Analyzing the Impact of Macro Environment on Business Strategy

This document analyzes the impact of the macro environment on business strategy. It discusses the Pestle analysis and its factors such as political, economic, social, technological, environmental, and legal. It also explores the application of Porter's five force model to evaluate the competitive force of the specific market industry.

Unit 32 Business
Strategy

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
P1.Analyse the impact and influence of the macro environment on organisation and its
strategies......................................................................................................................................1
TASK 2............................................................................................................................................3
P2.Analyse the internal environment and capabilities by using effective framework................3
TASK 3............................................................................................................................................6
P3. Application of Porter's five force model to evaluate the competitive force of the specific
market industry............................................................................................................................6
TASK 4............................................................................................................................................7
P4. Applying a range of theories, concepts and models to interpret and advise strategic
planning.......................................................................................................................................7
CONCLUSION ............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business strategy is set of action or decision which assist the entrepreneur in achieving
the define set and goals in the a well define manner. In other words this is define as the master
plan through which management secure the marketplace to achieve desire aims and objectives
effectively (Agustia, Muhammad and Permatasari 2020). With the increase of competition, the
importance of business strategy have become crucial for the company to manage and secure the
profitability effectively. The present report is bases upon Klarna which is an Europe largest bank
and it provide payment solution for the 80 millions people in 17 different countries. The
company was founded in year 2005 and its headquarter is located in Stockholm. Apart from this,
it describe about the macro and micro environment for making effective decision. However the
competitive forces are been used to identifying the competitors and the demands of customer.
The mission of the company to build better positioning in the market. Whereas vision of the firm
is to become one of the most valuable firm. Apart from this business strategy of the firm is
expand the business and to provide better service to improve the productivity of the firm.
TASK 1
P1.Analyse the impact and influence of the macro environment on organisation and its strategies
As to there are different organisation present in the market which makes macro
environment more complex. So this is crucial for the management of Klarna to study the external
effectively. The macro environment is known as the effective method which is crucial for the
firm to expand and explore the business effectively. As there are different aspect such as legal,
political and technological must be consider closely to meet the objectives. Here is the detail
analyse of Pestle analyse which is explained down below:
PESTEL Analysis:
It is the method which is used by the management as to determine and figure out the
macro environment which have direct impact on the productivity of the firm. This is vital for
Klarna to make changes and bring out the new policies as to compete in the market
effectively(Coulson-Thomas, 2020). Apart from this also provide valuable information and the
operating challenges which company has to face. There are some factor which are explained
briefly down below:
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Political factor: This factor involves different kind of government rules and regulation under
which organisation have to conduct operational activities. For the nation like UK government
shield domestic payment card network, brand from international competition by forcing market
access barriers and domestic regulation. As there is stable and democratic government present in
UK which is beneficial for the organisation like Klarna to operate and create better opportunities
for the company (Koria, and et., al., 2020). But due to BREXIT there has been adverse effect on
the business which tend to reduce business to some extent. This can harm the visa and its
financial result effectively. However there are some fund raising programmes are conducted by
the UK government as to uplift the economy of the company effectively.
Economical factor: This consist of the Gross domestic product (GDP), per capita
income, inflation rate etc. Now world is going digital and the demand for the digital payment
method have increased with replacement of cash to digital. Hence the replacement has benefited
merchants by minimising the theft (Duquette and Williams, 2020). Although the, present
economical condition of UK is stable and people have more spending power which increase the
profit and market share effectively. Hence all the this factor tent to create huge impact on the
business as well as management of Klarna to analyse the environment and offer better product
and service to consumer. While UK have stable infrastructure quality in Bank industry which
tend to have better financial strength to survive for the longer time period.
Social factor: Society culture and the way of doing business have impact the culture of
the organisation as well as environment. This consist of individual belief, norms and attitude of
person which plays an vital role for the Klarna. As the people of UK have move towards
digitalization which aid firm to capture large market share effectively. There is skilled and have
high level of education level among the people and society which create large customer base for
the company. The class distribution among the population and the generally firm can promote
high premium product to the general public. So main responsibility of Klarna management is to
focus on identifying the changing trend and make sure to offer the services as per the needs and
wants of company to achieve desire outcomes.
Technological factor: This factor include all the technological changes present in the
market like digitalization and online process transferring money. It has rapidly dismantle the
price structure and competitive landscape of the industry in a very short period of time. So the
company like Klarna have become essentials to constantly innovate which help in reducing risk
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and uncertainty present in the business. The company has to move towards online mode of
transactions which allow ease to conduct financial services for the company as for the consumer
effectively. Apart from this, organisation must spend more on research and development as this
provide proper insight which allow firm to implement new policies and structure to achieve
desire aims and objectives effectively.
