BMP4003 - Macro-economic Factors Influencing Virgin Holiday's Business

This report examines the influence of macro-economic factors on Virgin Holiday's business operations within the UK business environment. It identifies inflation and unemployment as key considerations, detailing their impact on business outputs. The report analyzes the UK's current economic growth rate and the effects of government interventions, including fiscal and monetary policies, on the company. Furthermore, it addresses current global challenges, such as foreign politics and fuel efficiency, and offers recommendations for overcoming these obstacles. The report concludes by emphasizing the importance of adapting to the changing economic landscape to ensure the sustainability and profitability of Virgin Holiday. Desklib provides students access to a wealth of resources, including similar reports and solved assignments, to aid in their studies.

Business Management
BMP4003 Business Environment
Assessment 2
Influences of Macro-economic Activity
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Table of Contents
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
How will the UK current growth rate impact on the chosen business. .....................................4
How can the government current intervention methods affect the selected business? .............5
What are the current global challenges facing by the chosen business and recommendations
on how to overcome them in this current time? ........................................................................6
Conclusion..................................................................................................................................6
References..................................................................................................................................7
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Introduction
The business environment is the concept which involves several factors affecting
company functioning and how company works directly or indirectly. It is collection of
internal and external factors such as employees, customer needs, suppliers, innovation by
technology etc. For the business organization business environment is most important aspect.
Macro-economics is branch of economics which has dealing in structure, behavior and
company decision making of economy as whole. It helps in long term economic growth. The
macro-economic analysis involves economic trend analysis, impact of fiscal and monetary
measures of economy. It has look on the decisions of countries and government
(Abdulrasheed, A., 2021). For the report virgin holiday is taken which is owned by virgin
group that provides holidays worldwide with destinations. The company was incorporated in
1985 providing products of package holidays located at UK. The report will cover macro-
economic factors which influences overall business operations of business. It also discusses
UK current growth rate and how government current interventions methods affect the
business. Further, there is analyses of current global challenges business facing and
recommendation is provided to overcome with situation.
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.)
There is rise and fall in economies due to factors of inside and outside the government
control this variable is known as macro-economic factors which states the change. It is
indicator of financial growth that affects economy. It involves the several factors which
impacts the monetary stability related to whole economy. This factor influences fiscal and
geopolitical events. There are several factors which influences the overall business output are
as follows in context to Virgin holiday-
 Inflation- The inflation defines to the increasing in average cost of goods or services
over the period of time. The rapid inflation measures economic instability whereas
steady inflation is predicted as normal economic factor. When there is excess demand
of goods and services, then there is rise of inflation which tends to increase prices of
overall given goods in market. The inflation is leading huge impact on business cost
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in context to virgin holiday. The rise in labour cost impacts the overall sustainability
as challenge face by supplying goods by economy in current year. The high rate of
inflation causes to reallocation of scare resources to unproductive activities which
affects economic efficiency and reduces output growth. The overall impact of change
in price is described as inflation across wide range of goods and services. The rise in
price level of goods & services in economy allows for single value representation in
context to virgin holiday.
 Unemployment- It refers to rate of unemployment is the unemployed share of labour
force in given country which is calculated and stated as percentage. This are the
people who are employable and seeking jobs but not getting any of job. From the
groups it involves the people who are not working due to several aspects. In the
present times there was sudden impact of Pandemic which impacted overall
employment in UK (Dornubari, and et.al., 2019). The huge recession is making
economy slowdown in its functionality because of this people are losing their
employment. In context to virgin holiday there is carrier that is becoming leads as
possible in first flight for survival. For the future it is important for the company to
change the entire market strategy in order to meet the changes which is taking in
economy. It is also said that tight labour market increases the wages for hiring the
new staff. Potential output measures the economy's production capacity when
unemployment is normal. The natural rate of unemployment is assumed to be larger
than zero since people move from job to job on a regular basis; the economy will
almost always have some unemployment.
From above it is analysed that these are two macro-economic factor which influence
overall operation of virgin holiday in economy. It leads to rise in the overall prices with the
increase in overall cost of production and less availability of fresh employees.
How will the UK current growth rate impact on the chosen business.
