Business Strategy: Impact of Macro Environment and Internal Factors

This report discusses the impact of macro environment and internal factors on business strategy. It includes a PESTLE analysis to identify the effect of external environment, SWOT and VRIO analysis to assess internal capabilities, and Porter's Five Forces model to analyze the business and market situation. The report also explores the value chain analysis and stakeholder analysis of Klarna, a Swedish bank.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Determine suitable framework assess the impact of macro environment within company
and its strategies. ...................................................................................................................3
TASK 2............................................................................................................................................6
Briefly explain the internal factors of the organisation..........................................................6
P3 Use porter five force model in relevance with business and market situation.................7
TASK 4............................................................................................................................................9
P4 Theories & concept to develop strategic plan...................................................................9
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy is considered as a process in which an organisation focuses on
accomplishing goal and objective in effective manner with the aim to achieve competitive
advantage over rival firm (Andriof and Waddock, 2017). This strategy helps the company in
selecting positive outcome and techniques. In assistance of this, the manager of company make
appropriate plan of action, policy as well as procedure for achieving target within stipulated
period of time. The current report is about Klarna with a aim to take superior strategic decision
in the workplace. In context of Klarna, it is one the largest Swedish bank founded by Victor
Jacobsson in the year 2005. They provide online services to its customer such as online payment,
manager customer payment as well as direct payment and many more. Along with this, this
report consists PESTLE analysis in order to identify the effect of external environment on
business organisation. Also determine SWOT and VRIO for assess the internal ability of
company. Beside form this, this report shows Porter five force model as well as Ansoff matrix
which is going to be mentioned below:
TASK 1
P1 Determine suitable framework assess the impact of macro environment within company and
its strategies.
For the success of any business organisation it is essential to determine its external
environment which imposes both positive and negative impact on operation and functioning of
company (Murray, 2017).
It is important for every organisation to assess macro environment for boosting future success as
well as growth company (Gopalakrishna, 2018).In reference of Klarna, the supervisor of this
company adopted PESTLE analyses to analyse the impact of external environment on business
organisation which is going to be described below:
Political: The Political factor includes laws, rules, regulations, legislation and many
more. In addition to this, the political condition of Europe is stable as well as consistent that
helps in increasing future success of company (Bees and Williams, 2017). Klarna bank focuses
on this factor so that all the activities are carried out in appropriate manner. Moreover, the
government regulation as well as taxation policy imposes direct impact on functioning and
operations of business firm. Due to impose impose limitation on payment system it affect the

future sales and growth of company in adverse manner. Therefore, political stability is vital for
increasing profitability as well as productivity level of business organisation.
Economic Factor: These factor involves exchange rate, inflation rate, as well as
deflation rate may impose direct impact on success of business organisation. A proper market
research is to be undertaken when dealing with economic factors. In assistance of this, due to
accelerate inflation rate which imposes negative impact on productivity as well as operation of
Klarna (Hill,2019).
Social Factor: It involves culture, norms, value, belief and many more that affect the
functioning of business firm. These factor alter the attitude and behaviour of user towards buying
products and services from the company. In relation Klarna, their marketing team helps them to
evaluate these social factors. (Piercy,2017).
Technological Factor: Technology plays a vital role in the business organisation. It is
very necessary to implement advanced technology for future success and growth of company. In
reference of Klarna, the company execute advanced technology in order to satisfy the changing
behaviour of customer. In addition to this, launching of biometric supported credit card which is
innovative helps company to boosting its future sales as well as productivity.
Legal Factor: It involves various law, legislation and other benefits that affect the
operation of business firm. In discourse of Klarna, the manager of this company comply law and
legislation that helps in maintaining positive image and reputation of company (Cooper, 2017).
Furthermore, changes in legislation increase the cost to company which imposes adverse effect
on productivity and profitability level of Klarna.
Environmental Factor: It involves change in weather as well as climatic condition and
so on. In reference of Klarna, the company focuses on providing eco-friendly environment to its
customer that helps in increasing their motivation as well as satisfaction level. This company
offer products and services that do not harm society which helps in increasing standard of living
of customer (Blockeel, 2016)
Political factors affect the Klarna at deep level. Economic factor slow down the progress
level of business. When comes to social factor it increases the activeness of firm towards the
market and people. Technological factors also give a boost to the business of bank.
environmental factors has impacted the business and value of the firm got enhanced. Further

