Business Strategy: Influence of Macro Environmental Factors on an Organization

Business strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1 Influence of macro environmental factors on an organization...............................................3
LO2..................................................................................................................................................5
P2 Analysing the internal environment and capability of the business......................................5
LO3..................................................................................................................................................8
P3 Competitive analysis of the organization...............................................................................8
LO 4...............................................................................................................................................10
P4 Applying theories and models for strategic planning for company.....................................10
CONCLUSION..............................................................................................................................15
REFERENCES................................................................................................................................1

INTRODUCTION
Business strategy is a combination of business plan and decision that are taken by the
businesses to accomplish business goals and secure a competitive position in the market. It
outlines the direction in which business should proceed to achieve its desired aims. In this report,
Klarna is taken as an organization. It is an Swedish online payment service provider. It was
established in 2005. After acquiring SOFORT in 2014, it become the largest payment service
provider in European e-commerce. The objective of the report is to prepare a strategic
management plan. This report provides insights about the macro environment factors that
influenced the organization. It also include a complete analysis of internal environment and the
competitive analysis of the organization to know its competitive positioning with the help of
different models and theories. At last, a strategic management plan is carried out to achieve
business objectives.
LO1
P1 Influence of macro environmental factors on an organization
When an organization operates its business in an economy, it is prone to some
environmental factors which affects the business operation and over which business has no
control but specific measures can be taken to reduce the it's impact. To analyse it, PESTEL
analysis is carried out, it is used by marketer to monitor the macro environmental factors. A
detailed discussion is done below.
Political factors (High): These factors have a strong influence on the sustainability and
profitability of the organization. Klarna in UK is currently facing political instability because of
Brexit (Aithal, 2017). Other factors that may impact the Klarna is the increasing corruption
among political parties, labour laws, trade restrictions etc. So, Klarna business operation and
function is highly influenced by the political factors.
Economic factors (High): These factors have a significant impact on how business is
carried out. This factor includes change in interest rate, foreign exchange rate, disposable income
of consumers, economic performance of the country etc. The high rate of borrowing will impact
the business operation as it will make the cost of funding expensive for the business. Also, Brexit
may cause high rate of unemployment as many of the workforce are from the European nations.
So, this economic factor is also having high impact on the Klarna business operation in terms of
workforce required.

Social factors (Low): It mostly involves the culture, shared belief, lifestyle and attitude
of the population. These factors include age, gender, health consciousness, career attitude etc.
These factors are very useful for marketers for understanding the customers and their needs. In
UK, there is a high demand for equality in an organization and online shopping trends have
changed the behaviour of the customers. Currently, Klarna has adopted practices that will be
beneficial for its business based on the current trends such as direct payment, instalment plans
and pay after delivery are some of its services. Also, it has promoted equality in the organization
irrespective of age, gender, religion, race etc. So, the implication of social factors over Klarna is
low on its business operation.
Technological factors (High): It refers to the changes in the technological landscape and
the ways it impacts the business. Introducing latest technology in the business helps in gaining
efficiency and effectiveness and also helps in attracting more customers. Technological
innovation can be favourable for one and unfavourable for another. High investment in research
and development by the competitors is putting pressure on Klarna business operation to increase
its investment also. It will help in analysing the coming trend and helps in better decision
making. Technological innovation like emergence of automation has a huge impact on the
business and its profitability. Thus, Klarna is facing high level of technological challenge to
survive in the market.
Environmental factors (Low): This factor has came in the picture in the last decade
only. Also, with the increasing pressure by government and customers to meet with the
environmental needs. It includes climate change, environmental offset, weather change etc. To
meet with the changing demand of customers, organizations are coming up with different
practices as their contribution towards Corporate Social Responsibility (Sadgrove, 2016). Klarna
has adopted efficient waste management practices and also invested in renewable resources of
energy. It has also started working towards climate tracking in 2019. All these factors are having
positive impact over Klarna business functioning.
Legal factors (Moderate): A clear evaluation of this factor is necessary for the business
to avoid getting into a serious trouble. It includes, employee protection law, consumer protection
laws, intellectual property laws etc. It is essential to abide by the all the legal laws and work
within it (Story James, 2019). Klarna has complied with all the laws and it treats its employees
fairly irrespective of race , gender, disability, religion etc. which has positive impact on the