Like a physical machine, the primary determinants of the performance of a VM are the speed and capacity of the underlying hardware. Performance of the virtual machine also depends on the inherent performance of the guest operating system. Performance also depends on what other programs or additional VMs are currently running.
As you might expect, overall performance for concurrently running VMs depends upon the characteristics of the VMs, the underlying physical machine, and which applications are currently in use.
VMware application minimizes the impact of each VM by implementing power management features of the x86 architecture. You should find little to no degradation to either the host or a guest OS due to running one or more VMs.
One way you can affect performance of a virtual machine is to adjust the memory size setting for the VM. However, by guaranteeing more memory to the guest operating system, less memory is available to the host operating system. This may not be a problem, particularly if you are not working in both the guest and host operating systems concurrently.
The execution of each VM is subject to the scheduling policies of the host operating system. You can control the priorities of one or more VMs (and of the applications running directly on the host operating system) by controlling the priorities of the VMware application processes.
Using undoable or nonpersistent disks can sometimes be faster than using persistent disks, but this is not always the case.
You can tune performance of virtual machines by making some adjustments to the host operating system. Some examples follow.