Business Strategy: Impact of Macro-Environmental Factors on Klarna

This report analyzes the impact of macro-environmental factors on Klarna's business strategy, including the internal environment and capabilities. It also includes the application of Porter's five forces model and strategic directions for Klarna.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
Analyse the impact and influence which the macro-environmental has on an organisation and
its business strategy.....................................................................................................................1
LO 2.................................................................................................................................................6
Assess an organisation's internal environment and capabilities..................................................6
LO 3.................................................................................................................................................8
Evaluate and apply the outcomes of an analysis using porter's five forces model to a given
market share................................................................................................................................8
LO 4...............................................................................................................................................10
Apply models, theories and concepts to assist with the understanding and interpretation of
strategic directions available to an organisation.......................................................................10
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy has been applied by an organisation to achieve its goals within a certain
period of time. It is a set of activities that is performed by the business to accomplish the target
and to gain the competitive advantage (Ansoff, 2019). It is a set of moves that has taken by the
business with that apply different tactics to grab the attention of the customers and then
strengthen the performance of business. This report is based on the business strategy of Klarna
that work in banking sector and that was founded in Stockholm, Sweden, 2005. Klarna offers
direct payments, pay after delivery options and instalment plans in one click and Klarna group
was formed when SOFORT acquired it in 2014. This report includes the macro-environmental
factor that affects the business strategies and after that defines the internal factor and capabilities
of the business. Furthermore, includes porter's five force model to state the competitive forces
and at the end includes the strategic directions by applying different several models and
concepts.
LO 1
Analyse the impact and influence which the macro-environmental has on an organisation and its
business strategy.
Strategic context provide the different norms under which the strategies has been
developed for to achieve the target within the specific period of time. It is a different norms that
is followed by the company to enhance the measurement of success and growth (Balon, 2019).
As Klarna works on a larger scale thus it is must for the company to know what they want to
achieve and with that defines the path that is chosen by the company to achieve target in an
effective manner. It provides the accuracy to the business of Klarna to maintain the continuous
development and improvement that is as defined below as:
Mission: Klarna works with the mission to provide the best, safest and smoothest
services for paying.
Vision: Klarna is the largest bank of Europe and provides the solution to 85 million
consumers all across 205,000 merchants in 17 countries. Thus their vision is to provide the best
services that create easiness for the consumers to manage the online banking and payments.
Objectives: The major objective of Klarna is to provide the easiest services for the people
to perform online shopping.
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Strategy is the plan that is opted by an organisation to achieve the target within the
particular period of time. It has been made to achieve the targets with the different ongoing
conditions or the uncertainties that will randomly generated within the market. It is a rigid of
activity that is performed by the manager of Klarna to gain the advantage from the market
competition (Cavaleri, 2018).
Strategy implementation plays an important role in the business as it provides the
direction to the business and with that company achieves their target in an efficacious manner.
Business objectives and goals states what company has and what company wants to achieve and
that difference would be covered by using different strategies. Strategic intent conveys what
company wants to achieve for a longer period of time. As it builds or forms the guidance that is
followed by the Klarna to measure the long term success and growth. Strategic directions are the
different norms that has been made by the manager of Klarna to accomplish the target and with
that directions will be changed or managed as per the requirement and demand of the ongoing
situation. Market growth is not fixed it always fluctuate and with that to sustain the business the
market strategies will be developed by the company. Thus manager of Klarna develops and
change the strategies as per the requirement of the business to measure the success for longer
period of time.
Different strategic planning techniques
 Benchmarking: It is a standard that is set by the company as per the market performance
as compare to their competitors. For that Klarna measure themselves performance and
then compare that with the market leaders that help them to gain higher profit by
applying different strategies (Christodoulou, 2019).
 Business analysis: By analysing different strategies of the market then Klarna compares
that with their own performance and measure the strength and weaknesses. Then make
different strategies with that achieve their goals in effective manner.
Frameworks and analyses of macro-environmental factors that has been opted by the
manager of Klarna to gain the competitive analysis and that all are as defined below as:
Stakeholder analysis: It is a process that is followed by the company and in this business
identifies each and every individual before the beginning of the project. After that as per the
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participation, interest and influence Klarna makes the group and then communicate with them to
make an effective outcome of the project.
(Source: Stakeholder analysis, 2019)
It includes three steps that are as follows as:
STEP 1: This is the first step in which Klarna specifies their stakeholder that are as
customer, suppliers and government. As these are those who influenced the project as per their
participation.
