Inflation rates will affect Virgin Atlantic because if the value of money goes down then the prices of their flights will decrees. If flight prices decrease then people will start paying for flights as they will be cheaper and Virgin Atlantic would be able to make a profit as people paying while they are cheap. Virgin Atlantic would also have to take into consideration how much they are going to pay their employees, because if the value of money went down then they would have to pay more so that the employees would still be receiving their same wage or salary. Also the price of oil will affect the inflation rates because if the price of oil goes up so will the price of everything else, as oil is in everything. One thing that can control inflation is interest rates.
Interest rates would affect any business because interest is the cost of borrowing money. Interest rates would affect Virgin Atlantic because the bank rate , which is set by the bank of England will affect everything from bank loans ( 4-5% ) , ISA rates ( 2.5%) , mortgage rates ( 5-7%) , credit cards rates ( 15-20 %) , the current bank rate is 0.5%. with the current bank rate being so low it is also a good time for Virgin Atlantic to take out a bank loan so they could fulfil to their maximum potential to expand. An advantage for Virgin Atlantic would be with the bank rate being so low would encourage customers to do things they never would have done before, for example they would lavish out on an expensive holiday, and Virgin Atlantic would want to take advantage of this while the rates are as low as this will help them boost their profits.
The rate on unemployment is currently 5-6%. This is going to affect Virgin Atlantic because if there are less people without jobs, they won’t be able to spend money so virgin might be losing some money. Another way that the unemployment rate will effect Virgin Atlantic because if they are short staffed they would get a higher rate of people applying , giving them more people to choose from. The unemployment rates not only affect Virgin Atlantic but they also affect individuals and the economy. This affects individuals as they find they have a lower income which will affect their standard of living; they find it hard to find new jobs as skills are always changing. They will affect the economy because the government will receive less money from unemployed people and in turn affect the amount of money they have to spend on other things such as if a business goes into liquidation and the government can’t afford to let it too.
The boom and bust cycle can also affect Virgin Atlantic as part of the unemployment rates, because as the cycle has its alternating periods of economic growth and contraction. During the boom periods the economy will increase and there will be increase in GDP. During the bust periods the economy would then see a fall in GDP and an increase in unemployment. This affects Virgin Atlantic as if there is a bust people they would be looking for jobs and as for Virgin Atlantic are always looking for new members of staff they would be more likely to employee some of the unemployed.
Energy prices will affect Virgin Atlantic because they need to use oil and gas all the time as they are flying planes to various destinations all the time. Also if the prices of the oil and gas go up the prices of their flights will also have to increase so that they will still be able to make a profit
Competition is a big factor that affects Virgin Atlantic. Competitors have a major influence on how well other businesses will do. For Virgin Atlantic to overcome this they will have to look on what the other airlines are doing, such as British Airways which have always been one of Virgin Atlantics biggest competition. For Virgin Atlantic to make a bigger profit they will have to look at the pricing of flights and what offers other airlines are putting on, for example they might want to lower some of their prices so that in the future they attract more custom and as a result make a profit. As well some competitors may move into an area close to Virgin Atlantic and maybe decide to offer a better service, meaning Virgin Atlantic would have to come back by creating a lower price or a better offer, and by them gaining customers it will increase their market share.
Consumer confidence is also a big factor affecting Virgin Atlantic. Consumer confidence is an economic indicator that measure how consumers feel about the overall state of the economy and their own person financial situation. This also shows how comfortable people are with spending money, affecting this is how confident people are about the stability of their incomes which in turn determines their shopping habits. For example[le is the economy expanded , this causes the consumer confidence to be higher meaning consumers will be spending more so Virgin can afford to raise their prices slightly as they will be making a profit. On the other hand if the economy was in bad shape the consumer confidence is lower and people will tend to save more and spend less
Social and Cultural influences
Social and cultural influences have will have a major effect on Virgin Atlantic as there are always more people getting interest in travelling every day. Some of the effects on Virgin Atlantic are:
- Change in consumer tastes
- Population changes
- ethical value
- Levels of education
- demographics
A change in consumer taste can easily be changed as if Virgin Atlantic were to get feedback from their customers they would then be sure to be able to make changed within the company according to the data they gathered. Another way a change can affect a business is because people aspire to have a better quality and aspire to move up the social ladder. A change in consumer taste would affect Virgin Atlantic because consumers would want to be able to fly to more places. This will vary from person to person and this will affect where Virgin Atlantic Fly to in future.
Population change would affect Virgin Atlantic hugely. This is because if people started to move into the countries where they operate from then they would have a higher increase in profit. Also population change would affect Virgin Atlantic as they would have a larger choice of applicants to choose from on job vacancies. Also Virgin Atlantics market at the moment are the baby boomers as they are the ones which are higher in the economy market as they have most money , so Virgin Atlantic will make them their target market as they will be retiring and wanted to spend money and to go more exotic places for holidays.
Education levels will affect all most any business. Education levels of consumers can businesses can no false advertise as the education levels are people are generally getting higher. Also if consumers are getting a higher level of education Virgin will have a choice of employees who meet some of their standards under their criteria. Also employees are generally more able to have more common sense if their education level is higher.
Ethical value will also affect Virgin Atlantic because as all types of people from different religions fly with Virgin, they have to make sure they are able to appeal to all people of all ethical backgrounds, and for example be able to fly to the places they may need to travel too. Also many of Virgins Flights travel to many other counties that speak a different language so for example on these flights Virgin may decide to put some cabin crew on that flight that speak that particular language.
