Report on Virgin Atlantic's Business and Environment Analysis

This report provides a comprehensive analysis of Virgin Atlantic's business and its environment. It begins with an introduction to business environments and then delves into the different types and purposes of organizations, focusing on Virgin Atlantic's structure and functions. The report examines th...Read More

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
P 1 Different types and purposes of organisations.....................................................................1
Covered in PPT...........................................................................................................................1
P 2 Size and scope of a range of different types of organisations...............................................1
Covered in PPT...........................................................................................................................1
TASK 2............................................................................................................................................1
P 3 Relationship between different organisational functions.....................................................1
P 4 Impacts of macro environment has upon business operations............................................3
P 5 Internal and external analysis .............................................................................................5
P 6 Interrelation of strengths and weaknesses with external macro factors................................7
CONCLUSION ...............................................................................................................................8
REFERENCES ...............................................................................................................................9

INTRODUCTION
Business environment can be simply defined as sum of total of all internal and external
factors that may impact the business of an organisation. The factors may include workers,
customers, stakeholders, supplier and norms of the business (Carter, 2013). The requirements or
need of users is also a part of this. There are generally two types of business environment that is
external and internal. The prior one consist of physical assets, work force, technological abilities,
resources required for marketing, management structures, finance, products, goals and
objectives, etc. Where as latter one is classified into two types namely micro and macro
environment. The present report is based on the business and business environment of Virgin
Atlantic. In this project, different types of organisations are explained such as private, pubic and
voluntary enterprises. The size and scope of Virgin Atlantic and British Airways is discussed
here.
TASK 1
P 1 Different types and purposes of organisations
Covered in PPT
P 2 Size and scope of a range of different types of organisations
Covered in PPT
TASK 2
P 3 Relationship between different organisational functions
An organisation includes different functions that are closely linked with their objectives
and structures. Some of the functions of Virgin Atlantic are discussed below:
 Production : This is one of the functionalities of the organisation. It is producing
comfortable and luxurious air lines services so that large number of travellers get
attracted towards them ( Botha, Kourie and Snyman, 2014). And as a result, the sales of
the corporation gets increased effectively.
 Research and development : Virgin Atlantic is investing a large amount of money in
doing research and developments as this tells them about the demands of population. By
this way, they can manufacture services or goods in accordance to them. They examines
the culture of the civilians whereby they notices the holiday or festivals of their users.
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They also give focus on living style where they recognise what type of food are used by
them so that they can provide them the same during the travelling hours. After identifying
these all, they do development regarding such activities.
 Purchasing : They attempt to purchase best quality and low price raw material such as
high speed aeroplanes, fresh food items, etc. They also tries to provide a separate waiting
area for the purpose of rest if there occurs any delay in the departure and arrival of
planes.
 Human resource management : Virgin Atlantic involves HRM in their company so that
thy can recruit skilled workers. It is the responsibility of human resource management to
hire best or skilled employees. They have to do so as lives of large number of people
depends on one or two pilots. They are familiar by this truth because of this they also
provide training and development to the new joiners (Chang and et. al., 2014). They also
set a criteria for selecting an employee such as one get hired if they posses good
communication skills, effective interpersonal as well as intra- personal skills, politeness
in their behaviours, etc. They provide maximum 8 months training to the newly hired
employees so that there will be no risk at the time of travelling. For recruiting best
employees, they have conduct survey of various universities and colleges. This takes a lot
of time as well as money. So, they can also take online interviews in order to minimise
the time and money of recruiting.
 Accounting and finance : Venture also invest a lot of money in management so that less
risk or errors gets occurred in the accounting and finance. They uses modern software for
the purpose of calculation of their incomes and expenditures such as Spreadsheet, Ms
excel, Ubuntu, etc. so that manual errors can be minimised and less time gets consumed.
Organisational structures can be simply defined as a structural framework that is used to
determine hierarchical design within an enterprise. It explains the ways through which task is
allocated, coordination and various other activities like supervision is carried out so that desired
goals can be achieved. There are three types of organisational structures namely functional
structure whereby enterprises creates special functional departments (Chavis, Klapper and Love,
2011). This is done on the basis of skills and specialisation. The second one is divisional
structure whereby organisation generate divisions on the ground of geography and goods or
services or market. The third one is matrix structure that consists of multiple reporting lines.
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Virgin Atlantic Airways follows a functional structure where they groups their workers
into various functional regions as per their skills and specialisation. They are small enterprise in
relation to British Airways, so they has a developed structure that is very easy to control and
manage. The organisational structure is linked to the functionalities of the corporation as each
functional areas are controlled by different group of employees. So, both are complementary to
each other.
Virgin Atlantic can achieve their objectives if organisational structures and functionalities can
be managed and controlled properly. If segmentation of work load is not done appropriately then
they can not attain the objectives.
