic factors are the indicators of the financial growth and decline
that can affect the economy. The factors may include the geopolitical, environmental
or economic events that can effect the monetary stability of the country as a whole.
The factors can be considered as positive, negative or neutral on the basis of their
impact on the economy(Abdoh, 2022). These factors are analyzed by the
economist, financial analyst and other professional who provide report related to the
financial health of the country. Thus, the two macro-economic factors are explained
below in context to the Virgin group:
Inflation rate: It refers to the increment in the average price of the goods and
services. When there is rise in inflation then people have to spend more on the same
products or services and the purchasing power of the persons become low. The
employer of a some companies also raise the living cost sop that the salaries of the
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employees can match the rate of the inflation. This may help the employees in
purchasing those products or services whose prices are raised due to inflation. The
inflation rate shows the rise in price and es expressed in percentage. In relation to
the Virgin group when the rate of inflation increases then then the company have to
face many problem. The problems may include the prices of the raw material and
other specific items become expensive due to which the company have to increase
the cost of their products. As a result the purchasing power of the customers also
affected and they make less purchase which result in loss to the company. But
company may protect itself from such loss by adopting new pricing strategy and
focus on the expenses which help in increasing the sale of a company.
Unemployment rate: It is defined as the percentage of the unemployed
worker present in a labor force(Clancy and Ricci, 2022). It indicates the performance
of the labor market in a country which affect the income of the families, reduce
purchasing power of the people, decrease the morale of the employees and reduce
the output of economy. The unemployment rate increases due to the low demand of
the product and services in the market. As a result the company lay off the
employees which may lead to increase in the rate of unemployment. With reference
to the Virgin group, the company have great impact of the unemployment because
their products of the products become low. This happens because the demand for
the products or service get reduced due to unemployment as there is no earning to
the families due to which the purchasing power get reduced and effect an
organization adversely(Uzel and et. al., 2022).
Thus, in such ways the macro-economic factors affect the business of the
Virgin group therefore, it has to make different strategies to prevent such negative
impacts that may affect its business.
How will the UK current growth rate impact on the chosen
business (give reference to economic life cycle, GDP,
inflation, unemployment rate)
The growth rate refers to the change in the percentage of a specific variable
within a specific time period. The growth rate help in evaluating the performance of a
company and also forecast for the future presentation(Rajaeifar and et. al., 2022).
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The economies growth rate is traced as the the annual rate of change at which GDP
of the country increases or decreases. In relation to Virgin group, there are some
factors which affect business of a company which are describes as under:
Economic life cycle: It is also known as the business cycle which is a
periodic growth and decline of the economy of the country that are measured in
GDP. It is important because it help the professional to forecast the direction of the
economy makes everyone better to produce or consume more goods and services. It
has four stages which are depicted as under: Expansion: This is an stage where the companies grow their production
steadily and earn profits. At this stage the unemployment rate are low and the
stock market have good performance(Islam and et. al., 2022). The consumer
are buying and investing which lead to increase in demand for goods and
service where prices begin to rise. Peak: This is an stage where the companies expand their businesses
carelessly and the investors invest more by purchasing the assets which lead
to increase in the growth economy. Contraction: At this stage the economic activity is on the way down where
the investors have to face reduction in the value of the assets and the rate of
unemployment get increased. The stock market turn into the bear market and
the GDP growth is below 2%.
 Trough: The Trough is the lowest point which occurs when there is recession
and the business expects to rebound into the expansion phase.
GDP: The GDP of UK is expected to reach 3200.00 USD billion by the end of
2020 according to the analyst. The GDP indicates the production of goods and
services in the country which impact the economy as well. when the GDP increases
it provide various opportunities to the business because the demand for the goods
and services increase which lead to increase in the national income. This also
enable change in the living standard of the people and generate revenue to the
business.
Inflation: This affect the business because the price of the raw material and
manufacturing cost get increase due to which the company have to face the low
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purchasing power of the customers. This lead to decrease in the demand of the
company's goods and services(Ren and et. al., 2022).
