Virgin Money UK: Navigating the Contemporary Business Environment

This case study examines the economic and global business environment in which Virgin Money operates in the United Kingdom. It begins by providing a brief introduction to Virgin Money, its history, and its services within the Virgin Group. The report then investigates the economic environment within the UK, focusing on factors such as GDP, inflation, tax rates, and banking regulations, and also touches upon micro factors such as value system, vision, organizational structure, corporate culture, human resources, resource and technical capabilities. It also explores the global business environment using the PESTEL model, analyzing political, economic, social, technological, and environmental factors affecting Virgin Money's international operations. The analysis considers the impact of Brexit, economic stability, social trends, technological advancements, and environmental concerns on the company's strategic planning and long-term growth. The study concludes by highlighting the importance of understanding these factors for Virgin Money's success in the competitive financial services market.

Contemporary
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 2............................................................................................................................................3
Examine the economic environment within which Virgin Money business operate in the
United Kingdom..........................................................................................................................3
Examine the global business environment .................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Sir Richard Branson is the founder of the Virgin Group which is a United Kingdom based
company, they have own the business such as Virgin Atlantic Airlines to Virgin media. Under
this report, we are going to discuss about the Virgin Money which comes under the Virgin
Group. It has its headquarter in the England, United Kingdom and it deals in the sector of
financial services and banking. It was established in March 1995 and back then it was known as
Virgin Direct. The management of Virgin Money has expanded their businesses all around the
world in the year 2000. They provided the services such as Retail banking,small and medium-
size lender,they also offers credit card, pensions,insurance, limits of savings and mortgage
facilities. Today, in the United Kingdom the Virgin Money is one of the largest bank which
holds the 6th rank with 6.5 million clientele base, national stores, modern digital platform,
human relationship manager and few customers centre. In the outbreak of the COVID-19
pandemic, the founder of the company faced various difficulties related to regulating the
financial gain and doing the smooth businesses. In this report we are going to investigate the
current market condition from which the Virgin Money's doing businesses and their
consequences on the nation with the help of the applicable models and theories.
MAIN BODY
TASK 2
Examine the economic environment within which Virgin Money business operate in the United
Kingdom
In the United kingdom the monetary policy is working exceptional because the nation GDP
forecast is in positive. The evaluation is primarily based on the important of financial expansion
to all the sectors. The gross home product fixes the day to day price of the financial practice in
an economy, which determines the customer spending, subsidizing the enterprise and the
spending on the specialist. Improvement in the financial performance is the resulted in the huge
mark on how to cope up with the ordinary expectation. In the past few years, the United
Kingdom economy has been recovering itself from the downturn which the world has been seen
in the year 2007-2009 emergency(Mogaji, 2021). The downfall in the economy is especially
harming the majority of the United Kingdom organization and it decreasing the financing

activity. Due to the sluggishness in the economy of the country it effected the improvement in
the GDP development so to tackle this situations the enterprises has now decreasing their
spending(Farrugia, 2018).
Businesses activities are operates in the internal environment and they are of two types that is
micro and macro. In the case of the virgin money, micro factors is responsible for affecting the
organization are:
 Value system: The prime objective of the organization is to improvement of the
customer experience in the banks. The prime aim of the bank is to differentiate their bank
from the rest of the bank and they concentrate towards customer satisfaction.
 Vision mission and objective: They has the objective of providing services to the
customer, which is comparably better than the traditional banking system. They make the
everyday customers experience hustle free by improving their technology for maintaining
their goodwill and be the one of the leading market disruptor. It has the aim in the future
to deliver the maximum return(Hamilton and Webster, 2018).
 Organizational structure: the decentralized system followed by the cooperation, there
the responsibilities can be handover by the top level management to middle level
management to lower level management.
 Corporate culture: it is the one of the leading banks which offers digital banking, the
one of the best product and services for retail and business needs.
 Human resource: The organization want to hire the best employees so that they can be
asset for the organization and deliver their best to there consumer. They hire individuals
who has years of experience and have the in-depth knowledge in the financial sector.
 Resource and technical capabilities: The organization is developing the unique value
by implementing the business analytic with the help of cloud automation, data structure
and the architecture etc.
The banks has specified the external environment that will affect the activity and the
purpose of the organization which includes the interest rates, inflation, rate of the employment,
size of the bank, GDP of the country, rate of the tax, recessions, consumer trust.