STEP 2: In this step Klarna specifies the stakeholders as per their participation that is
measured with the power-interest grid. In that company specifies the group of each individual
with that assign the group as per the performance that is as defined as:
 High power, high interest: It is a phase, in which Klarna shows the priority as these
group stakeholder has higher interest with that has high power in terms of engagement
that helps the company to achieve their target in an effective manner (Eskerod, 2018). Low power, high interest: It is a grid who's stakeholder has high interest within the
project thus company provides daily information to them with that keep monitoring their
performance and make ensure that their issues has been resolves has soon as possible. High power, low interest: In this grid Klarna must keep focusing to their stakeholders
and ensures that they are satisfied with the project as they have low interest towards the
project (Dawes, 2018).
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 Low power, low interest: It is a grid in which company must keep informing them about
the project as because they didn't have any interest and power towards the project.
STEP 3: It is the last stage in which Klarna makes the proper communication with the
stakeholders by which it further helps the company to achieve their target of project completion
in an effective manner.
PESTLE Analysis: It is an analysis that defines the impact of macro-environmental
factor that affect the growth and development of Klarna that is as defined below as:
Political It is a factor that defines the regulations and rules of the government that has
the direct impact on the different strategies of the business. UK is one of the
country that has flexible and balanced conditions that provide better
opportunities for the Klarna to measure growth. But as UK is affected after the
Brexit thus to measure the success company applies different strategies. On the
other hand government provides helps for the bank to maintain the stability
within the market (Hujainah, 2018).
Economic It states different factors as GDP, unemployment rate, inflation etc. that has
direct impact on the performance of Klarna. UK economy is affected due to
Brexit thus Klarna makes some strategies to maintain the balance environment
within the market. As company faces more strange difficulties to maintains the
profit as interest rate becomes low (Zahari, 2019).
Social It includes the development of the society in terms of belief, culture, lifestyle
that is followed by the society. It has positive impact on Klarna and for that
company performs different strategies to attract the large number of customer
base. By making several strategies as like pensions schemes and extra and
flexible interest rate (Niranjanamurthy, 2019).
Technological It includes the enhancement of technologies as if company wants to work on
an international level that it is must to use technology in the business. Klarna
uses different technologies to impart the development as they are working on a
wider scale. For that company operates their functions on websites and with
that try to make the easiest environment for the consumers to use online
banking system and payments (Ekuase-Anwansedo, 2018). With that company
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also provides training and development to the employees for better utilisation
of the market opportunities.
Legal These are the different acts and policies of the government that has been
developed to enhance the profit and development of the country. As after the
impact of Brexit UK governance develops an individual department named as
Financial conduct authority( FCA) that will operate and control the
international market and helps to take the decisions related to the monetary
funds. It has somehow negative impact on the performance of company as
Brexit reduces the flow of funds in the market.
Environmental It includes the factors that are related to the development and procurement of
the environment. UK set some of the rules and regulation to save the
environment and keep clean the surround for a better future. Thus Klarna
perform different functions to reduce carbon footprints with the use of best
technological machines that create less wastage with that minimise the paper
wastage as well (Racz, 2018).
SWOT Analysis: It is an analysis that defines the strength and weaknesses of the
company.
Strength Klarna has wider acceptability as it is one of the leading bank of Europe and
have the support of investors as sequoia capital, Permira, Visa, Atomico,
Bestseller and it is a part of Klarna group. Thus company gets the help to
maximise the sale and profit (Eskerod, 2018).
Weaknesses As after the Brexit it is hard to maintain the sustainability within the business
as economy of UK gets fluctuate and dis-balanced.
Opportunities More of the countries moves forwards to use the online transactions and turns
into cashless thus Klarna has wider acceptability in the market as they provide
easiest solution for the usage of online payments (Eskerod, 2018).
Threat To maintains and grab the satisfaction level of customer is the biggest threat as
cyber crime has been increased and that somehow resist the consumer to use
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online payments.
Thus these are the analysis that helps the company to know about the different macro-
environmental factor and with that measures the strength and weaknesses of the business to
measure the success for longer period of time.
LO 2
Assess an organisation's internal environment and capabilities.
Strategic capabilities are the abilities of the business to measure the long time success as
per the usage of different strategies. It has six major components as key goals, strategic goals,
tools for analysis, vision, values and action planning and that helps the company to implement
the strategy in effective manner (Gurcaylilar-Yenidogan, 2018).
Resource view base strategy implemented by the business to gain the advantage by
applying several strategy as to maintain sustainability in the business. As there are two type of
resources as tangent and in-tangent, tangent includes machinery, land, capital, instrument etc.
while in-tangent services as brand value and image.
