Regional Integration

The European Union formed in the year 1958 as per the precepts of the “Treaty of Rome” is the 2^nd largest economic bloc of the world just after the United Nations of America (Jay, Davies and Reid 2016). The economic bloc under discussion here has 28 member nations from the different parts of the continent of Europe and generates more than $22 trillion on an annual basis (Jay, Davies and Reid 2016). The primary idea behind this regional integration was to provide the member nations of the concerned bloc with the kind of trade and also financial opportunities that would help the member nations of the concerned bloc and also the industries as well as the business enterprises that are a part of it with the kind of business opportunities which would help them in a significant manner for the process of their business (Cumming and Zahra 2016). It was with this particular intention that the participating members of the concerned bloc agreed to provide free trade opportunities, the opportunity to utilize the labor forces of the member nations, the opportunity to utilize the technological, political and other resources of the participating nations and others (Cumming and Zahra 2016). It is significant to note that these opportunities or the practices followed by the members of the economic bloc under discussion here helped not only the concerned member nations but at the same time the various industries and the business enterprises that formed a part of these nations to achieve a considerable amount of success over the years. Furthermore, these practices are generally being considered as one of the major reasons which have helped the majority of the member nations of the European Union to achieve a considerable amount of economic success.

The United Kingdom which joined the economic bloc in 1973 has invoked the “Article 50 of the Treaty on European Union” and decided to exit the European Union as per a referendum on 29 March 2017 (Pollitt and Chyong 2017). The exit deal will be effective from 11 pm 29 March 2019. This is likely to pose various kinds of problems for the business enterprises of the concerned nation (Pollitt and Chyong 2017). The report will discuss about the opportunities as well as the risks that the recently concluded deal is likely to present to the organization Virgin Group, UK.

The process of regional integration is the mechanism through which the various neighboring states enter into an alliance and at the same time establish various committees as well as institution for the promotion or trade and commerce or for other purposes (Cumming and Zahra 2016). Furthermore, Cumming and Zahra (2016) are of the viewpoint that the nations or the states which are involved in the process of regional integration agree upon some basic leverages or advantages that only the member nations or the states that has entered into the alliance or the integration would be able to enjoy. Wright et al. (2016) are of the viewpoint that the primary purpose of the process of regional integration is the promotion of trade and thereby help the nations or the states which are involved in the process to boost their economies by means of the enhanced trade and commerce opportunities that they get because of the process of integration. One of the most famous regional integrations is currently called by the name of the European Union (Wright et al. 2016). It is significant to note that currently there are some 28 members of this union and all of them have the access some of the rights as well as opportunities that the majority of these nations agreed upon before they undertook the process of integration (Haag 2017). The major benefits or opportunities that almost all the 28 member nations of the European Union get are free trade policy, opportunity to procure raw materials as well as sell their services or products in the business markets of any of the member nations and others (Haag 2017). However, the decision of the UK to come out of this integrated set up is likely to cause various kinds of problems to the concerned nation and also its economy.

Virgin Group, UK

Virgin Group Ltd was founded by Sir Richard Branson and Nik Powell in the year 1989 and within a very short time the concerned organization has gained a significant amount of prominence in the business world (Virgin 2018). The organization under discussion here is generally considered to be a “British multinational venture capital conglomerate” (Virgin 2018). The concerned organization offers a wide range of services to the customers not only of the United Kingdom but also of the different nations of the world including the nations of the European Union. The organizations not only caters to the entertainment needs of the people but at the same time provides various kinds of telecom services, airline services and others to the people from the diverse parts of the world (Virgin 2018). Furthermore, in the recent times it is also seen that the organization has established various new ventures in the diverse parts of the world like Australia (Virgin Airlines), Virgin Vodka, Virgin Radio UK, Virgin America in USA and others (Virgin 2018). It is significant to note that the organization started as a small organization in the nation of the United Kingdom however soon the organization expanded into the other nations of the world as well and is currently operational in almost all the nations of the world (Virgin 2018). The organization currently recruits more than 71,000 people from the diverse parts of the world and as a matter of fact is one of the largest private recruiters of the world (Virgin 2018). One of the major reasons for the immense success attained by the organization within a very short time is generally been attributed to the effective leadership style followed by its co-founder Richard Branson and also the innovative services and strategies offered by the concerned company (Virgin 2018). An overview of the performance of the company in the recent years is provided by the below given figure-

                                                                     

                                                                     Figure 1: Virgin Group Performance

                                                             Source: “Factset, Bloomberg, S&P Cap IQ; Forbes”

Brexit and the Virgin Group

The organization under discussion here has a net market value of more than $2.1 billion (Virgin 2018). However, as the above given figure indicates the organization in the recent times has experienced a drop in the revenue which it generally used to earn in the earlier times (Independent 2018). This is generally attributed to the declaration on the part of the national government of the United Kingdom regarding the Brexit deal. It is significant to note that just after the announcement of the deal the concerned organization witnessed a significant drop, that is, nearly a third of its market shares lost a significant amount of value in the stock market (Independent 2018). In addition to these, Branson himself as warned the UK regarding the adverse effects of the impending signing of the Brexit deal and at the same time has hinted that this would hinder the prospects of his organization in a significant manner (Davies 2018).