Unemployment: This affect the business because there is no earning source
for the people which reduce their purchasing power due to which company have to
face loss in the production.
Thus, in such ways the growth rate of country can affect the business of the Virgin
group.
How can the government current intervention methods
affect the selected busines? (e.g., fiscal and monetary
policies, furlough scheme etc).
There are some government intervention method which have a great impact
on the businesses. In relation to the Virgin group, various policies have been
mentioned which are as under:
Fiscal policy: This policy refers to the use of government spending and tax
policies so that it can influence the economic conditions. These are of two types
which are expansionary fiscal policy which is highly used at the time of
unemployment and recession. The government use this policy by lowering taxes so
that the aggregate demand can be increased(Carrasco, Jawara and Meyer, 2022).
Second is contractionary fiscal policy which is designed to slow the economic growth
rate when there is high inflation. It raises the taxes and cut the spending. The fiscal
policy help in mobilizing the amount of the resources so that it can provide finance to
the numerous projects. This help in providing the information to promote the saving
rate and gives adequate incentives to the private sectors so that they can expand
their activities. The main objective of the fiscal policy is to decrease the instability in
the dispersion of the income and wealth. Moreover, it includes the price stability,
provide full employment to the people of the country and optimum use of resources.
It also help in accelerating the rate of economic evolution, promote investment,
capital arrangement and development(Shalyari, Arman and Salahmanesh, 2022).
With reference to the Virgin group, it is impacted by the fiscal policy because the
taxes of the government are charged fro the company therefore, it also has to
increase the price of their products. As a result, company have to face low income
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generation or sale due to the lower demand of the customer because of their lower
income.
Monetary policy: This policy are issued or made by the central bank that
manage the supply chain of money in form of cash, credit money market and
checks. This policy help in increasing the economic growth by preventing the
inflation through reducing the liquidity(Erer and Erer, 2022). The main objective of
this policy are managing the unemployment, control the inflation by reducing liquidity
and keeping up with long term interest rates. There are two types of monetary policy
which are expansionary fiscal policy which is used by the central bank to control the
inflation. They control the inflation by limiting the amount of lending to control the
supply of money. Therefore, they charge higher rate of interest through lending of
money. Second is contractionary fiscal policy which is used by central bank to avoid
the recession and control the unemployment. The bank charge lower interest so that
the comp[any take loan easily to expand the business and hire the staff and
equipment. It increase the liquidity by providing lower rate of interest. Moreover,
individual also borrow for spending more in buying new appliance and so on. This
help in increasing the economic growth of the country and reduce the rate of
unemployment(Novales, Fernández and Ruiz, 2022). Therefore, monetary policy
assist businesses like Virgin group by providing them lower interest loan so that they
can expend its business and hire employees to run the activities of the business.
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 challenges that company have to face while expanding its
business which are depicted as under in context to the Virgin group:
Foreign laws and regulation: When the company expand its business
internationally so it has to follow the rules and regulation of that particular country in
which it will operate its business(Shamdasani, 2022). Therefore, the company have
to understand the law of the country where its target market are. This will help the
company to successfully operate its business internationally.
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Currency rates: These rates may affect the business in two ways first by
changing the cost of providing goods that are purchased from different country and
by charging the attractiveness of the products to the manage customers. Therefore
when the rate of the currency gets depreciated the it provide benefits to the exporter
of the country and provide negative impact on the importers. Alternatively, when the
rate of the currency gets appreciated then the exporter of the country have negative
impact of it and the importer is provided benefits of it. Thus, in such ways the virgin
group can be impacted by the rate if the currencies while expanding its business to
other countries.
Choosing the right global shipping method: The company have to choose
the right shipping method to transfer its goods to other countries. Therefore, it has to
choose low cost method so that it enable an organization to pay freight for
transportation. It has to choose the carrier company which charge low transportation
cost that help a business concern in saving cost and keep safe their goods.
Political risk: The company have to face the political risk because the are
various laws, policies, taxes of government that are impose on the business of an
organization. Therefore they have to cope up with every party of government so that
it can run its business successfully(Ramlee, 2022). The government changes time
to time and the rule and regulation also changes according to the new government.