McKinsey’s 7S model: It is used to identify 7 components of Klarna to attain the goals
and objectives that is as defined as:
Strategy It has been made by the company to take the competitive advantage from their
rivals that help to enhance the customer base and sale of Klarna. If company
doesn't follow then there rivals overcome and business measure huge loss
(Shaqrah, 2018).
Structure It is a unit that is followed by the business to organise different functions in an
effective manner. If company doesn't follow then it creates more complex
conditions and ultimately affects the growth of the business.
Systems It shows the daily task that is performed in the business to measure the success.
If Klarna doesn't follow that it creates issue to achieve target within the set time
period.
Skills It is the skills and knowledge of the employees that is working within the
Klarna. If business doesn't follow then it creates issue to overcome from the
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complex situations (Hine, 2018).
Style It is the form that shows the management of the company. Klarna uses
participative style that enhances the participation of the employees.
Staff It includes the number of workers that worked within the Klarna. It shows the
way with that company hired and trained the employee and provides required
training and reward as well (Javied, 2019).
Shared values It is the norms and standards that is followed by the company to maintain the
sustainable environment.
VRIO Model: It is used by the company to identify about the resources and internal
capabilities that helps to overcome from the rivals. That is as explained below as: Valuable: These are the capabilities of an organisation that enhance their business
structure. Klarna has strong financial position that helps to achieve the target on time that
enhances their value. Company has skilled and experiences employees that increases the
overall productivity of the business. Klarna has patent thus that create image in the
market and makes their service different from all. Company also have technologies that
help to work in effective and efficient manner (Jordán, 2018).
 Rareness: Financial position is very rare as Klarna has strong financial background that
is very rare. Employees also are very rare because company provides special training to
them and also provides opportunities to measure growth. Patent is also be rare as it is the
intellectual property of the company (Vargas- Hernandez, 2020). Imitable: Financial positions are imitated as it is gained by the company after gaining the
performance and competitive advantage after applying several techniques. Patent is also
be imitable as it is legal format that will be shared or further licensed by the company
only (Vargas-Hernández, 2019).
 Organisation: financial positions and resources is organised by the company only as per
the requirement of the business.
Resource/ Valuable Rare Difficult to Is it organised
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Capability imitate
Technologies Yes
Workforce Yes Yes No
Patent Yes Yes Yes No
Financial
Position
Yes Yes Yes Yes
LO 3
Evaluate and apply the outcomes of an analysis using porter's five forces model to a given
market share.
Porter's five force model: It is a model that defines the different competitions that is faced by
the company to measure the success for a longer period of time that is described below as:
(Source: Porter's five force analysis, 2019)
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Bargaining power of buyers: Klarna makes the control on the suppliers as those who
provide raw material, capital etc. Klarna has financial institutions, depositors, loan, and
mortgagor as the suppliers. Thus supplier has more force as customer have more freedom to
switch towards any service for that Klarna makes the trust by providing effective services.
Bargaining power of suppliers: It defines the power of customers that switch to other as
per their requirement thus it has high power. For that Klarna provides best product with effective
price to attract large customer base.
Threat of substitute: Klarna has high threat from the substitute as like non-financial
institution like mutual funds and insurance providers. For that company must focus on all the
requirements of the consumer and fulfil that within the certain time period (Lane, 2018).
Threat of new entrant: Klarna has less threat of new entrant as it takes longer time to
gain the trust of consumers and that is the positive aspect for the business that they have high
acceptability from the market.
Rivalry among the existing competitors: It defines the competition that is faced by the
rivals as Wepay, Stripe etc. As there are other companies as well that provide services of online
banking. Thus Klarna uses effective strategy to attain the attention of customers by providing
simplicity and smoothness in the business.
As Klarna is the financial service provider company and they provide the best and
suitable balance within the business environment and by that they could introduce different
changes within the business and thus they get better sustainability for the longer period of time.
The financial provider sector is more important as they provide the services in more better
manner and which they could induce the better impact in the market. By providing the better
services they get attract the customers and have measured more profitable interest.
Ansoff growth vector matrix: It is a strategy that is used by the Klarna to measure the
growth that is as defines below as:
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(Source: Ansoff matrix, 2020)
Market penetration In this Klarna provide relevant services to the customers to enhance the
market share and with that provide best services with accurate pricing.
Product
development
In this Klarna provides new services to the consumers as like different
and unique method to use online payment and provides smoother
services.
Market development In this Klarna provides same services in the newer market with that offer
some new services to emphasise the sale and profit (Liew, 2018).
Diversification In this Klarna uses different new strategies in existing market as like
frictionless mobile banking that create easier environment to transact
online payment.
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LO 4
Apply models, theories and concepts to assist with the understanding and interpretation of
strategic directions available to an organisation.
