Business Strategy: Macro Environment Analysis, Internal Environment and Capabilities

This document provides an analysis of the macro environment and internal environment of Klarna, a leading banking institution. It discusses the impact of political, economic, social, technological, legal, and environmental factors on the company's strategies. It also explores the stakeholders analysis and McKinsey's 7S model for analyzing the internal environment. Additionally, it examines the valuable, rare, inimitable, and organized capabilities of Klarna through VRIO analysis.

Business strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Macro environment analysis........................................................................................................1
TASK 2............................................................................................................................................5
Internal environment as well as capabilities of company............................................................5
TASK 3............................................................................................................................................7
Porter's Five Force analysis.........................................................................................................7
TASK 4............................................................................................................................................9
Strategic Plan...............................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy is termed to combination of all taken decisions addition to performed
actions for achieving goals and securing competitive edge in dynamic market. It outlines ways in
which business must carry out competitive moves together with actions for reaching desired ends
(Adam, 2016.). For gaining understanding related to business strategy, Klarna is selected which
is a banking institution which offers variants of financial services. It is well popular and largest
bank in Europe that provide payment solutions and many more facilities in nearby 17 countries.
The report highlights application of suitable frameworks for analysing macro environment
impacts and influences on business and its key strategies. Further, it assesses internal
environment together with capabilities through using appropriate frameworks. The report also
involves application of Porter's Five force model for the purpose of evaluating competitive forces
in market sector. At last, range of theories and concepts are also applied along with devising
strategic planning for the business.
TASK 1
Macro environment analysis
Introduction of company: Klarna is one of leading banking institution which was
established by Sebastian Siemiatkowski, Victor Jacobsson together with Niklas Adalberth in the
year 2005. its headquarters are situated in Stockholm, Sweden. The mission of the bank is to
make payments in simple, smoother and safer manner (Klarna. 2020). The vision of Klarna is to
remain on leading position in the banking sector. Its objective is to make it convenient and easier
for population to shop online. The company serves to nearby 80000000 end customers with the
help of 25000 employees and have relations with more than 190000 merchants across 17 nations.
Macro environment: The environment that has wide and broad sets of conditions that
are uncontrollable by organisational managers is defined to macro environment. It involves
forces of external factors such as social, political, legal and so on that have huge willingness to
influence decision making, strategies and performances of entities. To analyse macro
environment, various frameworks are applied in Klarna by Junior Strategy manager for the
purpose of analysing impacts of elements or factors of the external environment of the business
an its strategies. Following are the discussion of some appropriate frameworks:
PESTLE Analysis:
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It is defined to the framework that assists in analysing and monitoring external market
environment and factors which have huge influences of company and its workings. By using the
framework, managers of Klarna track the environment wherein they are operating as well as
planning for expansion. Moreover, it helps managers to scan environmental components and
pertaining situations so to analyse influences on entity. In context to Klarna, PESTLE Analysis is
as applied:
Political factors: The element is related to ways through which political system
intervenes in business environment of a nation (Burgelman, 2020). Political stability, taxations
and restrictions of trade are few of political factors that influences a company and strategies of it.
Within Sweden, there is stable political system that provides wide opportunities and programmes
to companies that are working in it. For example, the government has also made various
integrations with other nations which helps in expansion of businesses such as Klarna. This helps
in trading freely without involvement of cumbersome tariffs and trades in international market as
well as making revenues that shows positive impacts on financial performance of Klarna and on
the strategies related to expansion.
Economic Factors: The determinants that are related to certain economy's performance
are termed as economic factors. Unemployment rates, development of economy, consumers
disposable income, inflation rates and exchange rates are few economic factors. The economic
environment of Sweden is said to developed and export oriented. At present, decision of Brexit
has resulted in downfall economy of the nation due to which values of its currency has
experienced reduction along with business cycle changes too. This has impacted negative
impacts on Klarna as in various circumstances it faces various challenges to operate with current
strategies. With this, its tactics, strategies as well as actions are more influenced.
