Virgin Money Case Study: Examining the Business Environment in the UK

This report provides an in-depth analysis of the business environment surrounding Virgin Money, a banking and financial services organization operating in the UK. It examines the economic environment, focusing on factors such as demand, market size, income, and unemployment levels, and identifies Virgin Money's market structure as oligopolistic. The report also explores the global business environment and its influence on countries, utilizing a PESTLE analysis to assess political, economic, social, technological, legal, and environmental factors impacting Virgin Money's operations in the UK. The analysis concludes that understanding both intrinsic and extrinsic factors is crucial for businesses to strategize, mitigate risks, and capitalize on opportunities for growth, highlighting Virgin Money's digital-first approach and its commitment to sustainability.

Business Environment

Table of Contents
Table of Contents........................................................................................................................................2
Introduction.................................................................................................................................................3
Task.............................................................................................................................................................3
Examine the economic environment........................................................................................................3
Examine the global business environment and its influence on countries................................................5
Conclusion...................................................................................................................................................6
References...................................................................................................................................................8
Books and journals:.................................................................................................................................8

Introduction
Business environment outlines a collection of all internal and external factors that includes
customer needs and preferences, dealers, workers, supply and demand, intervention of
government, social trends, economic changes, innovation in technology and many more. These
factors highly influence the business activities and operations in a direct or indirect manner.
Analyzing business environment supports in acknowledging the business opportunities, help in
planning, drumming beneficiary resources, progresses the overall performance, effectiveness and
growth of the organization (Ahmad, Omar, and Quoquab, 2020). The current project is based on
a case study of Virgin Money. This is a banking and financial service organization which is
operating in United Kingdom. In 1995, it was founded by Richard Branson. It has expanded its
business functions and activities throughout the world. It was announced the plans to become a
retail bank. With the help of the following case study, the current project will examine the
economic environment as well as global business environment and their influence on countries
with an emphasis on the UK.
Task
Examine the economic environment
The term economic environment can be defined as all the external factors of economy that
influences the customers and businesses buying habits, and therefore, influence the overall
performance of business. There is no control over all such factors and they may be either macro
or micro scale. In context of Virgin Money, there are many factors that influence the economic
environment. Some of them are discussed below:
 Demand: It indicates that the demand of merchandise increases and results in more
profits for the businesses whereas a reduction in demand can result in big losses for the
companies. In context to Virgin Money, the company utilizes many strategies to increase
their product and services demand in the market such as they provide credit and prepaid
cards, travel insurance, home insurance, car insurance, pension products, life insurance
savings products and many more.
 Market size: The profit margin of the business will be short if it has a small size of
market (Deprez, Leroy, and Euwema, 2018). The market size signifies that the total
number of perspective buyers in a market. In context to chosen company, it has a
worldwide business operation in which many countries are utilized to increase their
customer base and improve their market size.
 Income: Income describes as the total earning of a person or an entire family. It highly
affects the buying habits of the customers and thus influences the commercial
organizations (Berg, 2020). There is a direct relationship between consumer spending

power and their income. For example, the person with restricted income tends to
purchase only products and services which are essential for living and do not like to
spend much money on luxurious or entertainment items. In addition to Virgin Money, the
company provides facilities to all kinds of their customers and depends on the
consumers’ size of income, the company provides loan facilities accordingly.
 Unemployment level: It is another factor which influences economic environment. The
countries which has high rate of unemployment have a scrawnier economic atmosphere.
If most of the people will not make money then they will not have adequate income to
spend on purchasing products and services (Arieftiara, and et.al., 2019). This develops a
severe economic cycle in the nation. For instance, if population will not purchase then
organization will not recruit individuals for the purpose to reduce cost and if
organizations do not provide jobs or employment then the rate of unemployment will
simultaneously increase. In setting of Virgin Money, it is identified that the bank
provides and creates a number of occupation to the people in UK, which delivers of
favorable impact on the expenditure power of populace.
Economic Market Structure
It defines how various industries are divided and distinguished based on their nature and
degree of competition for products and services. It is relied on the features that affects the
behaviour and result of organisations working in a certain market. In addition to Virgin Money,
the different types of market structure as as follows:
 Perfect competition: This situation found where there is a huge number of small
organisations competing against each other. They sells same kinds of products which are
homogeneous in nature, free to enter and exit the marketplace and lack price influence
over the commodities. Also, customers have full understanding and knowledge of the
products and services that are being sold in the market (Duarte, Cabrita, and Cruz-
Machado, 2019).
 Monopolistic competition: It defines as an imperfectly competitive market with the
characteristics of both the competitive and monopoly market. Sellers have the
competition among themselves and distinguish their products in the way of quality and
branding to look unique.
 Oligopoly market: It involves a small number of large organisation that sell
distinguished or indistinguishable products. Since, there are limited number of
competition in the market, the competitive tactics and plans are relied on each other.
 Monopoly: It has no competitor and the products are sold in the market solely. It features
such as sole claim of ownership of resources, license issued by government, copyright
and patent and high initial costs of establishment (Millar, Groth, and Mahon, 2018).