Porter's generic strategies: Porter's generic strategies directly or indirectly aid in
identifying those factors by which they can gain competitive advantages in the international
market. Cost leadership, focus and differentiation are three kinds of strategies. In regards of
Klarna porter's generic strategies are illustrated as under:
Cost leadership: Through this porter' generic strategy price sensitive customers can be
attracted easily in short time duration by business administration. Information regarding easily
payment services are offered to the customers free of cost (Cavaleri, 2018). They are made aware
regarding how to do safe and secure online payment in simplified manner. From new customers
consultancy fees is charged which is very nominal. By this more trust is build regarding bank in
the eyes of the customers. Additionally, sales ratio is raised tremendously (Melville, 2018)
Differentiation: Here, creative product and services are designed for their potential
customers in bank. By this large customer base can be raised towards Klarna. Banks overall
productivity and profitability ratio can be raised by coming up with innovative payment service.
However, customers can be made satisfied by making the transaction of online payment simple
and easy to conduct. Easy payment mode can b e used by lees illiterate people in developing
nation.
Focus: It involves two aspects cost and differentiation aspects. However, in cost focus
payment services need to offered to the customers at low price by Klarna. By this customers will
be pushed to used online payment more in their daily life. Whereas, in differentiation innovative
services where payment is safe and secure from hackers. It will stimulate the customers to
purchase the goods despite off being price sensitive. It results in accomplishment of set standards
(Cavaleri, 2018).
Bowman's strategic clock
It aid in understanding suitable strategic positioning through which Klarna can position
their services in the mind of the targeted customers and competitive advantages can be gained.
Points are explained as under:
Low price and low value added: It is more competitive position for Klarna because they are
proving easy and safe online payment mode to their customers (Schawel, 2018). Despite of this
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that the information is provide free of cost to the customers while visiting the bank client
perceive more value to it.
Low price: With the help of advance software in the payment mode it is can be assesses
by anyone in just few step and safe transaction can be done. The demand for this service is low
which results in less profit maximization (Bolisani, 2018).
Hybrid: Low price and differentiation are included in Hybrid. For Klarna this tactic is
very effective because the easy payment mode service is unique in nature.
Differentiation: Here, more concentration is on proving creative payment services to the
customers in order to enhance sales ratio.
Focused differentiation: Consultancy fees are charged from customers while giving
information regarding safe and secure payment mode. The faith in online payment is raised
because this service is not leaked out in general public. People are more interested to use it
because of it perceived value (Desai, 2019).
Risky high margins: As Klarna come up with innovative service to simply the payment
mode and it has many risk associated with it. In this case, information regarding the safe and
secure online payment mode is given to their regular customers and can set high price without
providing any additional service in perceived value (Yuan, 2018).
Monopoly pricing: in this one business offered their services in the market and didn't
add any innovatory features within the business. As if customers buy the product they have to
buy it with the same price that is offered by the business.
Loss of market shares: It is a disaster in the market thus company set the price with
lower rates thus market share that is earned by the company is less.
Strategic planing helps the company to accomplish the target within the certain time and
strategic plan of Klarna is as follows as:
Strategies: The strategy that is followed by Klarna is market development as it is easy for
the company to measure the success as they get a support of governance (Dănălache, 2018).
Objectives: The major objective of Klarna is to make modern purchase method easier and
smoother and that is done by facilitate the relationship between merchant and consumers.
Tactics: It is an approach of the company that is applied by the company to achieve their
short time goals and objectives that is defined through marketing mix as:
Product Product offered by the company is as online payment with the suitable prices as
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they are known for their easy and balanced services (Street, 2019).
Price Klarna used relationship based strategy in which bank set the pricing as per the
relations with the consumers.
Place Klarna uses both online and offline platform to provide services in the market as
they are work on a larger scale.
Promotion Klarna uses websites, emails, advertisement to promote their product and services
in the market (Learn, 2019).
Klarna has provided the advanced services to the customer by whom they could achieve
the better interest of the large number of customer and it is more beneficiary for the business.
The company must induces the different changes within the business in order to maintain the
balance and keep garbing the attention of the customer that helps to bring more loyal customer
and better sustainability.
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CONCLUSION
It is concluded from the above report that Klarna adopted different business strategies to
measure growth and development for a longer period of time. For that business opt PESTLE,
SWOT, Ansoff, stakeholder analysis to measure the strength and weaknesses. With that uses
VRIO to measure the capabilities of the business with that measure the competitive edge by
using porter's five force model. At the end business uses different theories like porter's generic
model and Bowman strategy to implement the strategic planning.
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