Social Factors: Age distribution, emphasis on safety, population attitudes and other
aspects that are concerned with population of nation are social factors. In Sweden, population
changes their taste and preferences in fast manner (Gumusluoglu and Acur, 2016). It is essentials
for all enterprises that work in it to adapt those trends and preferences in order to reduce
influences of all. For instance, preferences for online service is a going trend in the nation. As
Klarna provides online solutions for payments and preferences of customers for online service
provides various opportunities to it that impacts positively on the company and various
operational strategies.
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Technological Factors: It is all about science addition to technology in a nation as well
as involves aspects related to new technology application, technological progress rate,
automation and so on. The technological environment of Sweden is renowned for high quality
scientific along with technological development. In the banking industry, various technological
trends are emerging and some are Artificial Intelligence, chatbots and so on that helps in
managing financial services along with providing spontaneous services to clients (Hillary, 2017).
Adoption of these factors impacts positively of Klarna and its certain strategies as with these it
can meet all requirements of customers and provide financial services on time that attract
maximum customers towards it.
Legal Factors: Dimensions related to legislations and acts of a nation are legal factors.
They have major influence on ways companies operates and product demands. Legislations
related to banking Companies Act, Public Debt Act, Companies Act and so on are governed by
political system of Sweden. Managers of Klarna considers all the legislations and also makes
changes in the strategies as per changes made by government in amendments that impacts
positivity on t and its operational strategies. However, negotiations made by the political parties
that are related to trade deals creates uncertain situations and this represents threats for the
institutions to manage and carry forward supply chains in the nations that are restricted to trade
shows negative impacts on current strategies and workings of company.
Environmental Factors: The dimensions related to ecological along with environmental
concerns that are prevailing in a country are environmental factors (Johnson, 2016). With in
Sweden, political systems are highly focused towards implementing programmes and plans to
protect environment and also improve pertaining situations. In context to Klarna, managers
follows all environmental laws and also takes various initiatives to improve the situations related
to environment. For example, it has taken initiative to make online payments simple that helps in
going cash less. With this, paper are used less that resolves situations of depletion of natural
resources and it impacts positive on the company as through this it has gained recognition in
market.
Stakeholders Analysis:
It is the framework which the help of which organisational administrators evaluates
potential changes in interested parties that are part of business. In a company, stakeholders are
those individuals that supports existence with ease and makes decisions for various operations
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(Kim and Mauborgne, 2017). There are certain stakeholders that are involved with Klarna and
have different level of interests and powers. The mentioned below is stakeholders analysis for
Klarna:
INTEREST LEVEL LEVEL OF
INTEREST
POWER LEVEL HIGH LOW
HIGH Owners Political system
LOW Employees Customers
As per the above grid, the two aspects are level of power as well as interest through
which impacts of stakeholder on company and its strategies are analysed. The stakeholders along
with impacts are underneath:
High power, High interest: Stakeholders which falls in this category are owners and
managers. In context to Klarna, these stakeholders takes all decisions and also oversees
execution of actions as per situations which impacts positively on the company and formulating
strategies for attaining desired state.
High power, Low Interest: Political system of a country is the stakeholder that have
high powers but less interest in activities undertaken by company (Kohtamäki and Farmer,
2017). In case with Klarna, political system have powers to stop workings or alter practices of it
that shows negative impacts of the firm and its various strategies.
Low power, High Interest: Employees of institution generally have less powers.
However, they have huge interest in strategies, actions and techniques of company. There are
various number of employees which work in Klarna and these stakeholder shares valuables to
make improvements in operations that impacts positively on execution of strategies and gaining
organisational revenues.
Low Power, Low interest: Customers are stakeholders of company that have low
powers together with less interest in activities that are performed within premises. The customers
of Klarna only gets involved with it when when they have to avail its offered services. At the
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time, when customers are satisfied with services then it impact positively on strategies and
company to huge extent.
The above analysis states that all elements of PESTLE frameworks as well as different
stakeholders leaves various impacts of Klarna and its strategies. It is important for the junior
strategy manager to consider all while making determinations for upcoming durations for
reducing chances of negative impacts.