In the economy UK is emerging growing industry as it is providing better living
standard and ensuring the better survival for people lives. The COVID-19 impact was huge
on business which leads to downfall by 9.4% fall in 2020 year due to the public health
restrictions and major pandemic in market. There was annual rise of 7.5% in gross domestic
product within the economy in 2021. There are definite approaches which is having great
impact on growth of economic which is been accessed by virgin holiday-
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Economic life cycle- It is state of overall economy which goes through several stages
in pattern of cyclical. It is defined as fluctuation in economy between expansion period and
contraction. There are several factors which helps in determining the current stage of
economic cycle such as gross domestic product, interest rates, total employment etc. For the
investor and business it provides useful insight by having of better understanding. In context
to virgin holiday there are four stages of economic life cycle which are as follows-
 Expansion- In this stage, the economy experiences low interest rate and rapid growth
rate with increase of production and inflationary pressure build. In respect to virgin
holiday the inflation is faced as there is increase of demand in market and the cost of
fuel also increase.
 Peak: In this stage there is creation of imbalance within the economy when growth
rate hits to maximum rates and peak cycle reaches it needs to be rectified. It is the
p0oint where company get up peak within the profitability but it also leads to creating
imbalances in overall operations of the virgin holiday (Li, X., 2019).
 Contraction:This is third stage in economic life cycle after meeting the peak stage,
the corrections arises through specified period of contraction when the growth is slow
down, employment falls and there is stagnate in price. In context to the virgin holiday
this is the stage where overall correction is made and through which errors can be
eliminated.
 Trough: This is the last stage in economic cycle which is state in economy that hit the
low point sale and overall growth starts for recovering economy overall operations.
Tn framework to virgin holiday it started of having recovery by analyzing the
environment of business.
Inflation: As the cost of manufacturing rises, corporations experience inflation,
which leads to an increase in the price of vacation packages, resulting in inflation within the
economy as customers experience significant market fluctuations. The price of tickets tends
to climb in tandem with the price of fuel.
Unemployment rate: The unemployment rate is the percentage of labor force
without job. In present market situation there are aspects which impacts the economy and
business organization. In UK unemployment is increasing because of high influence of
Covid-19 as people ensures to have better working in company. The unemployment rate is
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expected to high when the economy is in poor shape and jobs are scare (Pozdnyakova, and
et.al., 2019).
How can the government current intervention methods affect the selected
business?
In market government is the major player which is identified by people that have the
capacity to make modification in policy of fiscal and monetary. On the overall business
functioning there is huge impact of government intervention. It also helps in boosting the
currency as there is temporarily rise in profits of company and share prices. The minimization
in overall value leads to spikes in interest rates. The government intervention helps in
p5romoting the equatable and fair distribution of income thought the nation which leads to
increase of economic efficiency and competition is promoted. In context to virgin holiday,
there are some government methods which affects the overall business that are given below-
Fiscal policy: The economy is influence with the use of government spending and
inflation which helps in promoting the sustainable growth and poverty is reduce. The interest
rate is weapon which is used for analyzing inflation which is due to huge impact on economy
from inflation. In this government makes adjustments in its spending levels and tax rates for
monitoring and influencing nations economy. In the market there is huge loss which tends to
have better consideration in large market so that there can be increase of purchase by
companies and people. It essentially leads to better services to customers because of interest
loss via the Federal Reserve that is opposed to raise them.
Monetary policy: It refers to the amount of money accessible in the economy as well
as the methods through which money is delivered. Money management aids in the control of
variables such as inflation, consumption, and economic growth. The government in this
policy makes the fine control with tax policy in order to move capital within investment for
getting effective tax status in market (Saif-Alyousfi, and et.al., 2021). In context to virgin
holiday, the basic focus is on effective working in order to ensure the large variations and
diversified changing monetary landscape. Virgin holiday is also putting emphasis on better
working for interest rate of people through which flow of money can be formulated in the
right direction.
