Global Challenges and Recommendations for Virgin Holidays Business

This report provides a comprehensive analysis of the business environment surrounding Virgin Holidays. It begins by identifying and explaining the impact of two key macroeconomic factors: unemployment rate and inflation, on the company's operations. The report then delves into how the UK's curre...Read More

BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION................................................................................................................................4
MAIN BODY ......................................................................................................................................4
1. Stating 2 macroeconomic factors Virgin Holidays should consider and their influences on it
business.......................................................................................................................................4
2. How will UK's current growth rate impact on Virgin Holiday...............................................5
3. How can the government's current intervention methods affect your chosen business..........6
4. Global challenges faced and the recommendations................................................................8
CONCLUSION....................................................................................................................................9
REFERENCES...................................................................................................................................10

INTRODUCTION
Business environment is engaged with the environment in which the business functions. It
refers to all the things which affects the working of the business. There are four kind of business
environments namely external, internal, micro and macro environment. The business environment is
associated with the factors of demand, supply, employee management, customers and many other
business regulations (Hans, 2018). These factors have a direct influence on the business's decisions,
strategies and actions taken by the firm on its daily basis. Virgin holidays is company owned by
virgin group, it is engaged in offering holidays worldwide. It includes Canada and US, middle east,
Indian ocean, Caribbean, Far east, Africa etc. The company has its headquarters established in
England and 7 other offices in US and Canada. This report will comprise influences of two macro
economic factors on the business, impact of UK current growth on the business, ways by which
government intervention will affect the business and lastly, determination of the global challenges
which stand ahead of the virgin holidays and recommendations which the organization should take
into consideration in order to overcome the challenges.
MAIN BODY
1. Stating 2 macroeconomic factors Virgin Holidays should consider and their influences on it
business
Macroeconomic factors affect the working of a business in various ways. Here are two
factors that the Virgin Holidays should take into consideration.
Unemployment rate- The economic uncertainty that took place as Covid-19, left a huge negative
impact on all the businesses around the world (Meyer, Prescott and Sheng, 2022). Virgin group also
reduced its workforce by cutting many of its employees during the time of pandemic, as the group
was not able to make business in that period. The company contributed to the unemployment rate,
by cutting 1150 jobs. But as recovered again from the pandemic period, the company is now
planning to expand its business again. The areas with high unemployment rate will give the
company a benefit of easy recruitments and salary advantages (Chakraborty and et.al., 2021). The
company can become cost effective by looking at this factor. So the unemployment rate becomes a
crucial factor for the virgin group when it comes to expanding its operations or inaugurating in a
new area.
Inflation- As survived from the recent times of economic crisis, the prices of everything is going up
and as a result, the inflation is hitting up the overall business of the world. Coming from a rough

journey of past two years it becomes very important to look at this factor and take steps accordingly.
Virgin Holiday's CEO also warned about the rise in the prices as the pandemic was not at all good
for the company and the company had to cut 45% of its employees and reduce it cost by $400
million. The CEO said that the company did its best by cutting its cost and saving for the future, but
due to the rise of prices in the recent times, the company will eventually have to increase its pricing
too, in the coming 6 months.
2. How will UK's current growth rate impact on Virgin Holiday
Every business organization is tremendously affected by the active macro economic factors
that exist in the market sectors. These macro economic factors consist of high/low price levels,
inflation, gross domestic product, national domestic product, national income, unemployment, etc.
In a collective manner all these elements coherently form a complete economic life cycle. Even
business segments like Virgin Holidays belonging to the large scale Virgin Group organization are
severely affected by repercussions of the Covid-19 pandemic which shook almost all successful
industries. In a likewise manner the Virgin Holiday firm is a travel and tourism holiday business
segment the monetary and fiscal policies of which will be further affected by UK's current growth
rate of economy (Chesson, 2020).
Economic life cycle
The scope of a country's macro economic state can be fully viewed through the lens of the
entire economic life cycle which is defined as the overall economic state of a nation. This is so
because it is a cyclical pattern comprising of total four stages namely expansion, peak, contraction,
and trough. These are further determined on the basis of macro economic factors such as GDP,
interest rates, aggregate demand and supply, etc. The United Kingdom's travel, tourism and holiday
sector is immensely influenced by its current national economic state as the Greater London area in
2019-20 witnessed a consistent fall in room service and accomodations by around 20%. This was
more so during the aftermath of post pandemic period. It has been recently observed that the
country's economy is getting back in shape despite of Brexit thus increasing scope for the company
to grow.
Gross domestic product (GDP)
Gross domestic product is a term used by macroeconomists which is used while referring to
a country's total amount of manufactured production units. Basically GDP means the net (overall)
amount of goods and services that a nation produces in the given time of a whole year and is
therefore calculated on a yearly basis. It points towards the growth or decline rate of a country's
output in terms of its finished goods. In this context United Kingdom's current state of GDP has

