Business Environment Analysis: Macro Factors Affecting Virgin Atlantic

This report provides a comprehensive analysis of the business environment surrounding Virgin Atlantic airlines. It evaluates the influence of macroeconomic factors such as inflation and economic output on the company's performance. The report also examines the impact of the UK's current growth ra...Read More

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION.........................................................................................................................3
MAIN BODY..................................................................................................................................3
Evaluating two macro factors chosen by virgin Atlantis business which will influence on the business
output.......................................................................................................................................................3
Current growth rate impact on the Virgin Atlantics Airline.....................................................................4
Government intervention methods affect the selected business...............................................................5
Global challenges facing by the organization and recommendations to overcome..................................6
CONCLUSION..............................................................................................................................7
REFERENCES..............................................................................................................................8

INTRODUCTION
Business environment is being considered as a combination of various external and
internal factors which exits in organizations. The environment of success helps in assessing and
analyzing the strategies of the competitors which further assist in building and deploying the
resources which is being required by the firms for achieving the success. Along with that also
provides help in be aware about the surrounding as well as about competitors too. The virgin
group is the British company ranging its business from virgin atlantics to virgin medias. This
report will provide details for the virgin atlantics airlines, the company is made for providing
better flying experience to people, mainly designed for providing travelling and leisure services.
This report will specify about two macro-economic factors which influences business. also UK
current growth rate impact on business. It also analyses the current government interventions
methods affect the atlantics business. lastly, examining current global challenges faced by
business and providing recommendations for overcoming the challenges.
MAIN BODY
Evaluating two macro factors chosen by virgin Atlantis business which will influence on the
business output
The Virgin Atlantic airline industry is being offering wide variety of services to the
customers embracing the sprits of humans and operating with the purpose of let it fly. The main
mission of the company is to provide the extraordinary services and introduces the new program
for sustainable performance which encourage the customers to offset with their carbon emission.
Various airlines business is being effected by the environment directly and indirectly, the macro
factors of the company will affect the business strategic decisions of the aviation industry. The
macro factors of business are those which generally impact the business success and the growth
in the long run (Dinh, 2020). The present economic crises, instability in the prices of fuels are
basically the factors which will impact the company and increase its competiveness and rivalry.
The virgin group is being diversified in the various companies the biggest of them are he virgin
atlantics company. It is the second airline company in the UK, mainly diversified in the virgin
holidays, operators as of tour and rails.

Inflation: Inflation rates generally refers to as the rise in prices will effect and decreases
the purchasing power of the consumers with respect of the company. The business virgin
atlantics is being largely impacted by the inflation rates and also with the recession. As there are
several issues of the company which helps in determining the performance of the company. as
the financial crises being suffered by the company at the time of inflation have impacted at the
great extent for this the firm has adopted various new strategies in order to remain in the
competitive environment and retain the position of profitability (Satrovic, 2018). as for instance
the company has reduced the price of tickets for traveling to the targeted new destinations. as it
has affected the hospitality industry. also and the tourism business performance at the great
extent. The company has reduced the flights for decreasing the impact of the inflation on the
business. Also the bankruptcy position of the company due to covid from this the company have
been through very tough phase resulting in the high loss and also it has greatly impact on the
revenues generated from the fights. Thus, due to inflation the company was unable to meets its
operation cost. and the consumers were less spending on the flights which resulted in generating
less revenue impacted on the employee’s layoffs
Economic output: the airline industry builds the large network of the global businesses
and contribute in trade. The economic output of the airline helps in determining the level of the
revenue being generated with the passengers, departures taken of flights, and the network of
airlines. As there are various factors of the company which have impacted the company
economically and its output in the long run. As the consumer income and its inequality and
unemployment rate will cause the uncertainty and suppress the consumers for consumption
which hinders the development of the company (Agboola, Musa and Ibrahim, 2018). Also the
disposable income of the consumers, government spending, and the level of household incomes
also impacted the company economic output. As the governments spending’s are currently
facing the budget deficits which resulted in exposing and depreciating the currency risks. Also
the various global markets with the weak currency will influence the cost of travel. the
fluctuations in the prices of oil will impact on the currency level which in turn impact the cost of
the flying the airlines at the great extent.