TASK 2
Internal environment as well as capabilities of company
Internal Environment and capabilities:
Internal environment is defined as composition of various elements in the company and
generally are in control of managers (Kono, 2016). In case with Klarna, junior strategy manager
is more focused on analysing internal environment addition to capabilities. In this context,
application of suitable frameworks are the followings:
McKinsey's 7S Model
A framework which is mainly used to analyse organisational environment for assessing
together with monitoring changes that arises in internal situation of company is McKinsey's 7S
model. It involves hard elements along with soft elements which are described underneath in
context to Klarna:
Hard elements:
Strategy: It refers to the ways companies takes actions for attaining goals or competitive
benefits. It is the plan which is designed to successfully competing with other institutions and
gaining beneficiary outcomes. For example, digital strategy is one of strategy of Klarna for
enhancing customers experience to shop online. Along with this, the other strategies of the
company operational strategy, functional strategy and corporate strategy that are used to attain
objectives on time.
Structure: The ways in which activities including task allocation, supervision and other
are directed for accomplishing desired aims is termed to structure of company. It is also known
as business chart of all organisational departments (Laszlo and Zhexembayeva, 2017). In case
with Klarna, functional structure is opted by Junior Strategy manager in which employees are
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grouped in around 300 teams as per specialisation and set of similar roles so to execute strategy
effectively towards goals.
System: System is described as procedures which reveals daily activities of company and
making decisions. It determines the aspects in the manner business is done and it is major
emphasises of administrators while occurrence of some changes. The managers of Klarna
focuses on process system, marketing system and workplace system for attaining strategic
objectives.
Soft Elements:
Shared Values: Commonly accepted standards, norms and amendments of enterprise
that directs behaviour of workforce and actions are said to shared values. For example, In Klarna,
administrators emphasis on enhancing sophisticated leadership to huge standards so that trust,
values and respect are build within all teams and members of entity.
Skills: talents, potentials and capabilities that are within staff and management of
company are said to skills. Skills generally determines achievement types as well as achievement
of workings (Laudon and Traver, 2016). For example, at the time of hiring and delegation,
Klarna managers emphasis on interpersonal skills, technical literacy skills, adaptability skills,
analytical skills and hence forth of people.
Staff: the individual that are working in company are termed as staff. In context to
Klarna, it has more than 2500 staff members having all required skills to execute strategy
towards attaining objectives.
Style: The aspect in which entire business is administered and managed by top authorities
and the ways they interacts, performs actions as well as involves symbolic value is said to style.
The managers of Klarna adopts situational management style in which they perform activities in
accordance to pertaining situations.
VRIO Analysis:
It is framework that assist managers to analyse internal capabilities of organisation. It is
brilliant tool to assess internal capabilities that helps in gaining competitive advantages. In
context to Klarna, application of the model is below:
Resource and
capabilities
Valuable Rare Inimitable Organized
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International
network
✔ X X X
Employees ✔ ✔ X X
Innovational
competence
✔ ✔ ✔ ✔
Valuable: According to VRIO analysis, it is said that the resources or capabilities which
are worthy and important for enterprise are categorised as valuable. The capabilities of Klarna
that are valuable includes international network, employees and innovational competence.
International network are valuable for the financial institution as it has various networks to offer
its services to wide located population. Its employees are competent, experienced and highly
trained which contributes to provide solutions and gain outputs that makes them valuable for the
company. At same time, it has innovational competence to make unique offerings that are worth
to company and because of it they are valuable for Klarna.
Rare: Capabilities which are absolute unique within set of existing and potential rivals
are said to rare (Moseley III, 2017. ). In case with Klarna, its employees hired by the managers
are competent and productive which are not sourced by other institution and this makes part of
rare category. Moreover, it has skills and technology to make easy and better payment mode as
innovational competence which are unique from rival that gives the company a competitive edge.
Inimitable: The organisational capabilities which provides first mover benefits to
company and are rivals find them hard to imitate are part of inimitable. In context to Klarna,
innovational competence is difficult to imitate by other companies as the company have smart
team that makes huge innovation.