Environmental factor: Various market have different norms and the environmental
standards which have direct impact on the profitability of the organisation in different market.
Different nation have there own set of laws which are useful for making effective decision for
the company. In the context of Klarna the manager have to focus on follow all the rules and
regulation which are made by the government. As to enter in the new market company have to
aware about all the existing market and focus on the environmental standard which are requires
to operate in effectively. Further the company have to reduce the waste an move towards carbon
neutral process to make a world better place.
Legal factor: There are different laws and rules which are made for the company to
prevent all kind of theft and uncertainty present in the market. The firm have responsibility to
carefully evaluate before entering in market which lead to risk and problems for the company. In
order to use all the policies firm have to follow anti trust law for the industry and overall
country(Kotusev and et., al., 2020). As organisation must also follow all the employment law
and provide all the benefits to there workers as this will help in creating brand image as well as
profitability for the longer run. Laws are also placed to ensure a certain level of quality or
reasonable price for certain products to keep the customer safe and prevent them for being
cheated.
TASK 2
P2.Analyse the internal environment and capabilities by using effective framework
The internal environment are the set of elements which are define the working culture
and atmosphere for the company. There is also proper system to follow by the workers of the
organisation. To manage and smooth functioning of the organisation Klarna management can use
McKinsey model which illustrate about the linkage between all the business elements of the
business as to increase the effectiveness of shared values (Tomita, Y., 2020). This model is
consist of hard and soft skill which use to describe the productivity and the skill level of the
individual. Here is the detail explanation of the model in the context of organisation.
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Strategy: This is the factor in which company develop blueprint to carry forward all the
activities to consumer on timely basis. For the organisation like Klarna cost leadership can be
used as the business strategy which aid firm to sustain for the longer time period in the market
(Tardieu and et.,al., 2020). However the firm can survive by bring down the interest rate on the
loan which is provided by the company as to capture large market share. Presently the firm is
facing different challenges fro sustaining the business as the management have to improvise new
plans and strategies to create a sustainable business model effectively.
Structure: Klarna follow the traditional and hierarchical method which is consist of
many department and authorities from the management to employees. The organisation decision
are taken by the Boards of members as to achieve desire aims and objectives effectively. From
the past decade the company had made changes in there structure where the employees have
power to take decision effectively. As there has been elimination of the deputy finance manager
as to reduce the complexity of the firm.
System: As the company works on the wide range of system on the daily basis as to
capture larger market share effectively. In the financial sector there is an complex process which
must have proper plan to achieve desire aims and objectives in the well define manner. For the
organisation like Klarna the administration is responsible for the creating effective decision to
achieve desire aims and objectives effectively. The proper system can be developed by using
better model as well as improvement in policy which help in providing better performance and
also improve the working enviroement of the company.
Shared value: Value determine the image of the company in the minds of customer. The
mission and objectives of the firm has to be cleared and employees must be very well aware
about value of the company (Holotiuk, and Beimborn, 2017). As this tend to meet the
requirement of the firm to provide better quality product and service effectively. Apart from this,
it help in improving the current positioning of the firm to some extent. In the present business
world share values are more essential aspect so the company have focus more corporate social
responsibility which help in providing better service to consumer in the deatail manner. It also
improve the brand image of the company.
Staff: Every organisation have staff which fulfil all the needs and requirement of the firm
effectively as to accomplish desire aims and objectives effectively. The management of Klarna
have to make sure that employees must avail all the benefits as this will retain the employees to
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achieve effective outcomes in the shorter time span. Along with this, manager must appreciate on
the handwork of workers as to manage employees effectively. This is vital for the company to
make sure that staff members are motivated and able to achieve desire aims and objective in the
well define manner. Hence to improve the staff HR of the firm have to hire more talent
employees through which company can achieve desire aims and objective.
Style: The company have unique working style in which every individual take there roles
and task seriously and make sure that they meet the company standard. In the present day
company is using steering wheel method which is very popular method as to sustain for the
longer time period. In this style there are different kind of tool and techniques which are uses to
solve the problems effectively.
Skill: These are capabilities which employees must posses to complete the particular
objectives in the well define manner. Klarna management have to conduct extra training and
development programmes as to improve the efficiency of workers. There is an high demand of
skill labour as this leads to the minimum waste and enhance the productivity of the firm to
achieve higher goals.
This has been identified that all the above elements are essentials for the company to
align in a proper way to achieve desire aims and objectives effectively. While considering all the
factors this has been concluded that there are different improvement and changes are required to
accomplish the desire aims and objectives effectively. However firm have to put emphasis on
enhancing the skills to achieve desire aims and objectives effectively.
