Analyzing Business Environment for Virgin Atlantic Airways Report

This report provides a comprehensive analysis of the business environment impacting Virgin Atlantic Airways. It begins with an introduction to the business environment, outlining micro, macro, and market factors. The main body delves into two key macroeconomic factors: economic output and inflation, and their influence on the airline's performance. It examines the UK's current economic growth rate and its effects on Virgin Atlantic, including the impact of unemployment. The report also explores government intervention methods, such as fiscal and monetary policies, and their effects on the organization. Furthermore, it identifies current global challenges faced by Virgin Atlantic, such as fuel efficiency and competition, and offers recommendations for overcoming these issues. The report concludes with a summary of the key findings and recommendations.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Two macro-economy factors that organization should be consider and influence business
outputs..........................................................................................................................................3
The UK current growth rate impact on the Virgin Atlantic Airways-.........................................5
The government current intervention methods affect the organization-.....................................6
Current global challenges facing by virgin Atlantic Airlines and recommendations on how to
overcome them in this current time.............................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................1

INTRODUCTION
Business environment includes all factors which affects a business operation and
collection of external and internal factors like customer needs, supply, demand, employees,
government activities, social trends, economic change, suppliers, market trends etc.
(Cherunilam., 2021). These factors affect operation or function of organization directly or
indirectly. There are mainly three types of business environment that is micro, macro and market
and its includes various factors like economic, social, legal, political and technological
environment. Virgin Atlantic airlines is long haul carried flying, they also operate seasonal
flights and located in Crawley, England, parent company is Virgin Atlantic Limited. This report
includes two macro factors that influences this business outcomes such as unemployment rates,
economic output and influence and overview of UK economic structures and their current
growth that could be analysis by economic life cycle, inflation, Gross domestic products etc. and
also elaborate about United Kingdom economy by their foreign direct investment, GDP per
capita income, purchasing power parity etc. Moreover, it also includes government policies like
fiscal policies and monetary policies which have great impact on business and global issue faces
(such as passenger comfortably, price of flue and global congestion) by organization with some
recommendation which help organization to overcome this issue in current time.
MAIN BODY
Two macro-economy factors that organization should be consider and influence business outputs
Macro economy is a study of efforts of regional economy or national economy as a
whole, in simple words macro is study of whole economy (Molavi., 2019). UK having a highly
develop market and social market economy, it’s the rank as fifth national economy in the world,
measure by Gross domestic products and eight largest economies by PPP (Purchasing power
parity) moreover twenty-fifth largest by Gross domestic products per capita. United Kingdom
has highly or third largest in inward foreign direct economy and firth in outward FDI. UK have
developed and advance economy their services are dominates that is approx. 80% contributed in
Gross domestic products. United Kingdom has developed, international trading and independent
economy. Good or strong economy helps organization to grow in their area. There are many
factors which affect economy such as interest rate, fiscal policy, economy growth rate,
employment, industrial production, gross domestic products, inflation, national income etc. for

example if interest rate is high of country then businessmen not take loan which affect economy
but if interest rate is low then small business also have opportunities to expand their business
which grow economy as well (Batten., 2018). Macro economy also known as theory of income,
there are four main components of macroeconomics such as economy outputs, inflation, gross
domestic products and employment. By the study of macro economy, it evaluates capabilities
and resources of economy and create different way to improve national income, generate job
opportunities, boost productivity etc.
Virgin Atlantic airlines is effect economy output, inflation, unemployment rate and
technological factor. The two factors that affect this company are:
Economy output: If economy is growing or developed then it gives positive impact on Virgin
Atlantic airlines, because their target customer are middle and upper class that is who travel in
business travellers and their good quality services helps in maintain better relations with upper or
top class peoples specially, and government polices also affect output of organization
(Gholipour., 2019.). If people per capital is high, then they move to travel through airlines
moreover if person have job then they afford this services so it’s very important to have good
employment in the country. If unemployment rate is low, then it’s very helpful in growing this
business so economy output factors influence this business outputs.
Inflation: In simple words the impact of increase in prices of services and goods which
decreases the customer purchasing power its includes increases flue rate which impact on
increase the ticket price and many customers cancel their routes in this or change their traveling
routes (Arefiev, and et.al., 2019). If inflation rate is high, then it’s not good for Virgin Atlantic
airlines because it decreases the purchasing power of individual and have impact like low sales,
reduces revenue etc. If inflation rate is high in United Kingdom, then it increases the products or
services price and in this case increases the price of ticket and market become more expensive.
There are many external factors which affect or influence Virgin Atlantic airlines such as
political, economic, technological, environmental, legal and social. Inflation rate is high due to
decrease in the value of dollar, increase the interest rate, and decrease the ROI return on
investment.