 Inflation: Banks has the huge effect on inflation. They has to increase and decreases the
interest a lot of time because of it. The United Kingdom has the price inflation which is
about 23%. Profitability has the indirect relation with the rising price.
 Tax rate: The United Kingdom has the tax rate of 27% from which 8% was surcharges.
 Bank size: The banking sector operates for the SMEs. Virgin money is the government
undertaking bank that operates around the globe.
 Recession: This is the part of the economic cycle where the banks interest rate falls and
because of that their operating margins decreased. The two consecutive quarter shows a
decreases in GDP which will be putting lot of pressure on the banking sector. The
demand of the loan will also decreased and the households of the country parked their
money in the safer instruments (Gbadamosi, 2019) .
There are few others factors such as banks goals, their politics, trade union, solvency,
liquidity, management, technology used, quality of workforce, goodwill etc.
Generally banks are operates in the three type of environment.
 Competitors banks: The banking system is filled with the competitors who is offering
the similar products like other banks. HBSC is one of the strongest threat who is really
difficult to deal with. There is very tough competition in the banking industry and
innovations in the banking sector is really hard because of norms and the regulations
therefore there is very little differentiation in their financial instruments, money market
tools and other banking services(Saeed and Ziaulhaq, H.M., 2019). So, to be successful
in the banking industry the bank should be creative, do innovation and the marketing. In
the United Kingdom they has very strict policy for entrance and restrictions and because
of that the country has the lowest competition. The low competition is beneficial for the
banks because of that they have no price competition and they able to earn more profit.
 Banking regulations: Banking sector is considered to be the pillar of an economy, so
that is why there is no need to regulate and it at high level. The interest rate, repo-rate,
and other regulatory norms changes frequently(Beynon-Davies, 2019). All the protocols
has to be abide by the Virgin Money. All the legal frameworks and the government
regulations. The financial services and the market act 2000 is the legislation that governs
the financial institution in the United Kingdom. There are different regulations which has

to be followed such as capital requirement directive, financial market framework, market
abuse regulation, short selling regulation, payment service protocol, European market
infrastructure. The UK has three prime regulators of the banking system such as Bank of
England, Prudential Regulation Authority and the Financial conduct authority. These
regulators has the responsibilities to check the authorization, prudential matter and
conduct of business.
 International banking trends: For growing and expanding their business the
organization to offer their services at the global level. Every economy has different rules
and regulations. The banks in order to expand their businesses has to open different
branches in different countries. The international banking is really complicated when
other countries banks try to enter their market(James, 2018) (Gbadamosi, 2019).
Acceptance of the foreign banks is not that easy. They has to launch the banking services
related product for SMEs for normalizing the effect of departure from the European
union. They are expecting the lower interest rate by 0.5% for three consecutive years.
Examine the global business environment
For understanding the international business, the organization has to understand the
political,legal, technical, economical, social and environmental aspect of that place. It helps in to
do the in-depth analysis for asses the favorable and unfavorable situation that is exist in the
market and method to deal with those factors. The Virgin Money expended their business in 131
countries by providing retail and SMEs banking facility. For strategic planning they uses the
PESTEL model, Virgin Money want to expand their presence in the different part of the world
by the help of their core capabilities and also want to achieve their long term growth.
 Political factor- It is the one of the important role that helps in the identifying the aspects
that will affect the Virgin money in the certain market. When the organization is working
in different countries than they are exposed to different economic, political and laws. To
get the success in those environment the following essentials must be analysed. Those are
stability of the politics, wage regulation, protocols and legal frameworks intellectual
rights, foreign trade policies, industrial regulations, trading partners, working culture,
favouritism of the ruling party, taxation. Nowadays the United Kingdom BREXIT is the
current topic. The banking industry faces the immense competitive pressure due to the
chaos that has been created by the policy changes.