It is found that Virgin Money follows or adopt the oligopoly market structure in order to
run their business in UK market. It is a global company that operates their business in which
there are few firms in the target marketplace. It has few competitions such as Broken Trust, FDC
Trust, Horizon Bankcorp and many more (Farhoomand, and et.al., 2021). Also, it has few
competitions by small firms but due to the influence of their strategy, it is the one that become
digital first bank that impacts on the minds of consumers.
Examine the global business environment and its influence on countries.
The global business environment can be elaborated as a term in which several external
factors are beyond the power and control of any community or economy. It is important to
understand and realize the influence of all the macro environment factors as the same highly
affects the business decision-making and choices related with the utilization of resources. In case
of Virgin Money, the impact of global business environment will be comprehended with the use
certain model i.e. pestle in relation with UK. Analyzing the impact of all such factors will help in
knowing the present opportunities and risks.
PESTLE analysis of Virgin Money
Pestle analysis is a framework that supports business organization to analyses different macro
environmental factors such as political, economic, social, technology, legal and environmental
factors. All those factors support in analyzing the changes happening in the business. In addition
Virgin Money, the explanation of all such factors are mentioned below:
 Political factors: This segment includes factors such as taxation policies, regulatory
practices and government bodies, political ideology of the government, political stability,
of the country, influential political leaders and their ideas. In addition to Virgin Money, it
is found that in UK due to the Brexit impact many trade restrictions have been imposed
by the government. It also impacts the employability of the country due to which many
individuals suffer their work and jobs.
 Economic factors: This kind of factors delivers a big influence on the organization and
its success. It includes inflation rates, economic growth, important factors of specific
industry, consumer expending power, unemployment rates and many more. It is found
that buyer’s spending power indicates their employability power. If the consumer has
high income rate then their spending power is high in order to take services. In addition
to Virgin Money, the company supports in increasing employment rate in the country due
to which the customer an take many products and services from the bank.
 Social factors: It involves the factors such as lifestyle trends, state and influence of the
media, cultural and religious factors, demographics of the market, consumer spending
power many more (Kudlats, McDowell, and Mahto, 2019). It is found that the due to the
impact of global pandemic the spending power of consumer become very low due their

reduction in income. It influences company to support their customer and employees by
giving loan facilities so that they could help them out in the situation.
 Technology factors: This segment encompasses the changes in new production
technology, new innovations maturity of technology, intellectual property copyrights,
copyrights, patents and many more, manufacturing technology and so on. As the
government imposes many restrictions on the physical contact and social distancing, they
indulge many services that delivers positive impact on the welfare of staff members and
employees. These services include online payment, online customers’ services, enhancing
telecommunications and many more.
 Legal factors: It encompasses laws and legislations made by the local government that
the organization has to follow for the purpose to continue operate their business activities
(An, and Youn, 2018). These factors include health and safety guidelines, environment
laws and regulations, business laws, international trade agreements and many more. In
addition to Virgin Money, there is need to follow all the government guidelines and
protocols introduced by UK government so that it won’t negatively affect the brand
image and reputation of the respective bank.
Environmental factors: These are the factors that influence industries and their ability to
operate in a smooth way. These factors are insurance policy, safe waste disposal, energy
power consumption and environmental issues dealing with hazardous material and many
more. Virgin Money Bank gains the name and fame of increasing sustainability in their
business activities as they promote digitalization in their services which makes less usage of
paper work. Thus, this is the bank that increasing the protection of nature and natural
surroundings. It helps in engages more customers towards their brand (Whitehill, 2022)
 .
Conclusion
It has been concluded from this assignment is that business environment covers many
intrinsic and extrinsic factors which affects the business entities in both ways positive and
negatively. It is essential to assess all such elements with certain models and approaches that
show the business to how to make plan to combat risks and snatch opportunities for growth.
Virgin Money is the digital first bank that gives many services through their digital modes such
as e-services to their customers to resolve their issues and customers, digital payments and many
more. It is observed that economic environment of business is covered with all such external
factors that impacts the spending power of customers as well as their tastes and preferences. It is
needed to assess all those factors to provide better customers services. It is also found that
understanding economic market structure is important as it influence market outcomes through
its impact on the opportunities, motivations and decisions of economic players involved in the
target marketplace. Oligopoly, perfect competition, monopolistic competition and monopoly

market structure are detailed in the project. Moreover, it is seen that the market structure that the
respective company is chosen is the oligopoly market structure.

References
Books and journals:
Ahmad, S., Omar, R. and Quoquab, F., 2020. Family firms’ sustainable longevity: The role of
family involvement in business and innovation capability. Journal of Family Business
Management.
An, D. and Youn, N., 2018. The inspirational power of arts on creativity. Journal of Business
Research, 85, pp.467-475.
Arieftiara, and et.al., 2019. Contingent fit between business strategies and environmental
uncertainty: The impact on corporate tax avoidance in Indonesia. Meditari Accountancy
Research.
Berg, D.M., 2020. Preparing Students for the" Next" Global: The Responsibilities and Tools of
International Business Education. AIB Insights, 20(1), pp.1-5.
Deprez, J., Leroy, H. and Euwema, M., 2018. Three chronological steps toward encouraging
intrapreneurship: Lessons from the Wehkamp case. Business Horizons, 61(1), pp.135-145.
Duarte, S., Cabrita, M.D.R. and Cruz-Machado, V., 2019, August. Business model, lean and
green management and industry 4.0: A conceptual relationship. In International Conference
on Management Science and Engineering Management (pp. 359-372). Springer, Cham.
Farhoomand, and et.al., 2021. Managing (e) business transformation: a global perspective.
Bloomsbury Publishing.
Kudlats, J., McDowell, W.C. and Mahto, R.V., 2019. Unrelated but together: Trust and
intergroup relations in multi-family businesses. Journal of Business Research, 101, pp.750-
756.
Millar, C.C., Groth, O. and Mahon, J.F., 2018. Management innovation in a VUCA world:
Challenges and recommendations. California management review, 61(1), pp.5-14.
Whitehill, A.M., 2022. Japanese management: Tradition and transition. Taylor & Francis.