grown by almost approximately 0.1 % in the month of February 2022 which is only a mild increase
after a 0.8 percent growth in January of the same year. Such a slow growth rate indicates towards an
extremely gradual development of the economic status of Virgin Holiday firm (Dey-Chowdhury
and et.al., 2021).
Unemployment rate
It is the second most important factor among macro economic concepts that illustrates the
number of able and willing people out of the existent available labour force that are unable to find
paying jobs. Such an inability to find good, reputable, and salaried work offers hampers the
economic setup of a country's working population. Those who study the macroeconomic concepts
thoroughly are able to identify that the aspect of unemployment is actually unavoidable and it
occurs in almost every economy from time to time depending on the status of its GDP growth rate.
If the rate is low then the number of unemployed individuals increases and vice versa. It has been
witnessed by economists that the recent rate of unemployment in UK (April 2022) was specifically
estimated around being 3.8% which is contratsingly lower than three months before. This provides a
favourable option to the employers of the Virgin Holiday company meaning that at this rate, in the
coming furture they can profitably employ and manage their workforce personnel by a good scope
and can remedy the damage done during the coronavirus period.
Inflation
After having discussed GDP and unemployment rate the third most significant factor that is
directly related to the rise and fall in market price is termed as inflation. There are two ways of
measuring the rate of inflation namely CPI (consumer price index) and another method is the GDP
deflator (implicit price deflator). If the potential gross product is higher than real (actual) gdp then it
can be fairly assumed that the estimated price of goods is on the rise. 2021-22 statistics show that
the UK inflation rate has unfortunately struck a 40 year increment by 9%. This means that the
business growth of Virgin Holidays will be highly impacted by the current rate of inflation and
might hamper the company's new pricing plans that its CEO has set after a loss of $400 million
during Covid (Issa and et.al., 2018).
3. How can the government's current intervention methods affect your chosen business
There has been popularity about the provision of the support by the government for the
aviation both around the world and in UK also because of the outgrow of the coronavirus pandemic.
The debate has also discussed about the government that should help the airlines mainly with the
help of the crisis and the circumstances in which the governments must be doing so. Virgin holidays
has been given the order to come up to the deadlines of the refund in terms of the cancellations

related to Covid-19. The company has also agreed to give the refunds for any kind of the holidays
being cancelled. As per the law, the holiday packages that are being cancelled by the operator must
be given the refund in the 14 days.
If the flight is also cancelled then the passenger are needed to give completed refund to the
payment within maximum seven days however most of the airlines are trying to match that
deadline. The passengers can also accept, deny or rebook but the voucher can be invalid if the
company later goes bust. The airline industry has also faced a lot of economic challenges that has
also decreased the amount of the operations that ultimately created an influence on the revenue of
the company. The most trauma creating event which got struck on the airline industry is the
prevailing economic recession across the globe that decreased the number of passengers travelling
through air but also it witnessed that the airlines came down in their operational activities that led to
the reduction in the number of the flights taking place across the globe.
In relation to the airline sector the virgin holidays faced a lot of challenges that also existed
in the airline industry (Employe). This especially involves the competition from the other players of
the market, the economic recession and the inflation. The competition faced in the airline industry
also was being faced by already developed airlines that had the huge control on the market share
ultimately making it difficult to dive deep into such kind of the markets.
The literal meaning of the term intervention refers to the act of conniving an evil plan or
concocting an evil or cunning scheme in order to achieve an illegitimate end. But as dramatic as it
sounds, in the business environment it means devising a strategic management tool in order to avoid
impending crisis in the business organization or used as a support scheme of critical management
(Pellis and et.al., 2021). Generally these intervention methods are applied and implemented by the
government of a nation as a counter strategy to major issues such as the recent Coronavirus wave
that left many business enterprises in a damaged state such as Virgin Holidays of the Virgin Group.
Furlough scheme
Some of these business and market intervention methods have also been implemented by the
UK government for its business firms to salvage the post-Covid losses. A few examples of these
include monetary and fiscal policies and the furlough scheme. The latter one, i.e. the furlough
scheme can be defined as involuntary temporary layoffs implemented by business firms in order to
retain their skilled employees without pay for a certain period of time. The UK goverment's
furlough scheme in the wake of the Covid period has been an excellent strategic influence over the
business tactics of the Virgin Holiday company as it served as a retention scheme that effectively