comes the legal factor in which involvement of government affect the productivity and firm
goodwill.
Stakeholder Analysis
Stakeholder include those persons who shows interest in whole activities and function of
business firm that helps them in increasing future success and growth level. In addition to this,
the loyal and trustworthy stakeholder helps in boosting reputation as well as market share of
company. The stakeholder involves different customer, supplier, employees, shareholder and so
on. Along with this, the stakeholder analyses of Klarna which is going to be discussed below:
Stakeholder Effect of Klarna
Customer Herein, the company provides unique products
and services to its customer which help them in
boosting its brand image and reputation. It also
assists them in increasing the loyalty and trust
of its user as well as retain for a long period of
time (Bryson, 2018).
Government The manager of Klarna comply all laws and
regulations which is made by government it
helps them in perform their business function
in appropriate manner. It helps them in
increasing effectiveness and efficiency of
business firm (Kolios, Read and Ioannou,
2016) (Andriof, 2017).
Shareholders The shareholder offer finance to business firm
that helps them in increasing future growth and
development of company. In addition to this, it
increases their productivity as well as
profitability level. Therefore, stakeholder plays
a very important role in company for its
success and growth.
Employees Employees plays an important role for success

and growth of business organisation. The HR
Manager of Klarna focuses on hiring talented
client that helps in achieving its goal and
objective in appropriate way. In addition to
this, the top management satisfy the need and
wants of employees that helps in increasing
performance level of subordinates.
From the above mentioned discussion, it has been analysed that stakeholder plays
essential role for future success and growth of business firm. In assistance of this, the market
existence of Klarna is so high (Johnson, 2016). Therefore, it is vital for top manager to make a
friendly relation with the stakeholder of business firm.
TASK 2
Briefly explain the internal factors of the organisation
SWOT Analysis
It is tool used organisation to determine as well as track the internal capabilities of firm
and it includes several elements which are mentioned below-
Strength- Main strength of klarna bank is that they are well known bank in UK due to which
base of customer is very string.
Weakness- Due to impact of BREXIT and changing EU region policy it is becoming difficult
for bank to expand the business.
Opportunity- With high rise in demand and requirement by people, bank has opportunity to
merge up with other financial institutions also.
Threat- Biggest threat of Klarna bank is that new business such as Revolt financial services are
giving competition to the bank.
Value Chain Analysis

Value chain analysis is stool used by firm in which importance of resources
is described. This is also a strategic management tool in which various strategies
and tactics are implemented. This value chain analysis is divided into two parts;
primary and support activities-
Primary activities-
 Inbound logistics- Inbound logistics are those which includes distribution
facilities, warehouses, handling of materials and equipments etc. In
relation with Klarna bank, they use inbound logistics in appropriate
manner.
 Operations- Another element of primary activities is operations. This,
includes managing the systems, using of effective models etc.
 Outbound logistic- Further comes the outbound logistic in which
delivery process and transportation process is involved.
Support Activities-
 Human Resource Management- In this, recruitment of manpower and
applicants, training and development, takes place. In context to Klarna, they
use HRM with appropriate methodology and in effective manner.
 Technology development- Further element is technology development in
which supply chain management system, distribution system are involved.
In context to Klarna, technology development in the firm is rising at rapid
level.
 Procurement- Another type of element is procurement in which purchasing
of raw materials and equipments, inventory checking is involved.
After brief analysis of above matter, it is stated that it is important for firm to
analyse the internal factors which affect the business at deep level. Also, this value
chain analysis helps the firm to analyse the optimum use of resources.

