BSc (Hons) Business Management BMP4003: Business Environment Analysis

This report provides a comprehensive analysis of the macroeconomic factors influencing Virgin Atlantic Airlines. It begins with an introduction to macroeconomics and its impact on businesses, focusing on variables such as inflation and unemployment. The report then examines the UK's economic growth rate and its effect on the airline industry. It also explores the intervention tactics of government bodies and their impact on businesses. Furthermore, the report delves into the challenges faced by Virgin Atlantic, including overseas politics, strategy, and affairs, as well as redundancy issues, and offers suggestions to overcome them. The analysis covers the economic life cycle, fiscal and monetary policies, and the effects of the COVID-19 pandemic on the airline. The conclusion summarizes the key findings and recommendations for Virgin Atlantic to navigate the complex business environment. The report highlights the importance of understanding macroeconomic variables and government policies for the success of the airline. Finally, the report is supported by a comprehensive list of references.

BSc (Hons) Business Management
BMP4003 Business Environment
Assessment 2
Influences of Macro-economic
Activity
Submitted by:
Name:
ID:
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Contents
Introduction 3
Elaboration of the variables affecting the company’s output
ratio. 3
The impact of the UK’s rate of growth over the company. 4
The correction of the intervention tactics of the
government bodies over the businesses. 5
Elaboration of the existing comprehensive challenges that
are being faced by the selected business along with a few
suggestions to overcome them. 7
Conclusion 8
References 9
Introduction
Macro-economic can be defined as the subdivision of economics that exclusively
contracts with the construction, comportment and the administrative policymaking within the
economical budget of the country. It is that branch of economics which is related to inflation,
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output and unemployment prevailing in the nation. All such commercial pointers is directly
affected by the functioning of the management, buyer & the organization (Sibirskaya and et.
al., 2019). The presence of the major stimulus of COVID-19 in the complete economy within
the corporate sector. In this report, Virgin Atlantic Airlines is considered to be the business
organization for the investigation, which is a British Airlines that was established in 1984 and
the respective headquarter is in Crawlwy, England. This is a foremost organization, operating
its voyages in around 32 locations crosswise the globe. This project will examine the
clarification of the macro-economic facets that are impacting the entire maneuvers of the
commercial enterprise. Moreover, this will highlight the evolution in the UK that powers the
aviation industry. Additionally, the intervention modes of the government that have impacted
sector will also be considered. Furthermore, an analysis of the worldwide encounters that are
being handled by the division will also be done along with a few recommendations in order to
meet the given business circumstances.
Elaboration of the variables affecting the company’s output
ratio.
Macroeconomics refers to the aspects that impact the geographical and fiscal aspects
which is impacting the entire functionality in national and regional economy within UK. This
basically reflects the overall working of an economy not the particular group o individual or
the business. These are the aspects that reflect the entire working of an economy not the
specific group of people or the business. There are various aspects that are influencing the
entire working of the business output which are given below:
Inflation: It is the scenario, in which the increasing price of goods and services. This
is the terms that is broadly used and also involves the rise in the prices and the cost of living
which is influencing the overall working within the economy. It is the given situation in
which inflation is being arises as when the demand of commodity exceeds and impacting to
rise the overall price of the commodity in the target market. In context to the CEO of Virgin
Atlantic, they warns the inflation that is leading to have the high cost in business. Due to
which the economy is facing the issue for supply sufficient goods and leading to increase the
cost and the overall sustainability by the economy in the recent year. Passengers are facing
issues and CEO warns that scaling up the entire amount of sustainable aviation fuel which is 3
to 5 times more costly in comparison to the overall conventional fuel which directly affecting
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the budget of the aviation company. They also added that all the bill of an organization to fly
will be shared by all the stakeholders in the given market.
Unemployment: This refers to the situation in which people are not getting job or
they are unemployed and find difficulty in finding in getting job. This also includes the group
of non-working people due to the certain factors. In recent times, there is the huge impact f
the COVID-19 as there is the high unemployment in Unite Kingdom. Majority of people are
loosing their job as huge recession in making the overall economy slowdown in its
functionality. When taking concern of Virgin Atlantic, there is the carrier which is becoming
the first flights for its survival. They have laid off the 45% f employees and results in
minimizing the entire cost more than $530 million. In the communing year, this is important
to make change in the entire market strategy by which they can meet the change within the
economy as well. Furthermore, this is also added that tight labor market use the wages which
increases due to hiring of the staff. They also added this, more than 4.5 million individual are
loosing their job in the month of December and this is becoming the major issues to define.
