Macroeconomic Influences on Business: A Report for BMP4003

This report examines the impact of macroeconomic factors on Virgin Atlantic Airlines. It begins with an introduction to macroeconomic concepts and their influence on business operations, particularly during the COVID-19 pandemic. The report analyzes two key macroeconomic factors: inflation and unemployment, and their effects on the airline. It then assesses the impact of the UK's economic growth rate, considering the economic life cycle, GDP, inflation, and unemployment. The report further explores how government interventions, including fiscal and monetary policies and the furlough scheme, affect the business. It concludes by identifying current global challenges faced by Virgin Atlantic and offers recommendations for overcoming them, referencing foreign policy and market dynamics. The report provides a comprehensive overview of the external factors influencing the airline's performance and offers insights into navigating a complex business environment. The report is a response to a brief from Sir Richard Branson, who asked for a report to be presented to the board of directors and shareholders, to illustrate the level of influence that macro-economic activity can have on one of his businesses during the pandemic.

BSc (Hons) Business Management
BMP4003 Business Environment
Assessment 2
Influences of Macro-economic
Activity
Submitted by:
Name:
ID:
Contents
1

Introduction 3
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.) 3-4
How will the UK current growth rate impact on the chosen business
(give reference to economic life cycle, GDP, inflation,
unemployment rate) 4-6
How can the government current intervention methods affect the
selected busines? (e.g., fiscal and monetary policies, furlough
scheme etc) 6-7
What are the current global challenges facing by the chosen
business and recommendations on how to overcome them in this
current time? 7-9
Conclusion 9
References 9-10
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3

Introduction
The report is discuss about important macroeconomics concepts that mainly
allocates artefacts, outcomes, decision -making and the nature of whole economy.
The concept of economics involve rate of unemployment, inflation and economic
outcomes of the market. There are some signals which are productively monitored
the economic performance of the companies along with the customer and
government also. At the time of COVID -19 the complete working of the business is
highly effected (Chang and et.al., 2020). The British airlines which named as Virgin
Atlantic Airlines are established in crawlwy, England in the year 1984. It was setting
up their flights over 32 places around the whole world. This case is mainly cover all
the components of macroeconomics which create an impact on the complete output
of the company, it usually examine the rate of economic growth in UK. Apart from
this, it estimate the involvement of present government which mainly influence the
complete practicality of the company. At last, it approach some certain challenges it
usually deals in their company and provide the correct suggestion in respect to
recover the current time.
Explain two macro-economic elements that requires to
think and the influences these elements of selected
business could have on its company outcomes (macro-
economic e.g., economic output, unemployment rates,
inflation etc.)
The key prospects of macroeconomics factors define as the fiscal policy
which influence the geopolitical circumstance which mainly create an impact on the
regional and economy of UK country. These components of the economy influence
the whole nation not only the selected individuals (Chen and et.al., 2021). Most
importantly the rate of unemployment and inflation these are the major two
components of the economy which are describes as given below:
Inflation: It is the rate of price maximizing over a specific given time duration, it is
usually a big analyses which involves the increase in prices or the living cost of the
country. The results of demand pursing to reduce products which mainly effect to
create high price of the product. The rate of inflation has been enhanced to 9.4% in
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June, 2022. It is the most highest rate till now. The biggest issue of increasing in
price is motor fuels. The government of UK has evaluated that the price of motor fuel
has increased by 42.3%. The average cost of petrol has rose by 18.1 per ltr. In June
of 2022. To reduce the inflation rate, the government needs to focus on the
petrol(Chiambaretto and Coqueret, 2020).
Unemployment: It involved those individuals who are presently unemployed or
finding a job but they are not capable to identify the suitable job position. It involves
those group of individuals also who are not performing their job due to the influence
of various components. At the present time, there is a very big effect of COVID -19
influence the rate of employment in the country UK. In present time, individuals loose
their work job because of highly recession period in the economy. According to the
Virgin Atlantic there is the transporter which mainly support first flights endurance at
that time. It mainly fixed 45% of its staff members from which it decline the base of
cost more than its $530 billion. But the lightness will be required in the coming years
so that it can easy to follow the variations of plans in the market and it can simply fit
the variations considered in the economy (Fuellhart and et.al., 2021). They also added
that the 4.5 million people in the month of December leave their job which correctly
state the problem of scale.
The components of macroeconomics create an impact on the complete working of
the Virgin Atlantic Airlines in the economic system. It increase the cost due to higher
production price.
Impact of UK current growth on the business that has
chosen by giving the references to economic system life
cycle, GDP, inflation and unemployment rate.
The UK country is one of the speedily developing economy in which
individuals are having good standard of living and earn better for their endurance.