Value chain analysis:
This is the process through which the company develop the possible value for the
customer. For the organisation like Klarna management have to focus and achieve desire aims
and objectives and implement such process to improve the productivity of the company. Here are
some steps which are explained down below:
Activity analysis: This is consider as the brainstorm, in which the Klarna have to focus
on the market product and service (Johnson, 2016). Along with this firm can provide better
financial services in order to attract the customers. So company have to hire skills employees
through which they can improve the efficiency.
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Value analysis: In this step the firm figure out the way through which the firm can attract
larger customer. For example while providing loan to customer firm can provide flexible option
as to improve the experience of the customer.
Evaluate and plan for action: After passing all these stage firm have to focus on
implementing the plan as to achieve desire aims and objectives effectively. And then prioritize
the remaining tasks and plan to tackle them in an achievable, step-by-step way that delivers
steady improvement at the same time that it keeps your team enthusiastic.
TASK 3
P3. Application of Porter's five force model to evaluate the competitive force of the specific
market industry
Porter’s five force analysis of Klarna
This is simple but powerful tool which is used to understand the competitiveness of the
business environment to figure out the different strategy to have potential profitability. These
forces are frequently used to figure out the industry structure as to determine the corporate
strategy(Mota and et., al., 2020). These model is applied to any organisation as to get the in-
depth knowledge about the rivals and there techniques present in the market. In the context of
Klarna have to implement all such forces to meet the consumer needs and wants.
Threat of new entrant: New entrants in the Foreign money centre bank innovation
which tend to increase the large market share effectively. Hence this put pressure on Klarna top
reduce cost and bring down the cost as to achieve desire outcomes. As this method will create
new proposition for the customer and also increase trust in the minds of customer. The company
have to manage all the challenges and build the effective barriers to reduce the risk and secure
the positioning of the firm in the well define manner. As the management can create new product
and improve the service which tend to minimising the risk of new entrants effectively.
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Bargaining power of the supplier: All most each and every organisation which deals in
banking system which render all the material from the suppliers. As this create the dominant
position which decrease the profit margin of the company. As this increase the bargaining power
which is used as the negotiation in order to extract the higher price from the firm in the well
define manner. The overall impact of the high supply bargaining power is to lower down the
revenue of the firm. As to overcome such problems management have to build effective supply
chain with various suppliers as to tackle such problems. Further the company can build the
dedicates supplier which tend to reduce such problems effectively.
Bargaining power of Buyers: Today consumer have become more demanding as there
are different choice are available for the consumer. Every individual wants to purchase the high
quality product and service from the company (Tardieu and et., al., 2020). As this make difficult
for the company to meet the organisation requirement of the firm effectively. For the
organisation like Klarna the management have to firstly to identify the needs and make sure to
provide the services to meet the customer expectation. As to attract the use firm can add value to
there products which help in increasing the need and increase the market share effectively.
Threat of substitute: When there are different kind of product and service for the similar
product which exist in market. So this become difficult for the organisation to meet the
satisfactory service of the consumer (Chen, Eshleman and Soileau, 2017). As this create
confusion and conflict for the people due to wide variety of services present in the market.
Hence this means that, administration have to focus on implement new rules and policies as to
minimize the risk of substitute. Apart from this, organisation can also bring down the cost with
using effective supply chain method present in the organisation. There are other financial rivals
such as HSBC and Barclays which deals in product. So the company have to focus on market
and the trend present to accomplish desire aims and objective effectively.
Rivalry among the existing customer: The number of rivals in the business where
Klarna operates the low and the big giants which clearly shows any action take place by the firm
which is noticeable for each and every organisation. This make rivals the weaker force for the
company to achieve desire aims and objectives effectively. There are very few competitors
which have large market share and it allow firm to retain customer effectively. So the
management have rethink and make improvement to achieve desire aims and objectives to some
extent. As to avoid such forces company have to create effective business environment as to
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compete better. Along with this, collaboration is the option to enlarge the market size rather to
compete for the small market.
By adopting forces Klarna can overcome all the problems and to gain competitive
advantage for the longer time period. The management have to use such model which help in
bring new opportunities to carry forward the activities effectively. By analysing all the
competitive forces company can achieve desire aims and objectives effectively. Furthermore this
help in game changing trends which help in exploit the emerging opportunities for the company.