As above discusses factors are related to the macro-economics and also influenced the
entire operations of Virgin Atlantic Airlines within the economy. This is also leading major
change in the given prices due to the unavailability of new employees.
The impact of the UK’s rate of growth over the company.
This is being analyzed that UK is the growing industry in which people are having
goof living standards and also ensuring the survival of the individual. With the huge impact
of pandemic the entire working of the economy and a big downfall which id approx. 9.4%
fall in 2020 by which, they is the huge public health restrictions and the pandemic in the
market. In the year of 2021, gross domestic product estimated the annul increase of 7.5%
within the economy. There are various approaches which are having the major impact on the
entire economic growth rate. In context to Virgin Atlantic Airlines, these are given below:
Economic life cycle: This is the state in which the economy passes through the four
stages in the cyclical pattern which are expansion, contraction, peak and trough. There are
various aspects which helps in accessing the stages of economic cycle, interest rates,
consumer sending ad the overall employment which also helps in accessing the stages of
economic life cycle. There is the better understanding of the individual about the insights and
they are very useful for the given business and the investors. In context to Virgin Atlantic
Airlines, there are four stages of economic cycle which are explained as follows:
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 Expansion: In this situation the level of financial advancement along with ratio of
interest remains less while the level of output is heightened (I and et. al., 2020) The
advancement of value of the market is present in context of the respective firm which
also enhances the price of petrol.
 Peak: In this situation the advancement is elevated to its highest level where
imbalances in the economic environment is generated and steps need to be taken for
its ratification. Here the company is able to maximize its profits. In context to Virgin
Atlantic Airlines, there is the situation of imbalance within the economy.
 Contraction: After reaching to the peak, correction is being made with the help of
particular period of contractions in the advancement which is reduced leading to
lesser employability and changes in price rates. In this environment the respective
firm has taken action to remove the errors.
 Trough: It is the state in which the economy hit the low point and the entire growth
starts to recover the operations of an economy. In relation to Virgin Atlantic Airlines,
they basically start recovery from the given business by evaluating the business
environment.
Inflation: As the inflation takes place with the increasing cost of the entire production
and this is also leading to increase the prices of ticket fare by which the inflation within the
economy as the individual is going through the change in the given market. With the increase
in the given prices of fuel, this leads to raise the prices of the tickets.
Unemployment rate: In recent times, there are various factors which is having
major impact within the economy and the business. The unemployment is UK is keep rising
with the huge impact of COVID-19 due to which they can ensures the effective working of an
organization.
The correction of the intervention tactics of the
government bodies over the businesses.
There are individuals who is playing the major role such as government who is the
main player in the given market as they have all the authority to make change in the monetary
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and the fiscal policy of an economy. These are the factors which is impacting the entire
functionality of business. This also helps in boosting the currency as it temporarily increases
the corporate profits and the share prices by which the entire cost of the value minimizes and
this leads to spike the given interest rates. In context to Virgin Atlantic Airlines, these are the
various methods of government due to which there is the impact within the economy which
are given below:
Fiscal policy: In this, Interest rates refers to the weapon which is being to evaluate
the entire inflation within the economy. This majorly impact the entire economy from the
inflation within the economy. This is basically ensuring the better services to their respective
consumer due to the losing their invest from the Federal reserve which is opposed to increase
them. There is the major loose in the given market which is leading to have the effective
consideration in the given market market by which all the people and the companies go get
the more & they gradually buy more goods. This is the assets in which the company leads to
bubbles in that unlike the gradual erosion of inflation in the given market place. There is
large amount of capital is being used which also bring the neatly to the next level and the
government can impact the market.
Monetary policy: Under this specific policy the governing authorities have full
control and have the ability to move capital and provide individuals taxation standing (Li,
Huang and Song, 2020). In context to Virgin Atlantic Airlines, they are focuses to have the
better working by which they can ensures the huge change in the polices or the diversified by
making change in the monetary value and polices. In relation to Virgin Atlantic Airlines, they
are focusing on the effective working fro the major interest rates of the individual due to the
better working for the interest rate of the people by which the entire flow of money can be
formulated in the given direction.
Vacation outline: It is being known that the nation is going through the huge impact
of COVID19 lock-down and the entire industries which is having the major impact. As the
airlines industry is offering the scheme among the employees due to which they receive
provisional leaves on the special appeals of the personnel. In context to Virgin Atlantic
Airlines, there focus in over the entire commercial facet which ensures the operative working
that helps in eliminating the unnecessary cost of an organization in this critical period of
COVID-19. It is the tactic being used to ensure the profitability ratio of the company and it
distinguish role in the business market.