P 4 Impacts of macro environment has upon business operations
The impacts of macro environment on the business operations of Virgin Atlantic can be
determined by doing PESTLE analysis which is described below:
 Political factors : In the airline enterprises, the major political factors are frequently
regarding as the fear of terrorism attack. Virgin is facing serious issue of terrorism due to
the political or ideological conflicts that arises from the west with specific people from
the Islamic nation (Cavusgil, S. T. and et. al., 2014). Due to the threats of attacks of
terrorist, the organisation needs to invest more attempts on assuring the safety of the
flights and incurring capital expenditures for installing relevant safety tools and
techniques on planes. All of these would as a result add to the financial burden of the
operators of airlines. This was the negative impact. Political factors also give some
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source 1: Organisational structure of Virgin Atlantic, 2013

positive effects like government are creating certain rules and regulations in order to
preserve the safety of the planes.
 Economic factors : The economy around the globe remains fragile, even after the slow
recovery of three years from its bottom in year 2009. The unemployment rate gets higher
in the UK and as a result, consumers are cutting their expenses by doing less travelling
for the intention of tourism process. This reduces the demands of the air flights. Besides,
when the economy is suffering, travellers gets shifted to those companies that are offering
tickets at low prices.
 Social factor : The living style of people are improving day on day. Now a days they are
becoming more demanding. They expects best services from the firm as they are paying a
lot for that. Activities regarding tourism are growing due to the effects of globalisation.
This as a result give positive impacts on the performance of the venture (Lienert,
Schnetzer and Ingold, 2013). But the increasing and changing demand of the people also
led a negative affect as company gets confused about the real necessities of the travellers.
 Technological factors : Different technologies are impacting the business nature of the
Virgin Atlantic. One of the major issue is the increment in the popularity of the internet
and electronic commerce all around the globe. There both positive as well as negative
impacts due to the rising tendency of internet users. If considering the positive impact,
then organisation are getting larger audience and they are servicing them with minimum
cost structure. But if negative affects are considered, then passengers can compare the
prices of tickets from one click only. This effects the corporation adversely.
 Environmental factors : Global warming is the serious problem that affects the people
as well as the corporation now a days. Civilians are getting aware on the harms occurring
due to short term oriented and self-serving business entities. They are demanding now
Corporate Social Responsibility from the venture so that life standard of local people can
be improved. Sustainable improvement and intended attempts for ensuring the protection
of natural environment is demanded from the Virgin group (Kontogianni, Papageorgiou
and Tourkolias, 2012). This is a trend that is negatively influencing the corporation as
emission of poisonous carbon dioxide or various other gases from the air lines operators
is the one the main cause that is leading to global warming. The sudden change in the
weather or climatic conditions also impacts negatively on the performance of air line
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operators. For instance, due to foggy and rainy weather, delays in the arrival and
departure of flights occurs. Some times this causes serious damages to the lives of the
passengers. Due to high foggy weather, plane gets crashed and large number of people
die. This affects the image of the corporation too as people gets afraid and do not prefer
this company for the purpose of travelling as due the past experiences of the venture.
 Legislative factors : Venture as doing business in more than one countries are affected
by the norms made by them. The rules and regulations gets changes year on year such as
taxation rate, fluctuation in the values of currency, etc. This affects adversely on the
airline industry. But some times the rates of taxes goes lower and value of currency rises,
this as a result gives a positive impact and increases the probability of the firm.
P 5 Internal and external analysis
The internal and external analysis of Virgin Atlantic can be done by using SWOT
analysis that is done following:
 Strength : Virgin Atlantic are enjoying the positive perception that is created because of
the Virgin brand. Company comprises of strong North Atlantic network that remains at
the core of the business. As per the data of OAG data, Virgin is emerging as the second
largest challenger between UK and US. This corporation is recognised by almost 98 % of
the British civilians. Client are experiencing good customer service in each and every
class. Company is introducing innovative technology (Mayer, Ryley and Gillingwater,
2012). This includes flight music, games, movies and food facilities. New flights that are
manufactured on the basis of innovation are offering gold club holders or J-class having
lounges best quality food and comfort. Human Resource Management are hiring skilled
workers from other ventures in the organisation that aids in gaining probability. They are
doing partnership with Singapore airlines and this strengthen the enterprise because they
consist of minimum number of share holders at 49 %.