TASK 4
P4. Applying a range of theories, concepts and models to interpret and advise strategic planning
Strategic management plan
A strategic management plan is the blueprint for the way in which the organisation runs
operates and run and operate day to day activities present in the market. There are different
elements present such as handling money, dealing with the work and to address the employees to
achieve desire aims and objectives effectively(Orazalin, 2020.). With the assistance of this plan
Klarna management can ensure about the desire aims and objectives and focus on to accomplish
the common goal in the well define manner. In the context of Klarna the organisation must set up
the team of expert to bring out the plan which help to provide clear vision for the long term and
create strategies to achieve the target effectively. Such plan provide clear guidance for those who
are in the key position, defining the roles in achieving desire objectives.
Vertical and Horizontal integration
These are the integration which are used by the entity in the similar process while
creating product. In the horizontal integration a company take over another that operates at the
same level of the value chain in the industry. On the other hand the vertical integration consist of
different business operations with the same production and the vertical. For the organisation like
Klarna the administration have to focus on both the aspect of the business where the company
can manage and control there business operation effectively.
Vertical Organization
In this factor the company undergoes the vertical integration and it acquires a company
which company operates effectively in the process of delivering all the goods and services
effectively. As the kind of organisation will Klarna an effective supply chain which reduces the
cost of production and also aid in capturing upstream or the down stream profit for the industry
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itself. However this also bring the new distribution channel as this help in accomplish the desire
aims and objectives effectively. This strategy is vital for the organisation because it not assist
firm to increase the profit but it also help in acquiring operations by selling products and services
effectively.
Horizontal organisation:
Horizontal integration is the another competitive method which is uses by the
organisation to meet the organisation needs. In other words this is an acquisition of the business
activities in which all the same level of value chain is similar to the different industry. The
bigger, horizontally integrated company can achieve a higher production than the companies
merged, at a lower cost. Beside this, company will able to offer more product which feature the
customer effectively. Not only does it gain profits from the newly acquired transaction by selling
its ware directly to consumer. In the company like Klarna the management have to impelement
such method which help in providing better service and outcomes which help in providing better
service in a well define manner. There are different factor which are used to establish and help so
that it achieve the greater outcomes for the firm.
Balance score card:
A balance score card is the strategic management performance metric used to figure out
and improvise different internal business function and their resulting the external outcomes. The
balance scorecard are used to measure and provide feedback to the organisation. Data collection
is essentials for the company to provide quantitative result as the manager or the executive level
(Orazalin, N., 2020). As per the organisation like Klarna the HR manager have the responsibility
to maintain the balance scorecard as this help in providing the right information regarding the
employees performance through which company can offer right appraisal in the well define
manner. The balanced scorecard involves measuring four main aspects of a business which are
learning and growth, business processes, customers, and finance. An organization may use the
balanced scorecard model to utilize plan of action mapping to see where value is added within an
system (Romo-Muñoz and et., al., 2020).
Porters generic strategies:
This is the strategy which is used to determine whether a firm's profitability is above or
below the industry average. The fundamental basis of above average profitability in the long run
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is sustainable competitive advantage. Here are some factor which Klarna management should
focus to achieve desire aims and objectives.
Cost leadership: In cost leadership, a firm sets out to become the low cost producer in its
industry. The sources of cost advantage are varied and depend on the process of the firm. Klarna
management bring down the cost to accomplish goal.
Differentiation: In this strategy Klarna have to build effective as well unique product
and service to improve the experience of the customer. It is rewarded for its uniqueness with a
premium price.
Focus: The generic strategy of focus rests on the choice of a narrow competitive scope
within organisation. So in this case firm have to strength the working skill and ability to provide
innovative product to the customer.
Overview: The chosen organisation is Klarna which is was founded in year 2005 and its
headquarter is located in Stockholm, Sweden. The company is now the largest bank which
provide financial solution for the employees. Apart from this, there are different services which
are offered by the organisation which are direct payment, pay for delivering options and
instalment plan. Recently the company have acquired SOFORT while capturing at least 10% of
market share.
Mission: The prime mission of the company is to provide is to build a better positioning
with the assistance of high quality of product and service.
Vision: To become one of the most most valuable finance company and to capture large
market share in order to earn more revenue.
Objectives: The objective of the Klarna is generate profit by 10% in coming 3 years and
also to focus on trends to provide satisfactory service to consumer.
CONCLUSION
From the above given report this has been analysed that business strategy is important for
the organisation as to become successful. The strength as well as weakness of organisation as has
to be improved to bring out effective outcomes. Beside this, porters five force model is used to
analyse the market and offer to better quality product and service effectively. However
McKinsey 7's model is used to ascertain employees to focus on achieving desire aims and
objectives as per the organisation. At last the business plan is developed as to reduce risk and
uncertainty and also make blueprint to implement new policies and structure to improvise
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company working culture. The management of the company must use balance score card for the
determining the performance of employees effectively.
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REFERENCES
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