Introduction of The causes and impacts of inflation on a company determine the company’s strongest area and position in a country
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- The causes and impacts of inflation on a company determine the company’s strongest area and position in a country.
- Sometimes inflation rate is high in the country and sometimes it becomes low, which reflects the buying power of the country’s general public. When the value of currency decreases and the prices of goods and services are increased in a country, that situation is called inflation in a country (Haslam, al. 2020).
- This report discussed the overview of SMEs based in the UK market. The verdant leisure company is considered as a case company for easy completion of the report.
- The experience of a company is also explained in the study to conclude the causes and impacts of inflation on the case company.
- This study also includes UK inflation rises CBI chart to increase the reliability of the research. The models and theories of inflation are also considered in the report.
- The experience of inflation and models and theories used by the case company to support them during the time of inflation is also examined in the report.
Overview of the company
- Verdant Leisure is a UK-based mid-sized company, which provides holiday park services to its customers(Verdant Leisure, 2022). In 2010, the company was established by Andrew wall, Bev Dixon, and Graham Hodgson.
- Holiday Park means a type of park which is constructed by companies where the company's customers can stay and plan their holiday. The holiday parks are created the same as a residential houses (Adamovich, al. 2021). The only difference between residential and holiday parks is, the residential house can be purchased for lifetime living while holiday parks are constructed by the company to offer the customers only for their holiday days.
Verdant Leisure Limited logo
- The two caravan parks have been acquired by verdant leisure in Devon. The North Devon Cleavewood Park and golden coast holiday village in Woolacombe are acquired by verdant leisure with an unrevealed amount.
- The company does not offer only services of holiday parks, it also offers different types of facilities to attract more customers. The services like touring and indulgence accommodation facilities along with restaurants, outdoor and indoor pools, lakes, and bar facilities.
- The first foray of a case company into southern England represents two parks. The primary focus of a case company is to expand its business in the northern England and Scotland markets.
- The Cleavewood and Golden Coast brought 83 touring pitches and 342-holiday shelter units to a wider group of the case company. The company wants to become a lead choice of holiday-planned customers in the holiday market of the UK(Business sale REPORT, 2021). For achieving the objectives a case company further invested in many other planned parks that will be disclosed in the next few years.
- In the year 2017, verdant leisure is shortlisted as a finalist in the title "Growing Business of the year" in the mid-sized category of Amazon Growing Business Awards(Verdant Leisure, 2022). The selection of a case company in that grand award function has boosted the image of a company in the market.
- The case company promotes sustainable tourism by enhancing and protecting the natural environment. The company also accomplished a bronze award for green tourism and placed its membership of all parks in the green tourism scheme.
- The case company is a type of private limited company, which accepted the acquisition and buy-and-build strategy. Verdant leisure had six locations in its portfolio when the first investor palatine private equity invested in the company in 2016.
- A long-term investment commitment by the capital operating partnership of Pears Company help the case company to bring strategic acquisitions and raise services and standards of its park to grow the verdant leisure group.
- The palatine private equity make a deal with pears partnership capital and sold its verdant leisure stake in august. The case company’s portfolio raises to 12 parks and placed the company's first acquisition when the palatine private equity and pears deal was undertaken. The whole deal will result from the company's valuation as a multi-million in the UK holiday industry.
Experience of Verdant Leisure in inflation period
- Inflation refers to the rate which reflects a rise in the price of goods and services within a country. There are three types of inflation built-in inflation, demand-pull inflation, and cost-push inflation.
- The consumer price index (CPI) for air travel for passengers in the United Kingdom increased by 40.3 percent in August 2022 compared to the same month the previous year.
- Verdant Leisure holiday park price increase in August month. The CPI for hotels, motels, inns, and other lodging establishments increased dramatically in August 2022 compared to August 2021, increasing by 9.9%.
- However, after being hit by lockdowns and emergency measures implemented during the coronavirus (COVID-19) pandemic, Verdant Leisure holiday park may now face new difficulties as a result of the sharp rise in global inflation.
- In general, whether or not people are considering revising their travel plans, inflation is increasingly leading to hardship among both leisure and business travellers.
UK inflation rises
(Source: Race, 2022)
Models and theories used to increase the positive impacts of inflation
- There are four main types of inflation models that a company can use during inflation time. All four models deal with the possibility of scalar fields (Krajewski, al. 2019).
- The first model of inflation is chaotic inflation, it is a variation of the inflationary universe model. It is the simplest model of the scalar field and high field inflation which is considered a form of power law potential rules (Roberts, and Sorbo, 2021).
- Novel inflation is a second model which considers the potential of near minimum inflation. The requirement of flatness for an inflation potential is also presented in the novel inflation model (Enqvist, al. 2018).
- The third model of inflation is inflation with exponential potential, this model also includes the power of law inflation (Granda, and Jimenez, 2019).
- The last model of inflation is named as hybrid inflation, this model includes two scalar fields, the additional field, and an inflation field for the simplest version. The combination of two or more models of inflation that are free from Super-Planck fields is known as the hybrid inflation model (Gunji, and Ishiwata, 2021).
- Inflation has three main theories, the market-power theory, the conventional demand-pull theory, and the structural theory of inflation (Fahlevi, al. 2020).
- The market power theory refers to that inflation in which a group or single seller mutually decides the new price of a product or service that is distinct from competitive prices (Reichling, 2022).
- The second theory which is conventional demand-pull inflation believed that inflation occurs only when aggregate demand excess the aggregate supply. This theory also says that when the demand is not in excess, even then there is an existence of inflation in the country (Schwarzer, 2018).
- The structural theory of inflation concludes that due to structural maladjustments and business environment features of some institutions arises inflation in a country. This theory is further divided into two theories to describe the causes of inflation such as mark-up theory, and bottle-neck inflation (Okoye, al. 2019).
- To face the inflation up and down rates, the holiday park companies of the UK together decide the prices of their main services which is staying facility services to their customers. The case company also works on that market-power theory with its competitors, to balance the demands of holiday parks even in the inflation period.
- The first theory of inflation is used by verdant leisure only for their main services but for the additional services like bars, pools, lakes, restaurants, etc. the company used conventional demand-pull inflation.
- With the help of the second theory of inflation, the case company attracts more customers to its all services and makes sure the continuous supply to the customers, reduces the impact of inflation on the company's continuity.
- The verdant leisure also paid attention to the structural theory at the time of inflation. By analyzing the internal and external environment of a business, the case company changes some features of the internal structure. The case company mainly focused on the conventional demand-pull theory of inflation during the time of inflation in the country.
- The verdant leisure used a hybrid model of inflation to come up with the inflation crises in a country. Through this model the case company analysis the additional and inflation fields of a scalar field. This model helped verdant leisure to plan its strategy for a clash against the impacts of inflation on a company.
- The report is concluded that the mid-sized company, verdant leisure of the UK has great coverage of the market in the tourism industry.
- The overview of a case company concludes that the company has a variety of services to attract more customer even tourists also. An experience of a case company during inflation shows that the company was highly effected at that time (Athari, al. 2021).
- The theories and models of inflation extract that inflation can impact highly on the company in both positive and negative ways. By the use of models and theories of inflation any company can come up with the effects of inflation.
- The case company used a hybrid model and majorly used conventional demand-pull theory to overcome inflation in the UK.
- A case company also focuses on balancing the three theories of inflation in the inflation time of the country.
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