P3 Use porter five force model in relevance with business and market situation
Porter five forces model is a tool which is used by marketers and corporation to
determine the marketing strategy and and changes and trends. This five forces model assists
business to make effective decisions making and survive in this competitive market. With use of
Porter model, they help organisation to make strategies which boost the growth and development
of company. Market is wide and due to rise in competition it has become essential for firm to be
prepare for uncertain events. In relation with Klarna Bank, they use this model so that
competitors strategies and tactics are analysed in effective manner. Klarna has number of
competitors such as HSBC, Deutsch bank etc (Lyneis, 2020). Thus, it is important for firm to use
Porter five force model so that they are able to carry out their functions and operations in
appropriate manner. There are various factors which affect the Porter Five Force Model and are
discussed below-
 Threats of new entrants- In market, there are number of alternatives which are present
and due to which other firm dealing in the same product line get affected by those
alternatives. Competitors and rivals increases the competition in market and which
results as threat for the organisation. In context to Klarna bank, there are many banks
which give a tough competition to the bank such as HDFC, Deutsch, etc. These banks
are threat to Klarna bank because they keep tracking each other activities and strategies.
 Bargaining power of Suppliers- Another factors which affect the firm productivity is
bargaining power of supplier. In this, supplier keeps the bargaining power high and
provide its buyers and to distribution channels goods and services of poor quality. In
relation with Klarna bank, their bargaining power is high that means interest rate is high
and it makes them more profitable amongst other banks (Adam 2016.9). For example-
Klarna bank charge for all payment options with a $.30fee & also transaction fee with
3.29% to 6.10% approximately.
 Bargaining power of buyers- This factor is crucial in Porter five force model as buyers
usually demands low price for their raw materials, tools and equipments. Buyers and
sellers both play important role in decision making in this factor. Buyer make sure that
goods and products which has been purchased are of good quality and with affordable
prices. In context to Klarna bank, customers bargaining power is low and which affect
the firm goodwill and productivity.

 Threats of substitutes- In this, alternatives in the market and availability of substitutes
has a deep impact on firm and business activities. There are ample number of banks who
provide the same services with better prices and interest rate such as HSBC bank, Lloyds
TSB, Halifax etc. In context to Klarna bank, they should use effective strategies and
tactics to attract more customers and market share growth (Vargas-Hernandez,2020).
After a brief analysis of above model it is stated that it is important to be active for firm
in the market and flexible so that factors affecting business activities are examined in proper
manner. Also, strategies and tactics gives a boost in growth as well as development so with help
of this model uncertain activities are analysed in proper manner.
VRIO ANALYSIS
In organisation, it is important for every firm to focus on their internal strength and
weakness. This is because competition in market is rising at rapid level and it is crucial for
organisation to focus on trends and change in the market and to monitor strategies, resources
which are used by rivals and competitors. VRIO analysis is framework used by organisation to
analyse and determine the capability of the firm to use resources effectively. Also, this helps the
entities to evaluate progress of the firm. VRIO is elaborated and discussed below-
 Valuable- This factor states that it is crucial for firm to analyse and evaluate those
resources which are beneficial to them and can be used as a competitive advantage.
Resources such as technological resources, social and economical resources etc. In
relation with Klarna bank their valuable resource is their customers through they which
gain profit and increases their sales revenue.
 Vargas-Hernández, 2020).
 Rare- In this factor of VRIO analysis, it states that it is essential to determine weather the
resource in the firm is rare or not. If the resource is rare in market then firm can use this
as advantage tool and which can be used in business activities.
 Imitable- This factor states that resources can be copied by rivals and competitors
depending upon the traits of resources. So, there are many small retailers and distributors
which imitate the product and resources and provide those into market with low prices. In
relation with Klarna bank it is not possible to imitate the resources or product by any
other competitors.

 Organisation- Another factor of VRIO is value of the organisation. In this factor, it is
important for firm to analyse the potential and capability of other three factor valuable,
imitable and rare. This assists them in sustained advantage of market. Thus, firm should
properly conduct market research and so that factors affecting the business are carefully
examined.
TASK 4
P4 Theories & concept to develop strategic plan
It is essential for companies to develop strategic plan as it helps in gaining success and to
increase market position. For this, the higher authorities of Kalrna adopt Porter's generic
strategies which assist them to implement plan by using effective strategy in a proper manner
(Gopalakrishna and Subramanian, 2018). It mainly involve three strategies that is cost
leadership, focus and differentiation. With the help of this strategies, it is easy for an organisation
to target right people & to cope up with market conditions. The strategies is defined below:
Cost Leadership: This strategy of porter's emphasise on offering products as well as
service at lower price in market by considering high quality. With reference to Kalrna, it offers
service to customers at lower rates as compare to its competitors which assist in gaining
competitive advantage at marketplace. By the assistance of this, Klarna can raise its customer
base which impact positively on overall profits. (Huang, 2019).
Differentiation: Herein, the focus is on to develop innovative and unique products as
well as services in order to gain attention of maximum number of people. In relation to Klarna, it
offers unique and smart solution to customers that will lead to attain competitive advantage at
marketplace (Murray, 2017). In addition to this, Differentiation strategy also helps in raising
sales and profit level of Klarna. In future perspective, Klarna Bank has the opportunity to
acquire larger market share growth if competitive strategy used in appropriate manner.
Focus: This strategy includes differentiation focus and cost focus that is offering unique
services in market and to provide product & service at lower price. Acquisition of focus strategy
by Klarna helps in increasing customer bases that leads to enhance in sales and overall revenue
of company (Lumbanraja, 2019).
From the above discussion of strategies, it has been analysed that the most feasible and
beneficial strategy for Klarna is cost focus strategy as it assist in increasing customer base as