Organised: The resources which are organised for purpose of exploiting along with using
mechanisms are said to organised. The capability of Klarna which falls into organised category is
innovational competence as various systematic actions are performed to make online payments
safe and simple which assist to grab opportunities in order to sustain advantages.
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TASK 3
Porter's Five Force analysis
Porter's five Force model which determines and examines various forces that play
essential part in shaping industry along with analyses weaknesses and strength of the sector. The
framework was described by Michael Porter in one of the book in 1980 (Pearson, 2016). With
the help of the model, organisational managers understands competitiveness within the business
environment where it operates and determines strategical benefits. The junior strategy manager
of Klarna applies this framework with the purpose to evaluate competitive forces through
analysing factors that influences competition level of industry. Following is the application of
model within Klarna:
New entrant threat: Presently, banking industry is developing through entrance of new
companies. To enter in the industry, banking institutions requires to invest huge capital along
with fulfil wide formalities. At same time, government institutions are providing assistance to
new entrants that creates huge threat for existing companies. It is evaluated that there is high
entrant threat for Klarna as new entrant are coming with various unique solutions that can secure
online payments and shopping. High entrant threat makes the industry huge competitive and this
negatively impacts of organisational market shares as well as abilities to generate profits.
Threat of substitute: The products or services that provides similar advantages and
satisfactions to population are termed to substitutes. In context to banking services, there is no
absolute substitute of it (Rugman and Verbeke, 2017). Moreover, there are various banking
institutions that offers similar services such as net banking facilities, online payment services and
others that are some threats to it. Hence, it is evaluated that there is moderate threat of substitute
fro Klarna that can impact positively on it as to analyse various new services offered by other
company and taking it as opportunity to modify its existing ones.
Bargaining power of buyer: Within banking industry, customers have low bargaining
powers as they prefers to enjoy the services of one bank and remain loyal with it until they feel
dissatisfaction from offered services. In case with Klarna, buyers have low powers to bargain for
the interest rates and others as all these are set as per pertaining market conditions. The
institution limits switching costs and attracts new clients as well as retains current customers by
offering innovative services time to time that impact in positive manner on it as this helps in
increasing customer base and making position in competing market.
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Bargaining power of supplier: In banking industry, suppliers are individuals,
governments and other businesses that provide findings in large proportion. Moreover, there are
wide suppliers in the industry which supplies funds for various purposes to banks and this
provides them low bargaining powers (Sanden, 2016.). Financial institution such as Klarna
manages relations with wide number of suppliers that shows low bargaining powers of suppliers.
When there is low bargaining powers of suppliers then it impacts positively on Klarna as it
creates and offers attractive facilities or services to customers that helps in increasing profit
potentials.
Rivalry among competitors: In banking industry uncountable institutions performs
activities that creates the competitive rivalry high. With the force, junior strategy manager of
organisation determines level of competition wherein it operates (Syaniardi and Shihab, 2016). It
is analysed that Bread, WePay, Adyen and Skrill are some institutions which are big competitors
of Klarna that offers similar services that shows high competitive rivalry among institutions. It
impacts negatively on Klarna as high competitive rivalry reduces shares of market and also cuts
prices, adds spendings on product improvements along with innovation.
TASK 4
Strategic Plan
For analysing various strategic directions that are available to an company following are
the application of some concepts and models with the help of which Klarna managers devises
strategic planning:
Ansoff's matrix
The strategic planning model that helps in making strategies for growth in upcoming
period (Wilcox, 2016). With the help of this model, four alternatives are properly analysed and
then suitable strategies are devised for development of company. The mentioned below are
certain strategies that can be opted by junior strategy managers of Klarna to attain aspects
related to growth:
Product development: In this, a new product is introduces by entity in current market
place so to gain attention of population and enhance market share. When Junior strategy manager
of Klarna will opt product development strategy then it will result in launching an innovative
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offering in the domestic market. With this, it can increase profits along with sales volume in
upcoming timings.
Market development: Herein, business activities and practices are expanded by
managers of company in completely new market through introducing current commodities. In
order to acquire larger shares of market, managers of Klarna can adopt it. By using some of ways
such as new distribution channel, new geographical market, different pricing policies and new
product dimensions can launch existing services in new market.