helped in maintaining its efficient emplpyee base till April 2021 (Mayhew and Anand, 2020).
After the set time period of furlough, the promised amount of salary was reimbursed among
the working staff covering largely 70-80% of wages of more than half of its personnel. This was
beneficial to both the employees and the Virgin Holidays company as the employers were able to
retain their invaluably experienced staff members for a set time duration in order to mitigate Covid
incurred losses with zero amount of extra expenses of training new cadidates while the layoff
process.
4. Global challenges faced and the recommendations
One of the main challenges faced by the Virgin holidays was the structure of the internal
team along with the marketing that is needed to go through the process of extensive approval
specifically for the purpose of email creative and content writing. As an outcome of this there was
no opportunity or time for the testing that resulted in the culture which is not creative or restricted
(Michel). The advantages of using the artificial intelligence platform in order to automate along
with optimising the subject lines. This kind of the technology examines the sentiments, emotions
along with the phrases for the purpose of forecasting the type of copy that the audience will respond
to in the best manner. Another challenge was the lack of imagination or creativity. The company has
always brought the latest ways to improve the travel experience for its passengers. One way in
which it can be done is with the help of developing an efficient strategy of the content in order to
guide the journey of the customers.
To examine the performance of the content marketing performance of the brand, the
company also conducted the audit of the content of all the passengers touch points. They also
found out the promising angle where there were a number of different ways to do the things in the
unique way with the assistance of the little effort from the Brand watch (Akitoby, 2018). The search
for the innovation by the Virgin holiday created an impact that resulted to the launch of the trending
travel guide of the company which is the first most socially-aggregated travel guide across the
world. The innovative and creative tool of the discovery brought together the information from vast
number of the social posts in order to display with the latest hottest attractions along with the
destinations or places across the world. As the complex projects are being increasing in the recent
times the challenges along with that are also increasing in number. The support team of the Brand
watch are always assisting to guide the process of the execution.
Government intervention are mainly the actions taken by the government in the regulatory
terms for the purpose of finding to change the decisions created by the organisations, groups as well

as the individuals related to the economic and the social aspects. The intervention made by the
government is any kind of the action taken out by the government which creates an impact on the
market with the goal or objective of changes in the free market result or equilibrium (Sidibe). The
virgin holidays is a company that is owned by the virgin group which provides the holidays across
the globe with major destinations such as the Canada and US. Along with that the company also has
a well developed ski program along with a specialist cruise division which is known as the Virgin
Holidays Cruises. In the past few years, it was also announces by the company that all the revenues
which the Virgin group gets from the virgin holidays would be utilised into the research and the
investment in order to create the sustainable source of energy (Mejia).
CONCLUSION
From the above report it has been concluded about the macro economic activity of the
Virgin Holidays. It was discussed about the macro economic factors that the company faces along
with the impacts that these developed on the output of the business such as the rate of
unemployment, economic output and the inflation. The prevailing growth rate on the business in
reference to the inflation, GDP, economic life cycle and the ways in which the existing intervention
methods of the government affect the company was also being discussed. At last the existing
challenges that the company faces across the globe and the relevant recommendations on how to
overcome them are also being examined in the report.

REFERENCES
Books and Journals
Akitoby, B., 2018. Raising revenue: Five country cases illustrate how best to improve tax
collection. Finance & Development.55(001).
Chakraborty, T. and et.al., 2021. Unemployment rate forecasting: A hybrid approach. Computational
Economics. 57(1). pp.183-201.
Chesson, E., 2020. Will travelling ever be the same again?.
Dey-Chowdhury, S., and et.al., 2021. International comparisons of GDP during the coronavirus
(COVID-19) pandemic. Office for National Statistics Retrieved. 22(03). p.2021.
Employe, A.H.A.W.P., A. Introduction and Overvie w.
Hans, V.B., 2018. Business environment–conceptual framework and polices. International
Educational Scientific Research Journal. 4(3). pp.67-74.
Issa, S.S., and et.al., 2018. Effectiveness of inflation targeting based monetary policy. Opción.
34(16). pp.590-605.
Mayhew, K. and Anand, P., 2020. COVID-19 and the UK labour market. Oxford Review of
Economic Policy. 36(Supplement_1). pp.S215-S224.
Mejia, A.L., Fiscal Developments and Challenges. In Cambodia. International Monetary Fund.
Meyer, B.H., Prescott, B. and Sheng, X.S., 2022. The impact of the COVID-19 pandemic on
business expectations. International Journal of Forecasting. 38(2). pp.529-544.
Michel, A.N., Lame Duck and Beyond, Tax Extenders Are Still Bad Policy.
Pellis, L., and et.al., 2021. Challenges in control of COVID-19: short doubling time and long delay
to effect of interventions. Philosophical Transactions of the Royal Society B. 376(1829).
p.20200264.
Sidibe, A., FISCAL INTEGRATION FOR THE ECCU.