Furlough scheme: There was major halt in the industries as nation was impacted
hugely due to COVID-19 lock down. This is temporary leave of absence from work which
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employees are expected to return to work. The virgin holiday is giving this scheme to top
workers in which they get temporary leave as special request is arisen by company. In the
context of the virgin holiday, the emphasis is on business, with better working conditions and
unnecessary company expenses being avoided during the difficult COVID-19 period. This is
the main strategy in which the enterprises correctly ensured profitability and the role in the
present market for improved working.
What are the current global challenges facing by the chosen business and
recommendations on how to overcome them in this current time?
The global challenges are the main considerations which is analyses in Virgin holiday
that is required to be rectified by firms which can be fulfilled in appropriate manner along
with ensures better working of firms. In context to virgin holiday the global challenges are as
follows-
Nuances of Foreign Politics, policy and relations: The firm decision making is
commonly influenced by the policies, law and politics which is being made by leader which
impacts material, transportation and entire system of economy. In context to virgin holiday
the huge loss impact the impact the business through which they can ensure working.
Unemployment: As a result of the massive impact of COVID-19, there has been a
significant drop in employment as it originally reduced work prospects, putting companies at
risk of substantial losses and reducing overall profitability. However, with the passage of
time, there has been a significant change in the corporation, allowing them to more effectively
provide better working conditions and large profits within the organization. They are
achieving enormous success in the market, allowing them to properly reduce overlapping
tasks within the organization (Wiedemann, A., 2022).
Fuel efficiency: Cost has remained one of the most important economic factors
determining the overall functionality of the aviation sector. The airline firms have an impact
on the financial portfolio. As the aviation industry grows, so do the associated fuel prices,
creating a vicious spiral. In the case of Virgin holiday, they are dealing with serious
challenges that are threatening the company's overall profitability and revenue.
Passenger comfort and experience: As part of the airline sector, these are services
that are based on the passenger's overall happiness. These are the problems that Virgin
holiday is analyzing because no two passengers are alike at any one time. There are certain
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areas where customers are consistently dissatisfied, and the organization is unable to push
them to ensure seamless and outstanding security and easy customer support.
This is being proposed to Virgin holiday in order for them to resume their services by
implementing all of the safety precautions necessary to avoid the airline industry's influence
within the organization. There are companies that can help fund a company so that it can
properly launch its services and provide secure jobs and opportunities in a huge market. As a
result, they increase the number of job possibilities available and can contribute to people's
better living standards by providing better services to passengers, resulting in increased
earnings and income.
Conclusion
From the above it is being concluded that macro-economics is branch of study which
helps in ensuring the structure, economy and working of economy. Certain variables, such as
inflation, unemployment, and so on, have an impact on corporate functions and the entire
economy. Furthermore, the economic life cycle aids in comprehending the economy's
spending capacity and consumption. The flow of money in the market is studied by monetary
and fiscal policy. As many companies operate in the existing business, the airline industry is
undergoing significant changes as a result of rising fuel prices. Finally, it is suggested that the
corporation use effective services to ensure the proper flow of goods and services, which will
lead to increased success.
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References
Books and Journals
Abdulrasheed, A., 2021. A Philosophical Evaluation of Marx Alienation Theory Vis-À-
VisElite Activities and their Influence on Policy Process in Nigeria’s Fourth
Republic. Available at SSRN 3881645.
Dornubari, and et.al., 2019. AN INVESTIGATION OF THE CASUAL EFFECT OF SOME
SELECTED MANUFACTURING ACTIVITIES ON GOVERNMENT CAPITAL
EXPENDITUREINNIGERIA, 1981-2017. GSJ, 7(1).
Li, X., 2019. Economic policy uncertainty and corporate cash policy: International
evidence. Journal of Accounting and Public Policy, 38(6), p.106694.
Pozdnyakova, and et.al., 2019. The model of well-balanced taxation for overcoming the
shadow economy in modern Russia. In Optimization of the taxation system:
Preconditions, tendencies and perspectives (pp. 207-215). Springer, Cham.
Saif-Alyousfi, and et.al., 2021. Do oil and gas price shocks have an impact on bank
performance?. Journal of Commodity Markets, 22, p.100147.
Wiedemann, A., 2022. How credit markets substitute for welfare states and influence social
policy preferences: Evidence from US states. British Journal of Political
Science, 52(2), pp.829-849.
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