The organization under discussion has been to gain a significant amount of success within a very short time and one of the main reasons for this particular factor is generally attributed to the global as well as the diversification strategy that the concerned organization follows all over the world and more particularly because of the regional integration policy followed by the different nations of the European continent (Haag 2017). It is significant to note that the concerned organization has active interests as well as major business holdings in the diverse nations of the European continent because of the regional integration followed by the United Kingdom in the earlier times (Hall and Wójcik 2018). The major disadvantages of the impending signing of the impending Brexit deal and the exit of the UK from the EU or more appropriately coming out of the regional integration process that it had followed in the earlier times are firstly the various organizations of the UK will not be able to use the free trade opportunity which they have received in the earlier times for the process of their business in the various nations of the European continent in the prior times, they will not be able to use the technological, political and other resources of the European nations like they have been able to use in the earlier times, they will also be not able to procure raw materials like the components of the plane, petroleum and other fuels that are needed for the manufacturing process and labor forces from the various nations of the European Union and others (Hall and Wójcik 2018). Furthermore, in the earlier times it was seen that the concerned organization used to get their products or services manufactured in several European countries like Italy, France and others however post the exit deal it would not be able to do and this will not only affect their manufacturing process but at the same time would cause delay in the manufacture of the services and the products offered by the organization. This is likely to affect the business of the concerned organization in a significant manner since the company will not only incur a higher price through the manufacture of the products in UK but at the same time the quality will also be affected. It is significant to note that these factors are likely to affect the prospects of the concerned organization in a significant manner after the exit of the United Kingdom from the EU.

The policy of free trade which the various nations of the EU were entitled to, through their effective use of the concept of regional integration enabled them to conduct business in the diverse member nations of the bloc without having to pay any extra tariff charges (Cumming and Zahra 2016). However, post the Brexit deal or post the breaking of the regional integration, the organizations like Virgin and others of the UK would have to pay additional tariff charges for the conduct of their business member nations of the EU like market entry charges, trade charges, export charges and others (McCombie and Spreafico 2018). Furthermore, post this particular deal the organization Virgin will at the same time be not able to use the technological and the other kinds of resources of these nations which it in the earlier times had been able to by virtue of the process of regional integration policy followed by it. It is significant to note that some of the member nations of the EU are highly advanced in terms of technology and other resources and the end result of the deal would be the fact that the concerned organization will not be able to get access to these technologies and other resources for the process of their business (McCombie and Spreafico 2018). The use of these resources of the member nations which underwent the process of regional integration along with UK has helped the concerned organization in a significant manner to provide innovative kind of services or products to the customers which has in turn helped them to emerge as one of the major organizations of the continent of Europe itself. However, the inability of the concerned organization to have access to these resources would significantly hinder the prospects of the concerned organization.

Employees or labor force are of the key requirements of the various business enterprises as it is of the organization under discussion here. It is significant to note that experts are of the viewpoint that the employees or the labor do the majority of the jobs within the fold of any organization and thus it becomes important for the organizations to have as many labors as possible since the prospects of the any organizations depends on the number and the effectiveness of these labor (Wright et al. 2016). The organization under discussion here has more than 71,000 employees and the majority of them are from the various member nations of the EU (Virgin 2018). Furthermore, the hard work put in by these individuals has helped the organization under discussion here to achieve the success that it has been able to gain within a very short time (Hillion 2018). However, post the Brexit deal the concerned organization will not be able to have access to these labors and this is likely to affect the prospects of the organization in a significant manner since it is likely that in the event of less workforce the services or the products offered by the organization will be significantly hampered as well as reduced.

