Business Management BMP4003: Macroeconomic Factors and Virgin Holidays

This report provides a detailed analysis of the business environment of Virgin Holidays, exploring the impact of macroeconomic factors such as inflation and unemployment rates on its operations. It examines how the UK's growth rate influences the company, referencing the economic life cycle, GDP, and other key indicators. The report also investigates the effects of government intervention methods, including fiscal and monetary policies and labor laws, on Virgin Holidays' business. Furthermore, it identifies current global challenges faced by the company, such as understanding diverse languages and cultures, navigating legal landscapes, and managing communication and technology across international operations. The report concludes with recommendations on how Virgin Holidays can overcome these challenges, including strategies for adapting to cultural differences, adhering to legal requirements, and leveraging technology for effective communication and environmental conservation.

Business Management
BMP4003 Business Environment
Assessment 2
Influences of Macro-economic Activity
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Table of Content
Introduction..............................................................................................................................1
Main Body.................................................................................................................................1
Conclusion.................................................................................................................................5
References.................................................................................................................................6
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Introduction
Business environment involves all those factors that impacts operations of a company
as well as includes competitors, customers, suppliers, stakeholders, regulations other
government activities, industry trends, technological developments along with the social or
economic factors (Betti and Sarens, 2020) . In the following report, selected company is
Virgin Holidays from Virgin Group that provide provides holidays service across the world
along with the destinations in US and Canada, the Middle East, the Caribbean, Africa, the
Indian Ocean and the Far East. The report covers an ability to investigate as well as
explaining how economic factors can affects business activities. It further covers challenges
facing business in a global economy.
Main Body
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 refer to as broad indicators related to financial decline or
growth that affects the economy of a country. It can also describe as environmental,
economic or geopolitical event that can affects the monetary stability of an economy. There
are many factors that affect an economy such as interest rate, inflation, fiscal policy, inflation
rate, economic output, unemployment rates and many more (Cook and Davíðsdóttir, 2021).
These have direct impact on the demand of product and service of the organisation and
profitability of the company. Virgin Holidays is the organisation that provides holiday’s
service to their potential customers in many destinations of different countries. Because of
this, macro-economic factors of different countries affect the overall business output of the
company. This makes important for the management of Virgin Holidays to consider all these
factors while providing their holiday’s service to their customers as they also affects their
business growth. The two major macro-economic factors that affect its business are described
below:
Inflation- It refers to an increase in the average cost of product and service in a
certain period of time. Inflation that arise rapid manner can help in measure the economic
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downturn or instability while steady inflation can be considered as a normal economic factor
(Nijam Ismai and Musthafa, 2018). When the inflation rate arise in the economy which
means that the person need to spend more money on the same product and service. This will
affects the Virgin Holidays in order to decline in sales. When the inflation rate of the country
is stable or low which help company to increase their sales by the increase of customer’s
spending through the decline of goods and service in the country.
Unemployment rate- It provides an indication related to an economic health within a
country. A higher employment rate make economy of a strong whereas higher unemployment
rate can affects the economy of a country in negative manner. When most of the population
of a country is employed, their spending increases which increase the amount of money
circulation as well as boosts the economy in better manner. Whereas in the country which do
not have proper employment rate can decline the growth of economy. This makes
management of Virgin Holiday to analyze the employment rate of a country before providing
any destination holiday service to their customers.
How will the UK current growth rate impact on the chosen business (give
reference to economic life cycle, GDP, inflation, unemployment rate)
Current growth rate of United Kingdom has a great impact on the economies. It has
been analyzed that the growth of the United Kingdom is increasing from the past years. This
makes opportunity for many companies in order to make their business operation more
effective in order to gain many benefits from it (Peng and Li, 2018). The growth rate of
United Kingdom describes that many other rates of the country is also increased or decreased
in the economy in order to help in increasing the growth rate of country. Increasing the
current growth rate of the country helps Virgin Holidays to increase their sales. From the last
years the unemployment rate of the country decreases due to which many people in the
country has better employment which helps in increasing their spending. By the increase of
their spending, it increases the opportunity for the Virgin Holidays to increase their sales as it
increases their demand also. The inflation of the country increases due to which the price of
products and service increases from the least years but it will do not affects the demand of
Virgin Holidays as their income is also increase which makes them to avail their service in
effective manner. Many companies will get help from increase of growth of the country in
order to get recover from the negative impact of Covid-19 pandemic in better manner (Yu
and Chen, 2020). Economic life cycle of the UK is also effective which helps Virgin
Holidays in order to operate their business in better manner.
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How can the government current intervention methods affect the selected
business? (e.g., fiscal and monetary policies, furlough scheme etc.).
Government intervention refers to as regulatory actions taken by the government of a
country that may change the decision made by a person, group of person as well as
organisations related to social and economic matters. These actions can affect the market with
the objective to change the free market equilibrium of a country. Governments creates many
rules and regulations that affects the company in order to operate their business in better
manner which includes taxation policies, labour laws as well as trade restrictions (Badri and
Hachicha, 2019). The government of UK creates various rules and policies recently which
affect the business environment of many companies in order to operate their business in
effective manner. This makes important for the management of Virgin Holidays in order to
aware about the rules and regulations of the government in order to operate their business
according to them. The factors of the government current intervention that affects the
business environment of Virgin Holidays are described below:
Fiscal and monetary policies- This refers to a factor that affects the aggregate
demand of the country by changing in government spending and taxations. It influence
household income and employment of the economy due to which consumer spending and
investment is also affected. It also affects the demand of Virgin Holidays in order to operate
their business in better manner.