Demographics play an important role in affecting a business as this is where they will get all their information from such as market research. By using demographics they understand what the consumers want so they can create the best deal for their customers, for Virgin Atlantic this would be services and prices. Some of the things that Virgin Atlantic will need to know are the age ranges. This is because then they can use this at their disposal by creating the perfect flight package which appeals to all the different age ranges. For example for the younger flyer they might put more TVs on planes and add more games or music to them. Another thing that Virgin Atlantic would need to know is how often do consumers go abroad to take part in leisure activities, as this will let them know where they need to fly to more and to create the perfect package for their flyers that fly to the more exotic places for their own hobbies or leisure activities.
Technological influences
Technology plays an important role within all business as technology is always changing and improving so business will have to keep up with all the changes. Virgin Atlantic have done this well as they are always constantly looking for way in which they can improve their planes from more the plane its self (weight, emissions) to more efficient engines. Some of the technological influences that affect Virgin Atlantic are:
- Use of ict
- New machinery
- e-commerce
The use of ICT within business will influence any business hugely, this will majorly affect virgin Atlantic as they will be able to do more market research and this will also be able to improve the way that most people working within the business for example in the future they could have an advance in improvements with communication between the planes and the terminal and the storing of information about consumers.
New machinery is a huge influence on Virgin Atlantic as they are always looking for ways in which they can cut back on how much carbon emissions they are emitting into the atmosphere. An improvement in machinery will help Virgin Atlantic because they will be using more efficient engines which in turn would not use as much petrol. Also through an improvement in technology, Virgin Atlantic has been able to enable wifi on most of their planes, which allows business people to be able to work while in flight. The safety of passengers is also a prime concern for Virgin Atlantic, as they are faced with all the rapidly changing technology they are always aware of the need for them to invest into their aircraft fleet and while providing a more improved customer service and safety while on board for passengers to enjoy their IFE (in flight experience) as well as on the ground.
E-commerce is a major effect on Virgin Atlantic because as they have a website it allows them to reach a wider variety of customers and also which allows consumers to contact Virgin whenever they wish. Also by using E commerce they don’t have as much overhead and so they will not be spending as much money. An advantage of Virgin having E-commerce is that it allows customers to be able to organise their holiday or flights themselves by being able to print out their boarding passes at home or even being able to chose where they want to sit on the flight, right down to the last detail. For example not just choosing first or economy class but actually choosing the seats
Legal influences
Legal influences affect every company. These will affect almost every aspect of every company. Some of these influences on company can be:
- competition laws
- health and safety
- Adverting regulations.
Competition laws will affect Virgin Atlantic because they are always under the competition to provide what people what and at affordable prices. For example if Virgin Atlantic were the only company able to provide the services they would be able to price their flights at what they want as consumers will have no other choice. But if they have competition they will be under competition to compete for the lowest price. Competition is thought to improve efficiency in the business and be good for customers, but if there is too much competition then the company will not be making a profit. Like all airlines Virgin Atlantic must observe all rules and regulations of the FFA (federal aviation authority) and the CAA (civil aviation authority). By Virgin Atlantic doing this it leads to a higher cost and more administration. Under the USA/UK agreement there is currently only 4 major airlines allowed to land at Heathrow on direct flights. These currently are united airlines, American airlines, British airways and Virgin Atlantic. The European legislation is currently looking into opening up the market and this could lead to an increased competition.
Health and safety is an import at part of Virgin Atlantic, as they want to look after their customers so that they will come back. Before flying Virgin gives the passengers some things they can do to maximize their IFE and make sure they arrive at their destination feeling well. Some of the suggestions Virgin Atlantic give passengers are to move around on the plane and to change position so they don’t contract a clotting disorder such as deep vein thrombosis. As for their employees Virgin also wants to look after them as they want to be the airline that everyone wants to work at. For example Virgin Atlantic recently changed the stairs they use while they are cleaning the engines and since the staff have found these of much more use and easier to use.
Advertising regulations refer to the law of rules which currently define what can be advertised in a particular place. The regulations can define what can be shown, for example in most countries most advertisements cannot be aimed at children under 12, and in the United Kingdom the advertising of tobacco is banned. An example of when Virgin Atlantic are advertising they will use direct responses, sales promotions , and these combine to provide clarity, consistency and maximum communication. Virgin Atlantic use a wide range of marketing techniques some of these are direct mail, press, billboards, all featuring their distinctive logo , the flying lady. They use advertising to raise awareness of new product developments and to inform customers about new routes forming. An example of when they used this is was on NBC when the television series “friends” when showed during the primetime showed Richard Branson with all the characters flying on Virgin Atlantic to London. There are many regulations about advertising throughout Europe as well as in many non-western countries. A wide variety of linguistic and non-linguistic strategies are used to mock and undermine regulations.
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Environmental influences
Environmental influences are something that all business cannot get away from. Some of the environmental influences that affect virgin Atlantic are:
- Pollution laws
- Waste disposal laws.
- Recycling
- Pressure groups
Pollution laws
Pollution laws are part of the national air quality strategy for england,scotland, wales and northern island. They set out the national standard and objectives to reduce air pollution and levels of health- threating pollutions. Pollution laws would affect Virgin Atlantic because this will stop them from having as many flights take off and land , as the orgizination that sets the national strategy and objectives sets a target for what they want the air pollution to reduce down too. This in turn will also reduce profit as Virgin Atlantic are having to keep to the target set and not let as many flights take off.
Waste disposal laws
Environmental Protection Act 1990
Environment Act 1995
Business must have a safe and legal method of disposing of their waste. One of the choices which is not acceptable is burning of your business waste. It may seem easy to take short cuts. The Council has a duty to enforce the law. We have an Enforcement Policy on how we will deal with those who fail to comply with the law.