The deal signed by the UK with the EU to exit from the economic bloc of EU or more appropriately to give up the use of the policy of regional integration is likely to pose various kinds of risks as well as issues for the concerned organization. In an interview with CNBC (2018) Branson himself said that “Trade protectionism is so unhealthy. What happened with Brexit is a terrible, terrible thing for Great Britain and Europe and will set back Great Britain and may take several years to recover”. The primary risk that the concerned organization faces on the score of the Brexit deal is the fact that the organization is likely to lose some of the major business markets in the member nations of the EU because of the deal which are still following the process of regional integration (Haag 2017). It is a reflection of this particular that the organization has to sell the major shares of its airlines industry to the various companies of the European continent at a much lower price (Thompson and Zang 2018). It is significant to note that the concerned organization held a monopoly over the airlines industry of the continent and it was seen that the company has more than 31% of the market share in the concerned field (Thompson and Zang 2018). Another major threat that the company faces at the current moment is the fact that within the next few years it is likely to lose its market value because the business of the organization would soon be overtaken by its competitors who would still be having the access to the privileges that the concerned organization will not have access to any longer (Gamble 2018). In addition to these, the production of the company will also be affected in a significant manner since it will not have access to the raw materials and the other resources which it used to procure from the various member nations of the EU (Plomien 2018). Furthermore, in order to conduct its business in the member nations of the EU it will have to pay additional tariff prices like trade taxes, export tariffs and others to these nations which will significantly reduce the profit earned by the concerned company (Plomien 2018). At the same it is significant to note that mere dependence on the business market of the UK will not suffice for the concerned organization since it is seen that the organization has active market shares in the various members of the EU which will get obliterated because of the deal and even if the organization decides to keep them operational then it will have to pay higher prices in comparison to the earlier times (Farnsworth 2017). This is likely to put the concerned organization in a critical situation wherein it is likely to lose the competitive advantage that it once held.

The exit of the UK from the EU while presenting various kinds of risks also presents diverse kinds of opportunities to the concerned organization as well. It is true that the organization in order to conduct its business in the nations of the EU would have to pay extra tariff charges to those nations and it would significantly affect its business prospects in the concerned nations (Goldman and Schulte-Strathaus 2017). However, at the same time the same thing hold true for the other organizations of these nations for the process of their business in the UK as well (Goldman and Schulte-Strathaus 2017). The concerned company can thus can focus on the business market of the UK and try to take make the most of them. Furthermore, all the problems related to labor, technology and other resources that the concerned organization would face in the nations of the EU would be faced by them in the UK as well (Wood and Jang 2017). This to some extent puts all of them on the same following. Moreover, the concerned organization can at the same time gain in a significant manner through the effective use of the concept of opportunity cost (Wood and Jang 2017). Through the effective use of this particular concept the concerned organization can take the help of the kind of marketing opportunities that is likely to help it to reduce or mitigate the adverse effects of the Brexit deal (Wood and Jang 2017). For example, the organization can establish its business centers in the nations of the European continent which are still not a part of the EU and get the same kind of advantages or leverages that it used to enjoy prior to the Brexit deal (Clegg 2018). In addition to these, exploring new business markets is another option that the concerned organization can consider for the process of their business (Clegg 2018). For example, the company is already known for the diversity of the products or the services that it offers to the customers from the diverse parts of the world thus the opening of new business centers in unexplored nations in another opportunity that galore the concerned organization. One of the major ideas behind the exit deal was the fact that it would improve the economy of the nation of the United Kingdom (Jessop 2017). It is significant to note that according to an estimate the benefits that the UK from its association with the EU were much overshadowed by the drawbacks of the same. For example, the concerned nation has to share its various resources with the various members of the EU and this used to create a lot of pressure on the national government of the UK (Jessop 2017). It is likely that after the exit of the UK from the EU the economy of the UK will revive in a significant manner in the longer run and the organization under discussion here can take the help of this particular economic framework of the nation for the process of the improvement of the prospects of their business (Jessop 2017).These in short are some of the opportunities that galore the concerned organization.

Conclusion:

To conclude, the association of the United Kingdom with the European Union has helped not only the nation of the UK but also the other member nations of the EU in a significant manner to revive their dwindling economies which were terribly shaken after the two Great Wars. At the same time it was seen that the business enterprises of the nations which were involved in the deal had access to various kinds of leverages that helped in the growth of their organization and also the economic bloc itself. However, it was seen that not all the nations involved in the process were able to gain equal kinds of benefits process and this is one of the reasons for the exit of UK from the bloc. Furthermore, the Brexit deal is likely to cause various kinds of problems for the concerned nation since it will limit the trade and thee business opportunities that it used to get in the member nations of the EU in the earlier times. This is likely to pose a significant amount of threat to the business of the organizations of the UK. However, at the same time it is significant to note that there are various kind of opportunities as well which galore these organization after the exit of the nation from the economic bloc.

In order to effective utilize the opportunities presented by the Brexit and also to mitigate the adverse effects of the same the organization can take the help of diverse kinds of strategies. For example, expansion into the nations of Europe which are not a part of EU is one option. Secondly, use of effective marketing research and data analysis can at the same time help the concerned organization in a significant manner. The organization can also take the help of the process of “Innovative Value Chain” to generate new innovative as well as business ideas which will help the organization in a significant manner.

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