Labour law- It describes the rules and regulation which is imposed by the
government of the country in order to protect the rights of labour while working in the
organisation. This will be also a factor that affects the business environment Virgin Holiday
in order to adhere this law to operate their business in better manner.
Taxation- The government also imposed various taxation policies on the business which
affects the profitability of the company. This makes to Virgin Holidays to pay all these taxes
on time in order to operate their business in better manner. By paying proper taxes to
government, it will also contribute towards the growth of a business (Yang, 2020).
What are the current global challenges facing by the chosen business and
recommendations on how to overcome them in this current time?
In today’s world many organisation is operating their business in two and many
countries to make their international expansion. There are many changes occur in the global
business environment which creates challenges for the company in order to operate their
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business in global business environment in smooth manner. Virgin Holidays is operating their
business in many countries in order to provide holiday service in many destinations. The
current challenges in global business environment that are faced by the Virgin Holidays are
described below:
Understanding other languages and cultures- In different countries, there
languages and cultures are different which also affects the international companies in order to
understand other country languages and cultures in order to operate their business in proper
manner (Eberenz and Schröer, 2019). This will also create problem for the Virgin Holidays to
understand the languages and cultures of different countries in which they operating their
business. Due to this, the company is also faces problem to understand the needs and wants of
their global customers in order to make their business more effective.
The legal landscape- It describes that when the company operates there in many
countries needs to subject many laws, tax rules and different regulations in order to survive in
global business environment. It is similar for the company who are operating their business in
online channels. Due to this Virgin Holidays is also faces challenges in order to follow legal
laws in different countries to operate their business in better manner.
Communication and technology- One of effective challenges facing by the
companies is to have centralized communication system while operating their business in
different countries in order to manage their global staff and operations in better manner. If the
company runs their different technological systems in different parts of their company will
create challenges for the company in order to synchronize them as well as enhance proper
communication in the organisation. This will be also a challenge that is facing by Virgin
Holidays while operating their business in many countries as it leads in declining their
efficiency as well as it may also decrease their profitability and sales of the company.
Environmental conservation- Most of the countries are interested in conserving the
environment as well as preserving from the effects of global warming. Different countries
have different environmental issues for which they make different rules in order to protect
their business environment. Virgin Holidays operating their business in many countries
which creates challenges for them in order to follow different environmental protecting rules
of different countries in better manner.
Recommendations-
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These challenges are creating for the company in order to operate their business in
many countries in better manner. In order to overcome these challenges, following strategies
are recommended to Virgin Holidays:
Use common language as well as knows different culture- This makes company in
order to use common language and knows about the different culture of the country (Bashan
and Kordova 2021). This will help Virgin Holidays to overcome their challenges of
understanding the languages and cultures of different countries in better manner.
Aware about the legal laws of different countries- when the company operates their
business in different countries they need to follows many legal laws of different countries.
This makes Virgin Holidays to aware about the legal laws of different countries in order to
operate their business in better manner.
Use common technology in different parts of the organisation- This makes
management of Virgin Holidays to use common technology that helps them to operate their
business in different manner. This will also help them to overcome the challenge that was
affected by different communication and technology in the business.
Knows about the different environmental policies of different countries- This
makes management of Virgin Holidays to know about the different environmental policies of
different countries in order to overcome their current global challenges inn effective manner.
Conclusion
From the above discussion, it has been concluded that the business environment is the
environment in which many companies operating their business in order to increase their
growth. Inflation and unemployment rate are some macro-economic factors that affect the
business environment of the company. Labour law, Fiscal and monetary policies as well as
Taxation are some factors that affects the company due to government intervention in the
economy. Understanding other languages and cultures, legal landscape, communication and
technology as well as environmental conservation are some current global challenges that are
facing by the company while operating business in global business environment.
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References
Books and Journals:
Betti, N. and Sarens, G., 2020. Understanding the internal audit function in a digitalised
business environment. Journal of Accounting & Organizational Change.
Cook, D. and Davíðsdóttir, B., 2021. An appraisal of interlinkages between macro-economic
indicators of economic well-being and the sustainable development goals. Ecological
Economics, 184, p.106996.
Nijam, H.M., Ismail, S.M.M. and Musthafa, A.M.M., 2018. The impact of macro-economic
variables on stock market performance; evidence from Sri Lanka. Journal of
Emerging Trends in Economics and Management Sciences, 9(2), pp.115-121.
Peng, Z. and Li, X., 2018, August. Application of a multi-factor linear regression model for
stock portfolio optimization. In 2018 International Conference on Virtual Reality and
Intelligent Systems (ICVRIS) (pp. 367-370). IEEE.
Yu, J.J.. and Chen, X.M., 2020. A balancing act of regulating on-demand ride
services. Management Science, 66(7), pp.2975-2992.
Badri, R. and Hachicha, N., 2019. Entrepreneurship education and its impact on students’
intention to start up: A sample case study of students from two Tunisian
universities. The International Journal of Management Education, 17(2), pp.182-190.
Yang, S., 2020. Global Challenges and Market Transformation in Support of
Remanufacturing. In Remanufacturing in the Circular Economy: Operations,
Engineering and Logistics (pp. 169-207). John Wiley & Sons, Inc. Hoboken.
Eberenz, R. and Schröer, M., 2019. Current Challenges for Consumer Goods and Retail
Companies and Their Implications for Controlling. In Performance Management in
Retail and the Consumer Goods Industry (pp. 29-47). Springer, Cham.
Bashan, A. and Kordova, S., 2021. Challenges in regulating the local and global needs of
quality management systems. International Journal of Quality & Reliability
Management.
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