Market Penetration: Within it, business emphasis on making sales of current goods in
current market. In case of Klarna, managers if plans to apply the strategy then they can secure
dominance, improving market share of existing services, restructure mature market and enhance
usage of its offerings.
Diversification: In this, new products are launched or introduced by institutions in new
market for facilitating expansion. This strategy generally involves high risks as moving in the
market about which entity has no experience involves various threats (Zeng, 2018). If Klarna
managers apply the strategy then they are required to perform wide research activities and huge
investment of funding to introduce new service in new market.
Integration
Vertical integration: It is mentioned to the arrangement wherein business operations are
expanded by taking ownership of other enterprises which works in same industry. When
managers of Klarna opts the strategy then they can reduce transportation costs, increase
coordination with multiple supply chains and access to new channels.
Horizontal integration: Hereby, companies enhance production of goods by acquiring
similar organization in same sector (Kono, 2016). In case with Klarna, managers can acquire
companies such as WePay, Bread and so on that have similar functions and services in banking
industry.
As per the findings and discussion on various models and concepts, it can be states that
Klarna managers can opt product development strategy along with horizontal integration so that
it can inflate market shares along with sales volume in the market. With the help of product
development and horizontal integration strategy, it can introduce a new service with the help of
companies that are already working in the current market. Along with this, it can also ensure
competitive edge, improve sustainability as well as effective market position.
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Strategic Plan
Klarna is leading brand in banking industry which offers various online solutions to
customers. The Junior strategy managers is making plan for introducing a new service that is
Chatbots service within current audiences. In this regards, following is strategic management
plan:
Aim: The main aim of Klarna is “To make things easier and smoother for population for
shopping online”.
Mission statement: Klarna has mission of “Making procedures of payments smoother,
safer and convenient”.
Objectives: The objective of the company is “To improve customer base by 10% till the
end of 1 year”.
Strategies: To introduce the new service that is Chatbot service in Stockholm, Sweden
managers will be focusing on market research and extensive marketing strategies. In context to
market research, all the activities will be carried out effectively to determine expectations of
consumers and pertaining trends in market (Hillary,2017). Moreover, with extensive marketing
strategy, the new service will be promoted to inflate the each as well as satisfying mass
population.
Implementation and evaluation: In this, managers will implement the plan into actions.,
further, they will monitor and evaluate all performances through KPI mechanisms. KPI will help
in reducing gaps among actual and standard performances in order to take corrective actiosn in
case of deviations.
CONCLUSION
From above report, it has been concluded that business strategy equips top management
with unified model for discovering, examining along with exploiting beneficial opportunities in
order to make optimum utilisation of strengths with resources so that all the potential threats are
meet and weaknesses are counterbalance. To analyse macro environment along with impacts of it
on company addition to strategies, PESTLE analysis and Stakeholder analyses are suitable one.
Moreover, in context to assessing internal resources together with capabilities, suitable
framework are VRIO analysis and McKinsey's 7S model which provide accurate aspects for key
resources and essential capabilities. Porter's Five Force model helps to analyse business
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competition through five forces. Strategic planning is key part for company as it provide insights
to gain expansion opportunities to companies.
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REFERENCES
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Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Kim, W. C. and Mauborgne, R. A., 2017. Blue Ocean Strategy with Harvard Business Review
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Pearson, S., 2016. Building brands directly: creating business value from customer relationships.
Springer.
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Routledge.
Sanden, G. R., 2016. Language: The sharpest tool in the business strategy toolbox. Corporate
Communications: An International Journal.
Syaniardi, Y. H. and Shihab, M. R., 2016, October. Formulating e-business strategy for
branchless banking: A case of a bank in Indonesia. In 2016 International Conference on
Advanced Computer Science and Information Systems (ICACSIS) (pp. 201-206). IEEE.
Wilcox, M., 2016. Effective talent management: Aligning strategy, people and performance.
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Zeng, M., 2018. Smart Business: What Alibaba's Success Reveals about the Future of Strategy.
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Online:
Klarna. 2020. [Online]. Available through: <https://www.klarna.com/international/>
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