Current growth rate impact on the Virgin Atlantics Airline
The Virgin Atlantics is the Airlines company mainly offering services to the targeted
consumers. The growth rate of the company will impact in various positive and negative ways.
as it will reduce the poverty and unemployment situations in the industry. This will generally
advance the development in the quality of services being provided which promotes economic
growth for the company in airlines industry.
Including the economic life: The growth rate in the economy will impact the economic life of
company. the growth in the economy will result in better employment opportunities for the
unemployed people of the country (Lyu and et.al., 2018). This will eliminate the poverty in the
economy and will help in increasing the better productivity for working of people and employees
in the company. Also with the growth the more number of consumers will able to travel better
with the company and able to purchase travel tickets concerning the leisure services.
GDP: The GDP (gross domestic product) is important factors as it gives information relating to
the economic size and its performance. An increase in The growth rate will result in greeter GDP
for the airline industry. But at the time of covid this will enables the flow of the goods and
services, capital and transportation cost (Berardi and Plazzi, 2019). With increase in the GDP the
passengers for the company will increase and travel more across the countries but if the GDP
decrease the Passengers for travelling from the company will decrease.
Inflation: As with the growth in the economy result in growth in GDP will causes inflation for
the company. Which encompasses the rise in price in the tickets and travel related products. This
will increase the rise in the cost of fuels, which results in cancellation for the various tickets of
the passenger. With the rise in price will give the negative impact on the company which lowers
the demand of the travel in the pandemic and also in the post pandemic period.
Unemployment rate: Also with the growth rate, the unemployment will also get impacted at the
large extent. the total employment rate of the economy during the time of covid has declined
with 2.5 million. but with the growing economy the unemployment will reduces till 2022 in the
airlines industry. These will be increase in the employment level with the 10 %. Thus with the
increased in the growth rate in the economy of the aviation industry the unemployment of the
country will decrease (Nguyen and et.al., 2019). Also with the increase in the growth rate will

result in increase in the profits and the more sales and the dependence for the products and it’s
the better competiveness and the market diversifications will be there for the global market.
Government intervention methods affect the selected business
Government interventions are the actions taken by the administration in order to regulate
the economy and its system. These actions taken by the government department in order to
change the decisions related to the companies, various organizations, individuals which are
related to economy and its structures. Government interventions are basically done in order to
address the inefficiency in the market. As in the market the resources should be perfectly
allocated in order to have effective use of the resources. The government use to try to reduce the
inefficiency by putting regulations, taxation and subsidies (Eryarsoy, Shahmanzari and
Tanrisever, 2022). Mostly the governments have much combination in order to achieve the
objective and intervene in the market. Government used to intervene in order to minimize the
damages that are affecting the environment. In this, government used to intervene by having the
subsidies and have changes in the supply that may not affect the economic environment. These
interventions used to affect business of Virgin Airlines as due to pandemic there are lots of
changes done by the government. The government interventions methods are as follows:
Fiscal and monetary policies: Fiscal policies are the policies of the government that
affects the aggregate demand by having the changes in the spending in the government money
and taxation. These factors used to affect the business policies as organization has to make the
policies according to the policies made by the government. The changes in the spending and
taxation policies will affect the policies of the Virgin Airlines and this will make them difficulty
to have cash (Duan and et.al., 2020). Monetary policies are the policies which are related to the
activities of the central bank that are directed in order to influence the quantity of money and its
credit. As the fiscal policy used to regulate the economic activity on the continuous basis it
affects the business organizations. However, the fiscal and monetary policy both affects the
business as it controls the economy. Having the tighter fiscal policy makes the company to
contract and reduces the spending and demands in the market. In order to take the cash, the
organization should plan its budget according to the policies made by the government. By not
making the proper budget and policies this may affect the policies of the organization. As the
government used to take taxes in order to have welfare of the public and provides them best
infrastructure which use to increase consumer confidence.