well as sales of company. In future period of time, they have the chance to use effective
strategies and tactics by formulating new policies as well as procedures.
Bowman's strategic clock: This strategy is used by organisation for developing positioning of
their product in market. This model consist of eight elements which is defined below:
Low price and Low added value: This strategy is also defined as bargaining strategy
that assist in remaining markets for longer time period. It is analysed that, this strategy is not
beneficial in order compete with competitors and position product.
Low price: At this strategy, the main focus is on position brand by offering it at lower
price in market. Acquisition of this strategy assist companies in increases sales but lowers down
profit margins of company.
Hybrid: It is a combination of differentiation product as well as low price goods &
services. By the assistance of this strategy, an organisation can attain leading position and create
value at marketplace.
Differentiation: The aim is to offer unique and different products in market that builds a
good reputation in mind set of customers. This strategy assist a company to attain competitive
advantage at marketplace and retain for longer time period at marketplace.
Focused Differentiation: here, the objective is to position goods and services t high price
level so that customer's attain higher perceived value. Focused differentiation strategy assist
companies to earn higher profits and raise their market share level.
Risky Higher Margins: At this strategy, organisation set price of goods and services at
high without offer any discount. If a customer find same goods at lower prices than they will
frequently shift to other brands.
Monopoly pricing: Hereby, customers have no option as there is no alternatives in
market of goods and services. The companies have the opportunity to charge price according to
them.
Loss of market strategy: This strategy is a disaster for companies as they set standard
price which have low perceived value and did not help in gaining success at marketplace.
From the above given strategies, it is analysed that Klarna can use Hybrid strategy as it
help suitable and beneficial for company. It also assist Klarna to provide unique solution to
customer's and attain competitive advantage at marketplace.
Strategic management plan :

Strategic management plan is termed as an overview of objectives, mission, vision,
tactics and strategies of an organisation. With the help of strategic plan, companies can easily
achieve their objectives within stipulated time frame. The plan of Klarna are as follows:
Vision: The vision statement of Klaran is “To develop lifestyle of people by giving good
customer experience”.
Mission: The mission is “To gain leading position in these industry by offering unique &
feasible service to their customers at lower prices (Murray, 2017).
Objective: The primary motive of Klarna is to give best solution to people & attain
competitive advantage at market place that affect positively on its profits and performance level.
Extensive marketing: The marketing group of Klarna build effective strategies & plans
so that they can attract maximum number of people and increase their customer base level which
in turn affect on sales and profit level (Gopalakrishna, 2018).
Market Research: Klarna is conducted market research in order to identify the usage of
customer requirements of mobile application which will help them to easily implement activities
related to launching of new application.
Tactics: Klarna adopts Cost leadership strategy that assist in attracting more people and
increases customer base of company (Bryson, 2018). In addition to this, it also helps in attaining
competitive advantage at marketplace.
Marketing and control: It is important for higher authorities of Klarna to monitor and
evaluate performance of employees with the expected performance so that improvements take
place at initial stage which assist in attaining organisational goals within the time frame.
CONCLUSION
From the above report, it is determined that an organisation can gain high success &
remain in market for longer time period by the assistance of development of effective business
strategy. It also assist companies to achieve their desired goals within stipulated time frame. In
addition to this, PESTLE analysis helps an organisation to determine the impact of macro
environmental factors that is technology, political, social, economical on activities and
performance of company. Furthermore, Ansoff matrix is used by an entity in order to identify
growth opportunities which in turn raise sales and profit level of a company. Porter's generic
strategies assist an organisation to target right customers and to deal with market conditions in an
effective manner.

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