After the effect of COVID-19, it create an impact on the businesses which has a big
9.4% decline in the particular year of 2020 because of the restrictions in health of
public during the pandemic time period. Gross domestic items or product (GDP)
observe the increase rate on annually basis. Here are some certain methods which
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mainly create an impact on the future rate of economic system growth which can be
observed in the Virgin Atlantic Airlines that are discussed below:
 Life cycle of economy: It is the whole economic state which mainly go
through the four levels in cyclical structure and the growth, height, contraction
and depression. There are some components which assists in knowing the
GDP, rate of interest, spending of customer overall rate of employment which
assists in examining the present level of cyclic economy (Gonzalez-Alegre,
2020. Good knowing and visual image are very useful for the company and
the capitalist also. There are some four levels of life-cycle economy according
to the Virgin Atlantic Airlines which are as discussed below:
▪ Expansion: In this level the growth of the economy is faster and the
rate of interest tend to decreases, it also indicates the increase in
production and the force of inflation maximized. According to the Virgin
Atlantic airlines, it face the inflation due to high demand in the place of
market and the increase the fuel cost.
▪ Height: If the growth of the economy target its highest rates, then the
height of the cycle is ambit and its generate the disparity in the
economy which required to be corrected (Hafeez and Kar, 2021). This is
the main point in which firm achieve the profitable situation at the time
of peak but it also support to make disparity in the projected activity of
Virgin Atlantic Airlines.
▪ Contraction: After the completion of peak, a rectification incurred due
to the particular duration of contraction along with the slow growth,
reduce the employment rate and change in prices. It is the point where
modification is done by virgin Atlantic Airlines. This will help the
company to reduce the errors.
▪ Depression: This is the important part in which the economy target the
decreased point and develop begins to retrieve in the economy. It is
one of the most important point in which Virgin Atlantic Airlines begin to
retrieve from the company by knowing the environment of company.
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Inflation: In country UK, if inflation rate is higher then it increase the production cost
for the firm supports which maximized the prices of airlines tickets which tends to
become inflation within the economy if the individuals are facing high variations in
the market (Jażdżewska-Gutta and Borkowski, 2022). Along with this if prices of fuel
increases then it tends to increase the prices of airlines tickets and its create inflation
in the economy.
Rate of unemployment: In the present situation of market, there are some
components which create highly effect firm in the economy. The rate of
unemployment increases at the time of peak due to the effect of Pandemic in the UK
nation. So, on that basis it correctly check the best scrutiny in the market.
How can the government current intervention methods
affect the selected busines? (e.g., fiscal and monetary
policies, furlough scheme etc).
There are some individuals who mainly determined the government as the
important part of the market. If the government has ability to created the high
variations into the policy of monetary and fiscal. Which usually create an effect on
the complete practicality of the company (Kumaka, 2022). It can correctly encourage
the currency which is temporary rise the profits of the company and the prices of
share but it automatically reduce the worth and its create the rate of interest higher.
According to the Virgin Atlantic Airlines they have many techniques for the
involvement of government it mainly create an impact on the company which are
discussed below:
Fiscal policy: Rate of interest is the another instrument which mainly used to
prevent for the inflation. It is simple because, they can prompt the people of the
economy for the inflation. It also support to provide good services to the consumer it
can also lay the rate of interest through the federal reserve which mainly resisting to
increase them. It usually support to lose more in the market which tends to have
good scrutiny in the market through which it leads to have the firms and peoples to
collect high and tends to purchase high. But the assets of the company which are not
similar and moderately undermining of inflation in the market and the more value of
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capital is being exterminated and it mainly useful to refined the next stage of
government which create an impact on the market.
Monetary policy: This is one of the most strong policy in a similar way. It is
highly indistinct. The government can perform some of the precise control with the
policy of tax through which it can show the movement of capital in the investments
by providing the impressive status of tax (Rutkowski, 2021). It is one of the main
deliberation which checks the bigger, indiscriminate variations by restructuring the
monetary landscape. According to the Virgin Atlantic Airlines, it pressurize the good
working by checking the proper interest rate to the individuals through which the
money flow can move in the right way and it also checks the good money flow of
investors and the shareholders to begin its company or it can improvise the activities
of airlines by providing appropriate resources to them.
Furlough scheme: At the time of pandemic country goes into the complete
Lock-down, it create a major impact on the overall companies. The accumulation of
company is providing this approach to the staffs from which they are providing the
impermanent leave to the workers due to the particular requirement of the firm
through which the overall firm is having the good reflection in the market. According
to the Virgin Atlantic Airlines it mainly concentrated on the organization so that it can
correctly checks the best functioning and it also remove the unneeded expenses to
the firm mainly at the difficult time of COVID-19 (Vinod, 2021). The main deliberation
of best functioning of the organization. So, that it can correctly checks the more
profitable situation and job position in the market. The airlines firm confirm the good
functioning of the organization. So, that it can easily handle the production cost.