The UK current growth rate impact on the Virgin Atlantic Airways-
UK is considered as the fifth largest national economy in the world which is measured in
the terms of the nominal gross domestic product, eight largest nations in the terms of the
purchasing power parity as well as the twenty-fifth national economy in the terms of the GDP
per capita. The economic growth has the large impacts on the businesses of the country. The
Virgin Atlantic Airways also have the impact of the economic growth as this will have the
positive impacts on the businesses. This company may attract the large number of the customers,
increase the profitability as well as with this, the company will have the great opportunities for
the expansion and the growth to the other regions (Wardley-Kershaw and Schenk-Hoppé, 2021).
The faster growth of the gross domestic product of the country helps the business to
expand the businesses to different regions. The market value of the products and the services is
contributing for measuring the GDP. The unemployment rate of the UK is 4.1 percent and this is
the lowest rate from the December 2019. This shows that the unemployment rate is increasing
again after the impacts of the coronavirus. When the growth rate of the economy is increased,
employment rate also increases simultaneously. The Virgin Atlantic Airways company will have
the positive impacts of the unemployment rate as this is getting increased day by day which is
showing that the company will be benefited by this.
The benefits of the economic growth to the organization are such as
Higher average incomes: Economic growth of the country helps in the consumers to consume
more number of the goods and the services as well as enjoy the better standards of the living.
The Virgin Atlantic Airways will also get the benefit of the growing economy of UK (Sergi and
et.al., 2019).
Lower Unemployment rate: UK is having very low unemployment rate which is the biggest
advantage for the company as with the high output, company can employ more employees in the
organization. The Virgin Atlantic company will be able to employ more number of the
employees in the organization.
Decline poverty: The economic growth plays the vital role in reduction of the poverty of the
country. The GDP of the UK is rising very fast which shows that the country's poverty is
declining and the consumers will purchase the products and the services. The Virgin Atlantic
Airways will have the benefit of this as they may attract large number of the customers.

Investment: The economic growth of the country promotes the company to invest more for the
development for the future. The company investing more has the ability to increase the scope for
the future growth. This creates the economic cycle of the growth or the investment. The Atlantic
Virgin Airways investing more will help them in creating the scope for the future growth.
The government current intervention methods affect the organization-
The government intervention methods can affect the business but it also very important to
be made for correcting the market failure, promoting the equality, preventing the formulation of
the monopolies, providing the public goods and many more. Government establishes many
policies for the guiding the businesses, and the changes made are such as the changes in the
fiscal policy which results in changes in the taxes, trade as well as the subsidies. Businesses must
be flexible for responding in changing the rules and the policies.
The government uses the fiscal policy, monetary polices and many more related to this for the
intervention methods. The fiscal policies can affect the businesses as tax related fiscal policy has
the large impacts on the retail businesses as this changes the amount of the disposable income for
the for spending by the people (Ozcan, Tzeremes and Tzeremes, 2020). The higher taxes as well
as the expansion of the taxable items leads to the lowering the net income of the consumers as
this makes them more conscious of the budget and enables to limit the expenditures to the
necessities. The fiscal policy is the crucial tool which is used by the government for the changing
the economy workings which means that the Virgin Atlantic Airways should always be prepared
for the changes in the fiscal policy for adjusting accordingly.
Monetary policy another intervention method which affects the business environment as
adding the money to the economy of the country usually affects the interest rates as it gets
lowered, leads to the increase in the value of the money for the expansion of the business as well
as the consumer spending. This leads in spurring the growth of the economy. This policy can
affect the timing as well as the length of the business cycle. During the phase of the expansion,
the economy grows, the businesses adds more jobs as well as the spending of the consumer is
increased. The main object of the monetary policy is to influence the economy's performance
which are reflected in the factors such as the inflation, economic output as well as the
employment. This works as it impacts the demand of the economy that is the people and the firm
willingness for spending on the goods and the services of the Virgin Atlantic Airways