 Economical factor - The country's economic growth have directly impact the
organizational work in the economy. The factors of the macroeconomic like kinds of
economic system, economy stability, intervention of government, infrastructure, which
support banking industry to work properly and provide satisfaction to the customer
absence of that may lead to bad business performance. Despite the higher literacy rate the
population might understand product and services better. GDP helps the business entity
to decide their long term goals, the higher the GDP the population has more spending
power and want to invest in the deliverables in the market. Despite the cheap labour
available the fluctuation of the exchange rates have the great impact on the organization
which directly have impact on the productivity and the profitability. In the economy the
supply of labour skilled labour can affect the bank failing that, it might lead to business
failure.
 Social factor: The social trends, customs and the culture has the deep effect on the
business organisation. It influence the factors of marketing and promotional strategy. It is
very important to understand the target customers and their beliefs. Virgin money uses
the extracted data from the social, culture trends and the working culture for making their
marketing strategies. The pattern of spending and the consumer behaviour assist them in
their profitability and in their services. They have to must understand the customers
attitude towards their services and product. By studying the social factors, they can
understand the mindset of the people and positing the brand value in their mind.
 Technological factors: The technological advancement in the economy will help the
Virgin money in different ways such as profitability increasing, creativity boosting,
implementing artificial intelligence and improve their operational activity. Through the
social media marketing the banks can enhance their brand value in their users to get
known by their targeted audience. It is really important for the organisation to be
recognised in the economy in which they are operating. The banks can implement their
technical competencies to acquire more market and increase their profitability in area
where the technological advancement is not that advance. In the opposite scenario where
the technical advancement is high the company can use that resource for improving their
product and services. By implementing research and development they can improve the
supply chain management and improvised their respective products and the services.

Virgin money offers more digitally centred product and services to the citizens in the Post
BREXIT.
 Environment factor: When the company have global presence they must scrutiny the
condition of the climate , waste management, technology related to renewable
technology , resource fuller utilization etc. In post COVID, it is very important for the
organization to maintain the balance of the ecosystem by doing proper care of the
environment and protect all the natural resources
CONCLUSION
From the above report, it can be concluded that in the United Kingdom the businesses are
more focus towards the small and medium enterprise. Economical challenges is the most
important that effect the operational environment of the company and have impacts on plans and
the policies on the previous years. The interruption in the internal and the external working of the
organisation greatly impacts the business activity of the organization. Furthermore, Due to the
outbreak of COVID, the SMEs of the country faced decreasing in their profit in consequence of
that they are not be able to pay salaries to their employees.. It also evaluates the steps taken by
the government during the COVID for the small and medium enterprise.

REFERENCES
Books and Journals
Mogaji, E., 2021. Contemporary issues in brand management. In Brand Management (pp. 241-
255). Palgrave Macmillan, Cham.
Farrugia, A., 2018. The reform of the doctrine of utmost good faith: A reconnaissance of the
developments and outcome with particular reference to the UK. In Governance and
Regulations’ Contemporary Issues. Emerald Publishing Limited.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Gbadamosi, A., 2019. Contemporary issues in marketing: Principles and practice. Sage.
Saeed, A. and Ziaulhaq, H.M., 2019. The impact of CEO characteristics on the
internationalization of SMEs: Evidence from the UK. Canadian Journal of
Administrative Sciences/Revue Canadienne des Sciences de l'Administration, 36(3),
pp.322-335.
Beynon-Davies, P., 2019. Business information systems. Red Globe Press.
James, L., 2018. Making cyber-security a strategic business priority. Network Security, 2018(5),
pp.6-8.
Gbadamosi, A., 2019. A conceptual overview of consumer behavior in the contemporary
developing nations. Exploring the Dynamics of Consumerism in Developing Nations,
pp.1-30
(Mogaji, 2021) (Farrugia, 2018) (Hamilton and Webster, 2018) (Gbadamosi, 2019) (Saeed and
Ziaulhaq, H.M., 2019) (Beynon-Davies, 2019) (James, 2018) (Gbadamosi, 2019)