Furlough schemes: This is scheme which is being adopted by the business for responding
with the pandemic situation. This scheme is being adopted to place the personnel with the
furlough schemes for maintaining staff due to income and economy crises. This Scheme is
followed in the United Kingdom where the person working in the full time job on October 30
can be furloughed. From the starting of the 1 August 2021, the government will use to pay 60%
of the wages to the furlough employees and by the 1 July 2021, the employees will be getting
and receiving the wages up to 80%. This scheme has affected the business as government use to
pay more wages to the employees (Long and et.al., 2020). This will lead to cause the decreases
in the employees in the organization. Due to the happening of the pandemic the government used
to support the employees and business in order to have proper come back in the market. The
furlough refers to the system which used to provide the employees the temporary leaves this may
affect the business of the airlines.
Global challenges facing by the organization and recommendations to overcome
The aviation industry is the one of the biggest business and has the biggest workforce and
it have the significant share in the economy. The airlines industry used to face many global
challenges that used their business (Partridge, Deelen and Slagboom, 2018). As Virgin Airlines
has faced the lots of global challenges with the happening of the pandemic in the worldwide
which are as follows:
1. Fuel efficiency: The airlines have faced the lots of difficulties in order to have the
availability of the fuel in the market at the time of the pandemic. As the organization is
the airline company it also faced the availability of the fuel and the cost and has affected
the airlines industry from last three decades.
2. Technological advancements: The technological changes and advancement is one of the
biggest challenges to the airlines industry. This may come up with the surprise as to make
changes in the airline industry is the very big and tough process. This makes the
organization to face problem in order to earn profits.
3. Climate changes: Climate and environmental issues is also the biggest challenge that is
faced by the aviation industry from the long- time. As the aviation industry is the main
part of the global economy as it used to share the major part of its profits in the economy
(Catton, 2020). With the happening of the pandemic there is decrease in the profits as

people were not travelling and flights were also closed. This has affected the business of
the Virgin airlines and affects the profitability of the company.
4. Airline infrastructure: Challenges related to change in the infrastructure is regarded as
increase in the competition level relating to the runaways of airlines, terminals options,
lounges and updated versions of systems for maintaining the passenger level up to mark.
Recommendations to overcome challenges
1. As there is the inefficiency of the fuel in the market the organization should have
stock of the fuel which will help them in need. As the prices of the fuel are increasing
on the rapid basis the company must have the efficient fuel in order to manage their
flights.
2. It is recommended to the company that they should have some necessary
technological changes as per required by the economy. By having the changes it
increases the efficiency of the products of the company and helps the company to
have and earn more revenues from the market.
3. It is suggested to the company that it must be ready to adopt the climatic and
environmental changes as it may not affect to profits of the organization. The weather
forecast of the company should be so accurate as it may not affect the bookings of the
customers and may not decreases the profits.
4. For maintaining the aviation infrastructure upgraded, the virgin company should
maintain and adopt recent and latest technical infrastructure. Also it should purchase
the new modern efficient structure which in turn gives less operating cost and benefits
for the virgin airlines company.
CONCLUSION
From this report it can be concluded that the virgin atlantics airlines is the aviation
company providing various services relating to traveling and leisure. The main purpose of the
company is to provide the quality services to the consumers and the passengers with the great
value for the money. the company has improved and developed it strategies relating to the
pricing and offering the unique service offering in the premium economy. The major economic
factors concerning the company includes the inflation and the economic output which is being

impacted by the external environment of the company. Also the growth in the economy of the
country will impact the company in terms of inflation, unemployment rate, also the GDP and the
economic life of the people. Furthermore, there are various government interventions and
methods which is being introduced by the government concerning the fiscal, monetary policy
and the challenges faced have been overcome by the company by adopting various measure.

REFERENCES
Books and Journals
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Unemployment Rate on Economic Growth in Nigeria. International Education Journal. 1(2).
pp.100-110.
Berardi, A. and Plazzi, A., 2019. Inflation risk premia, yield volatility, and macro
factors. Journal of Financial Econometrics. 17(3). pp.397-431.
Catton, H., 2020. Global challenges in health and health care for nurses and midwives
everywhere. International Nursing Review. 67(1). pp.4-6.
Dinh, D.V., 2020. Impulse response of inflation to economic growth dynamics: VAR model
analysis. The Journal of Asian Finance, Economics, and Business. 7(9). pp.219-228.
Duan, T. and et.al., 2020. Government intervention, risk perception, and the adoption of
protective action recommendations: evidence from the COVID-19 prevention and control
experience of China. International journal of environmental research and public health. 17(10).
p.3387.
Eryarsoy, E., Shahmanzari, M. and Tanrisever, F., 2022. Models for Government Intervention
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Lyu, C. and et.al., 2018. GDP management to meet or beat growth targets. Journal of Accounting
and Economics. 66(1). pp.318-338.
Nguyen, T. L. and et.al., 2019. Macro factors affecting human resource quality in Dong Nai
industrial parks. International Journal of Advanced and Applied Sciences. 6(7). pp.1-9.
Partridge, L., Deelen, J. and Slagboom, P. E., 2018. Facing up to the global challenges of
ageing. Nature. 561(7721). pp.45-56.
Satrovic, E., 2018. Economic output and high-technology export: panel causality
analysis. Uluslararası Ekonomik Araştırmalar Dergisi. 4(3). pp.55-63.