Business Strategy: Formulating Effective Strategies for Competitive Advantage

Business Strategy

INTRODUCTION
Business strategy is related with a strategic plan which is formulated by a company in order
to attract customers, increase their sales and also enhance their competitiveness in market. It is
important that an efficient and effective strategies are formed by company which can help in
taking decisions which can help the company in achieving its vision and mission. Through these
strategies company can deal with the negative impact of changing external market environment
so that it can continue to sustain in market profitably (Chiang, Chen and Ho, 2016). In this report
Klarna Bank AB is taken which is a Swedish bank which provide online financial services to
their customers like direct payments, post purchase payments etc. The company was founded in
2005 in Stockholm, Sweden with the aim of making online shopping easy for customers. The
company has around 85 million customers across 2,05,000 merchants in 17 countries making it
Europe's largest bank. In this report discussion regarding the internal and external environment of
company will be done by applying certain theories so that appropriate strategies can be formed
which can help in gaining a competitive advantage in market. Further, recommendations on
growth strategies will also be given.
TASK 1
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Vision: The company aims at making online payment system the most efficient so that a
strong brand image in market is created and its customer base can increase (Parry and Lind,
2016)
. Mission: The mission of Klarna Bank is to increase the usage of online payment so that
the economy can become cashless and the customers are able to make payments by using
efficient methods (Revathi and Aithal, 2018).
Objectives: The objective of Klarna bank is to increase the efficiency with which
payments are done while purchasing thus making payment options more easy (Yuan, Cheng and
Ye, 2016).
Strategy are the set of planned actions which are formulated by the managers of company
as that they can take efficient decisions which can help the company in reaching to its goals
within stipulated time (Munandar, 2017). By formulating effective strategies company can gain a
competitive edge in market by offering products to customers as per their changing taste and
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preference. Following are the tools that help in analysing the macro environment of company so
that effective strategies can be formed:
PESTLE analysis
Macro-environmental factors are those which cannot be changed or controlled but create
an impact on business functions which can be both positive and negative. The positive impacts
can be used for the advantage of company's growth in market but in order to deal with the
negative impacts it is important that certain strategies are formulated so that the negative impact
can be minimised. Following are the macro-environmental factors which can affect Klarna and
its strategies:
Political: These are the factors related with rules and regulations formulated by country
government like trade tariffs, tax policies etc. which also impact the business strategies. UK is a
politically stable country which means that the rules are regulations are not frequently changed
which means that the company do not have to change its rules with changing government.
However, the uncertainty in Brexit can affect the business of Klarna as businesses in UK will
face losses due to foreign exchange fluctuations, loss in import-export etc. The company can deal
with this negative impact by expanding its business in other countries so that the losses which are
faced due to Brexit can be recovered by trading in other markets (Jaber and et. al., 2015).
Economical: These are the factors related to the economic conditions which exist in a
country like interest rates, GDP, inflation rates etc. which affects the spending pattern of people
in country and also the businesses which exist in market. The economic condition of UK are
stable which means that Klarna can grow in the market profitably as the unemployment rate in
UK is low and also the purchasing power of people is high. However due to Brexit there can be
negative impact on the economic conditions of UK like depreciation of value of money which
might affect the circulation of money in the country. These conditions can be dealt by Klarna by
increasing its business in other countries so that the company can form a large base of customers
and can enhance its economic conditions (Aldea, Iacob and Quartel, 2018).
Social: These are the factors which are related to the composition of society of market
like age, caste, religion, demographics etc. which also affect the purchasing behaviour of
customers. People in UK have high living standards which means that they do many online
transactions in order to purchase goods and services which can help in improving their way of
living. This is beneficial for the business of Klarna as it can expand its services beneficially in
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