Therefore, the company have to adjust with new government policies for successful
running of the business. Thus, in such ways the company may affected by the risk of
politics and their rule and reguletion.
Communication difficulties and cultural differences: When the company
expand its business so it has to consider the communication difficulties and cultural
differences because different county have different language and different taste or
perception. Therefore, the company have to bring products according to the taste or
culture of that specific country. A language barrier also occur to communicate about
the products so the company have to promote its products in the language which
prevails in the country so that they may get aware about the new product or services
of an transition.
Thus the company have to face global challenges while expanding it business
activities. But from the above discussion it has been recommended that to expand
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the business internationally the company should cultivate partnership tn the region
where it wants to operate its business and must have knowledge of the market
where it is expanding its business.
Conclusion
From the above discussion, it has been concluded that the factors of business
environment have great impact on the activities of the business. The profit,
production or the investment are determined by the business environment. The
factors may be of any type such as human, economic system, economic policies,
monitory and fiscal policies and so on. The report has discussed about he macro-
economic factor which positively and negatively impact the business of an
organization. It has explained the inflation rate and the unemployment rate which
may reduce the production of the business when the both factor increases because it
reduce the purchasing power of the customers. Further, it has stated the current
growth rate of UK which may impact the business of the Virgin group. In addition to
this, it has furnished information about method of the government such as fiscal and
monetary policies which affect the business of company. Apart from this, it has
discussed the global challenge that company may have to face during the course of
business.
References
Abdoh, H., 2022. Putting Bloomberg into Action for an Investment Class. Available at
SSRN 4003753.
Carrasco, H., Jawara, H. and Meyer, M., 2022. The Effects Of Fiscal Policy On
Inequality And Poverty In The Gambia (No. 117). Tulane University,
Department of Economics.
Clancy, D. and Ricci, L., 2022. Economic sentiments and international risk
sharing. International Economics.
Erer, E. and Erer, D., 2022. Stock Market Responses to Monetary and Fiscal
Policies: Case Studing China, India, Indonesia, and Malaysia. In Handbook of
Research on Current Trends in Asian Economics, Business, and
Administration (pp. 266-282). IGI Global.
Islam, M.S., and et. al., 2022. Investigating the effect of climate change on food loss
and food security in Bangladesh. SN Business & Economics, 2(1). pp.1-24.
Novales, A., Fernández, E. and Ruiz, J., 2022. Growth in Monetary Economies:
Steady-State Analysis of Monetary Policy. In Economic Growth (pp. 411-460).
Springer, Berlin, Heidelberg.
Rajaeifar, M.A., and et. al., 2022. Challenges and recent developments in supply and
value chains of electric vehicle batteries: A sustainability
perspective. Resources, Conservation and Recycling, 180, p.106144.
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Ramlee, A.A., 2022. Early Internationalizing of Small-Medium Firms: A
Conceptualization on Internationalisation of International New Ventures
(INVs). In Multidisciplinary Perspectives on Cross-Border Trade and
Business (pp. 46-63). IGI Global.
Ren, Z., and et. al., 2022. Stocks and flows of sand, gravel, and crushed stone in
China (1978–2018): Evidence of the peaking and structural transformation of
supply and demand. Resources, Conservation and Recycling, 180, p.106173.
Shalyari, F., Arman, S.A. and Salahmanesh, A., 2022. investigate the effect of
exchange rate uncertainty on inflation and interest rate uncertainties and the
role of monetary and fiscal credibility on it: Application of VECH and BEKK
and VAR methods. Journal of Applied Economics Studies in Iran.
Shamdasani, P.N., 2022. Intel: Reinventing a Technology Brand. SAGE
Publications: SAGE Business Cases Originals.
Shi, X., Zhuang, M. and King, C., 2022. Getting implicit incentives right in SOEs:
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Economics, pp.1-14.
Uzel, G., and et. al., 2022. Land use preferences considering resource economics:
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