What are the current global challenges facing by the
chosen business and recommendations on how to
overcome them in this current time?
It is one of the main deliberation which confirm the good functioning of the firm
but there are few challenges which usually faced by the Virgin Atlantic Airlines which
required to be corrected by the organization so that it can complete in a proper way
which are describes as given below:
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Meaning of foreign policy, politics and relations: This is mainly effected by
the government, rules and policies, law , relations and decision which is being
created by the leader it can also effect the labour, raw material, infrastructure of
transportation facility and the system of education (Viswanathan and et.al., 2022).
According to Virgin Atlantic Airlines, they face the high losses so that it can correctly
confirms the good functioning but it leads to reduce the whole functioning of the firm
and also checks the good working.
Unemployment: After the big impact of Pandemic, Virgin Atlantic Airlines,
face the high rate of unemployment which mainly breaks the job chances in the
various firms due to the high loss and deduction in profits of the company. Apart from
this people who are functioning in the organization for the long time are safe to job
less so that it moderately varies their profession (Yarovaya and et.al., 2022). So, that it
can earn more and live their life in a good way. If the firm concentrate on the simple
activities so in various manner they can decline the whole functioning and remove
the rate of unemployment within the company. It also provide an assistance in good
functioning so that it can maximized the more profitable situation in the entity.
Fuel productivity: The cost has been left and one of the most economic
component which mainly effect the company of Airlines. It usually effect the financial
portfolio of the airlines firms. If there is increase in number of airlines industry, then
the values of fuel also maximizing and also making brutal circle. According to Virgin
Atlantic Airlines they are facing the problems by which they are reducing the whole
profitable situation and revenues within the firm.
Comfort and experience of passenger: Airlines industry is provided the
services and its achievement is mainly depends upon the satisfaction of passengers
(Abouarghoub and Haider, 2019). The main challenge which is usually faced by the
Virgin Atlantic Airlines is that not all the customers are similar at same level, specific
department passenger always be not satisfied so, it need to understand who
pressurize the company to check the interruptions , better security and no
disturbance in the area of airport and simple customer service and many more.
It is suggestion for the Virgin Atlantic Airlines to again start the services by applying
all the safety standards so, that it can eliminate the negative affect of safety of
airlines within the company. Another more organizations also leads the firm by
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providing more funds to them so that it can correctly restart its services and it also
provide various opportunities of employment within the market (Ozdemir and et.al.,
2022). There are some ways to assists both of the firms and the community is an
example of job chances which assists in confirming the good standard of living of the
individuals and it can correctly check the good services which they are provided to
their passengers by which it can also check the high profits of the organization.
Conclusion
As it is concluded from the above report that the macroeconomics deals with
the economic artifacts and the whole functioning of the economy. There are some
few components which effect the complete working of the company and the
economy also which includes inflation rate, unemployment rate and outcomes of
economy. The life cycle of economics mainly assist in knowing the paying power and
consumption of many other components in the market. Policy of fiscal and monetary
calculate the money flow and confirm the particular rate of interest to the individual.
So that it can confirm the simple functioning and rotation of money within the
economy. Industry of airlines face the high effect which they are facing in increasing
the prices of fuel along with the high value of organization which are mainly
executing in the similar company. Apart from this, it also suggested to the firm to
utilize the best services by which it can keep the flow of products and services in the
market economy it also check the more achievements in the next coming years.
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References
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Chen, R and et.al., 2021. Returns and volatilities of energy futures markets: Roles of
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Chiambaretto, P. and Coqueret, G., 2020. Combining Economic and Search-Request
Variables to Predict Local Airline Market Shares: A Comparison of Forecasting
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Fuellhart, K and et.al., 2021. The US Essential Air Service Program and SARS C0V-2,
2019–2020. Journal of Transport Geography. 96. p.103169.
Gonzalez-Alegre, J., 2020. Macroeconomic Determinants of Air Travel Demand in
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Hafeez, A. and Kar, S., 2021. Looking beyond the financial numbers: The relationship
between macroeconomic indicators and the likelihood of financial distress. Global
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Jażdżewska-Gutta, M. and Borkowski, P., 2022. As strong as the weakest link. Transport and
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Kumaka, F.K., 2022. Workforce Management Strategies in the International Airline Alliance
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Yarovaya, L and et.al., 2022. Rethinking financial contagion: information transmission
mechanism during the COVID-19 pandemic. Journal of International Financial
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