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Elaboration of the existing comprehensive challenges that
are being faced by the selected business along with a few
suggestions to overcome them.
There are certain aspects that make sure of the efficacy of the functioning of the
company along with a number of challenges that are to be faced. They are evaluated by the
Virgin Atlantic Airlines in order to rectify them and safeguard the competence of the
association in the following manner:
Gradations of Overseas Politics, strategy and affairs: It frequently gets impacted
by the regulations, decision-making as well as the law of an organization that is implemented
by the trailblazer which vividly influences the transportation, availability of the resources and
the functioning of the company in an economy. In context to Virgin Atlantic Airlines, they
have been experiencing huge amount of losses which affects the effectiveness of the working,
leading to the minimization of the profit earning capacity of the business.
Redundancy: The level of the unemployment is decidedly impacted by the
commandments and the policymaking of an organization constructed by the influential people
present in the party affecting the availability of the job opportunities. Consequently, with time
there is foremost variations within the economy in respect to the organization. This ensures
the success of the company by eliminating the extra workload present in the pathway.
Efficiency of the fuel: It is being known that the cost is remain one of the chief
aspects influencing the functionality of the aviation sector. Due to the upsurge in the
commercial airline companies because of the increase in the prices of the exhaustible
resource, it is generating a complex cycle. In milieu to Virgin Atlantic Airlines, they face
these problems that is impacting the creation of profits and optimal revenue for the company.
The luxury experienced by the commuters: In commercial airline business, the
services provided by them to the passengers is evaluated by the overall experience of them.
The supreme challenge which is scrutinized by the Virgin Atlantic Airlines is the presence of
certain customers whose level of satisfaction is always below the score because of there
unusual nature. This cannot be served as it is an unnegotiable part for the company. They thus
can only give their respective best to ensure the seamless priority given to the passengers.
As per the above discussion, it is being recommended to Virgin Atlantic Airlines for
retrieving the protection actions in order to ignore the stimulus of the aviation industry within
an organization. In this way, they can improve the various job openings and make sure of the
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enhancements of the standards of the individuals as well as for the passengers. This helps in
ensuring huge products and revenue to the company.
Conclusion
An inference can thus be made that the macro-economic field of the study works with
an inclusion of the complete economy, its formulated structure as well as the overall
operations taking place withing the economic environment of the country. The factors that
can affect the functionality of the business are the scope of unemployment, level of inflation
and the fluctuations that occur in the nation furthermore, the cycle of the economy provides
an aid in the evaluation of the expenditure power & the ability to consume by the people. The
pecuniary and the financial strategy helps in the commutation of the movement of the cash
present in the marketplace. Thereby, a suggestion can be made to the company to prove
exceptional services to ensure the rate of success in order tp grow in the market.
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References
Li, Y., Huang, S.S. and Song, L., 2020. Opportunity and necessity entrepreneurship in the
hospitality sector: Examining the institutional environment influences. Tourism
Management Perspectives, 34, p.100665.
i, R. and et. al., 2020. Does economic policy uncertainty in the US influence stock markets in
China and India? Time-frequency evidence. Applied Economics, 52(39), pp.4300-
4316.
Bogoviz, A.V., Ragulina, J.V. and Barcho, M.K., 2018, April. Influence of innovations on
regional socio-economic development. In International Conference Project “The
future of the Global Financial System: Downfall of Harmony” (pp. 1200-1207).
Springer, Cham.
Sibirskaya, E. and et. al., 2019. Remote education vs traditional education based on
effectiveness at the micro level and its connection to the level of development of
macro-economic systems. International journal of educational management.
Online:
Virgin Atlantic CEO Warns Inflation Will Drive Higher Costs, Fares in 2022 [Online]
Available Through<https://airlineweekly.com/2022/01/virgin-atlantic-ceo-warns-
inflation-will-drive-higher-costs-fares-in-2022/>
Economic Cycle,2022 Available Through<https://www.investopedia.com/terms/e/economic-
cycle.asp#:~:text=An%20economic%20cycle%20is%20the,stage%20of%20the
%20economic%20cycle>
GDP first quarterly estimate, UK: October to December 2021 [Online] Available
Through<https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/
gdpfirstquarterlyestimateuk/octobertodecember2021>
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