(Schoenmaker, 2021). These policies have the large impacts over growing of the business as it
influences the interest rates it is the rise in which the costs are increased of the borrowing in the
community of businesses.
The monetary policies can impact the money supply in the economy which influences the
interest rates as well as the inflation rates. It has the large impact on the business expansion, net
exports, employment and many more, as these all has the direct impacts on the aggregate
demand of the country (Woo, Moon and Lam, 2018). This policy affecting the consumers has
also ultimately impacts the businesses as they affect the consumption by changing the household
spendings so when the consumers spending is affected this has the negative impacts on the
Virgin Atlantic Airways company of the country.
Current global challenges facing by virgin Atlantic Airlines and recommendations on how to
overcome them in this current time.
Nowadays globalization increased, so increased in competitions between the companies
is very high because of increased in demand of customers. There are lots of new applications in
the market which helps in travelling these days. Nowadays people are addicted to travelling and
want to travel more, so they search for the cheap rate flights so that they can travel to more cities.
Virgin Atlantic airlines will occur huge loss in the market if they bring their price lower. There is
one good thing in these airlines is that, they always land at fix time which was written on the
ticket and never changes its gate number (Zizka and et.al., 2020). Amazing feature is that it
allows the customer to check flight's geographical position of the flight. Some major challenges
faced by Virgin Atlantic airline are:
Fuel Efficiency: One of the major economic factor which has been always there is cost and
efficiency of airline fuel. High in jet fuel price have direct impact on the portfolio of the Airline.
Global economy: Stating world's economy is one of the primary challenges faced by Virgin
Atlantic airline.
Passenger comfort and Experience: Many of the Airlines know how to satisfy customers and
providing them best services in the lower price range. This is not cost sufficient for Virgin
Atlantic Airline so, they can't low their rate of the tickets.

Global congestion: Before few years Air travel is the luxurious thing to do, it was not the piece
of everyone's cake but nowadays airports are everywhere, and they are so crowded that led to
unnecessary flight delays that put impact on reputation of the airlines (Tileaga., 2019).
There are some recommendations for challenge of fuel efficiency,
◦ Fly on efficient routes without disposals, Pilots can fly direct routes more easily and
efficiently.
◦ Know the airport as airlines can reduce fuel.
◦ Adjust to changes as pilot need some directional guidance as to save fuel. Current and
perfect data helps in minimize the impact of turbulence and other natural conditions
that require them to use additional fuel.
◦ Use basic tools and techniques to collect genuine feedbacks.
◦ Using the wing-lets extension of wings that look like split ends help in save the fuel.
Passengers comfort and experience is the most effective place where company can take
care of and give customers best experiences of flying with it (Smith and et.al., 2021). Grades
where they can take care is Leveraging Existing Assets, Creating more comfortable space and
having sufficient level of leg space, taking customer's first approach and effectively support
customer on the platform of their choice, by giving real-time data and accurate information to the
customer, listen to the customer's need and acknowledge their needs, don't make customer repeat
themselves, improvement of available choices make some good changes in flights which are
legal to do and attract the customer's satisfaction and applying to all these points passengers will
come to Virgin Atlantic Airlines in the loop which helps to gain the recognition and fame.
CONCLUSION
This report highlights the concept macro economy activity and factors which affects
organization outputs these factors includes gross domestic products, employment, economic
output, inflation and interest rate, and how it impacts a company, if economy is strong,
developed then is beneficial for organization to expand their business but if economy is
developing then it affects business growth. Also illustrate about United Kingdom economy they
have developed and independent economy. Macro economy is a brief study of economy as a
whole and major factors are national income, gross domestic products and inflation etc. if factors
are in favour of organization that is low interest rate, good employment, low inflation rate etc.

helps business in increase their business by taking loan, generate employment, boost their
productivity and have good return on investment. Furthermore, also discuss the UK current
market scenario and government policies which affects organization activities such policies are
monetary and fiscal policies etc. (monetary policies have impact on money supply) and how
good average income, low unemployment rate, high investment, decline poverty helps in
growing economy which also have impact on organization. This also includes challenges faced
but this industry such as fuel efficiency, passengers experience and comfort, global congestion
etc. and have some suggestion to overcome such challenges.

REFERENCES
Books and journals
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Zizka, L and et.al., 2020. Airline Overbooking: Customer (dis) Satisfaction and Communication
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