 Weaknesses : The travelling routes of the company are limited and this is treated as a
weakness of the venture. The probability records of the firm is very poor. This reported a
pre- exceptional pre- tax loss of GBP 74 million in the end of the year 2013 as per the
annual report of 2013 at the companies house of UK (Minelli, Chambers and Dhiraj,
2012). Whether , they are moving in right direction now a days, it has faces financial loss
in four out of five past years. They are facing severe competition from the various other
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industries such as Cash Rich Middle Eastern Airlines. VA has established its first ever
domestic UK routes between the London Heathrow and Manchester in the year of 2013
under the Little Red brand. But this is not considered as their success. The company has
minimum global presence. They are only taking benefit of Europe and specially North
America and are not concentrating on the rising market of Asia. Having a strong brand
and an enterprise aviation background the Airline boasts, they has to expand their routes
to more rising markets such as Abu Dhabi, Mumbai, Seoul, Doha, Kuala Lumpur, among
others.
 Opportunities : The third run away located at Heathrow is approved by government
shown as a great opportunity for Virgin Atlantic. The planned enlargement would create
new and inexpensive extra capacities at Heathrow. This will also minimise the operating
cost to or from Heathrow which is presently the most pricey hub airport in the world.
Furthermore, enlargement of Heathrow post -Brexit would permit carriers like Virgin
Atlantic to provide large number of flights directly to not only UK destinations but also
up to 45 new cities abroad like Quito, Wuhan and Osaka (Missonier and Loufrani-Fedida,
2014). The price of fuels and interest rates got very low in the year of 2106 . If this
continues for the next years then this give more benefits to the company. It would
promote improvement or growth in capacities of market. This gives profits to the venture
in the terms of pricing of fuels and interest rates. If Virgin Atlantic can create equity
relationship with Delta for driving price synergies, this would proved to be very
profitable after some time. The company is not a member of one of the three popular
branded global alliances. So, the if they do this, then this gives benefits in future.
 Threats : The rising competition in the airline industries proved as a threat for the Virgin
Atlantic. Many other ventures are offering the same facilities or services to travellers on
the similar or low prices. This lowers the sales rate of the company. So, Virgin ought to
improve quality in their service management and should offer unique services that are not
offered by any other firm. Continuous strikes of Air traffic controller (ATC) in France are
creating large cancellations and delays for the corporation (Moores and Mula, 2011).
Another risk is the digital disruption. This causes various issues for the firm's activities
and performance. Coming to the conditions of weather of UK, this also incurs various
problems. Thunderstorms and extreme winter situations are giving adverse affects on the
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performance of company. Due to that delays occurs in the arrival and departure of the
flights. But in extreme condition, it some time causes to the crash of planes. This causes
death of large number of passengers which destroys the branding image of company.
P 6 Interrelation of strengths and weaknesses with external macro factors
The relation of strength and weaknesses of Virgin Atlantic with the external macro
factors are described below:
 Political factor : The risk of terrorist attacks are increasing day on day. This is treated as
weakness for the venture. The norm or legislation made by government such as increment
in the taxation rate affects adversely on the performance or turnover of the company.
 Environmental factors : The bad weather conditions such as fogy climate,
thunderstorms, etc. are giving bad impact on the venture. This causes delays in the
departure and arrival of flights. Some times planes get crashed due to extreme weather
and causing death of large number of passengers of the plane (Notis, 2015). So, it is
treated as a weakness for the company and some protective steps should be taken to
minimise it.
 Economical factors : As the economic conditions of civilians of UK are getting worst,
they are trying to save their money by cutting the extra costing of travelling for the
purpose of spending leisure and tourism. Due to this, the tickets selling are getting very
low and this minimises the turn over of the venture. So, this is related to the weakness of
firm and needs to be improved. This can be improved by lowering the price of fairs so
that common people can also afford it.
 Social factor : The living style of people are changing day on day. They are demanding
now more and more facilities in the planes regarding entertainment, food, protection, etc.
Company is doing the same and this attracts a large number of travellers towards them
(Welford, 2013). This is related to the strength of the organisation as the its turnover is
increasing due to the increment in the interest rate of travelling by civilians.
 Technological factors : The improvement in the technology assist in changing or making
easy the various tasks of the firm. Such as calculation of revenues now becomes so easy
as introduction of new or modern software are occurred like Spreadsheet, Ms-excel, etc.
This also strengthen the potential of venture.
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CONCLUSION
From the above based report, it can be concluded that business environment are very
essential as this is a place where business grows. This impacts positively as well as negatively
over the performance of various companies like Virgin Atlantic. To demonstrate this, pestle
analysis is done here whereby effects of political, economical, social, technological,
environmental and legal factors are described. The internal and external analysis is also done
here that determines the strength, weaknesses, threats and opportunities of venture.
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Online
GROWTH AND PESTLE ANALYSIS FOR VIRGIN GROUP. 2017. [Online]. Available through :
<http://businessessays.net/strategic-management/growth-and-pestle-analysis-for-virgin-
group/>. Accessed on 15th September 2017.
Virgin Atlantic : SWOT Analysis. 2017. [Online]. Available through :
<https://businessays.net/virgin-atlantic-airways-swot-analysis/>. Accessed on 15th
September 2017.
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