Impact of Macro Environment on Klarna

This report discusses the impact of macro environment on Klarna, a company providing online financial services. It covers the political, economic, social, technological, environmental, and legal factors affecting Klarna's operations. It also analyzes Klarna's internal environment capabilities and applies the Porter five force model to assess the competitive position of the company.

Unit 32 Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 Elaborate the impact of macro environment on a given organisation...................................1
P2 Analyse the internal environment capabilities.......................................................................3
P3 Analyse the Porter five force model......................................................................................6
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organization..............................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy is defined as the course of action among the various alternatives in
order to gain a competitive position within the market. The business environment in which
company carry out its operation is regarded as dynamic and it bring changes in taste and
preferences among the customers. This report is based on Klarna that provide wide range of
online services such as direct payment, post purchase payment, handling clients payment system
and so on to gain an ease of convenience among the customers (Bulatova, 2018). This report also
cover the impact of macro environment on decision making and also contain internal analysis in
order to scan the environment. This report is based on Porter's model so as to gain competitive
position and also contain various theories and models to gain a significant position within the
industry. This report also cover the strategic management plan that contain vision, mission and
goals of a firm with the help of strategic planning and thus help in completing the task in an
appropriate time.
P1 Elaborate the impact of macro environment on a given organisation
Macro environment play an important role in an economy which includes various aspects
such as national income, GDP, level of employment, competition and so on. It also help in
decision making and also affect the business in various ways such as spending, borrowing etc.
The external analysis is conducted with an view to scan the environment and also affect the
business due to various factors such as political, economic, social, technological and so on. The
manager of Klarna has conducted the PESTEL analysis which is presented as follows:
Political: This consist of various elements such as corruption, foreign trade, labour law
and trade restrictions. UK is considered as the powerful political country in the world. It is a
multi party system that consist of two parties such as labour party and conservative party. The
exit of Britain from European Union, namely Brexit has affected the political system in several
ways. This lead to increase in VAT from 17.5% to 20% and thus add the prices of various
products or services. The increase in taxation has affected the Klarna as it would not allow it
make more profit and reduces the overall efficiency of a business.
Economic: This cover aspects such as employment, exchange rates, inflation rates and
many more. UK is considered as the 5th largest economy in the world. Due to Brexit, there is an
increase in interest rates which affect individuals in several ways. This results in greater
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investment and provide growth opportunities to a firm. Therefore, increases the profit and
efficiency of a firm.
Social: This factor includes various aspects such as career attitude, diet conscious, safety
emphasise and so on. The lifestyle of people in UK is regarded as high class and are highly
educated and they are also regarded as multi cultural. The respective firm provide fast and
innovative solutions to their clients so as to fulfil the current requirements (Deligeorgiou, 2018).
United Kingdom's banking sector is continuously looking forward to raise economic conditions
of this nation, which has helped financial institutes in meeting different range of goals and
objectives in much effective and in efficient manner as well. This helped business like banks to
raise living standards of individuals through offering them with loans and other financial
benefits.
Technological: This consist of various aspects such as level of innovation, automation,
research and development. UK is considered as the most technologically advanced country in the
world. The concerned firm focuses on improvement in technology in order gain competitive
advantage within the banking industry. This saves time and cost and also ensure greater profits.
The impact of technology on firm help to increase the profits over a long period of time.
Environmental: This includes various aspects such as change in climate, weather and
various environmental policies and so on. By looking on growing awareness among the people
towards the environment, the manager of Klarna focuses on reducing the waste by adopting the
strategy of 3R's namely, reduce, reuse and recycle. This results in increase in positive reputation
of a firm in the eyes of public at a global level and thus this step provide protection towards the
environment.
Legal: This includes various factors such as consumer protection laws, discrimination
laws, anti trust laws and patent and copyright laws. It is compulsory for the manager of Klarna to
abide all the rules and regulations pertaining to the legislations of UK. The manager of respective
firm provide intellectual property laws and date protection laws so as it does not allow to copy
the products easily in order to gain a competitive position. Laws are provided to ensure a
standard quality of products in order to keep the customers safe.
Stakeholder analysis: It is described as the process of identifying the changes that has
taken place by tracking the changes in behaviour of different stakeholders. It provide the
advantage to gain more resources, such time, people and also help to make fast decisions and
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thus improving the quality of services. The manager of Klarna has adopted this analysis which is
given below:
High power and high interested people: The manager of Klarna ensure that
subordinates would work completely in a respective time period and with greater efficiency.
High power but less interested people: The senior authority ensure to achieve the task
in a limited period of time so that they do not become bore and induce creativity in them.
Low power but high interested people: The manager of Klarna should completely
informed about the projects among the employees so that they could work with greater speed.
They are highly interested but their views and opinion are not taken into consideration.
Low power and low interested people: In this, the manager of Klarna highly monitor
the activities of subordinates so as to bring proper coordination in a workplace.
P2 Analyse the internal environment capabilities
The internal analysis is conducted to find the strength and weakness of a firm by
assessing its resources, competencies and this knowledge help the firm to make decisions and
carry out the execution process. In order to analyse the strengths along with the weaknesses
faced by Klarna, then these are presented underneath:
SWOT Analysis:
Strengths:
 Klarna, which is one of the crucial
business organisation consists of
different online financial services
offered by them like direct payments,
post purchase payments, payment
solutions for online store fronts and so
on. This is said to be one of the strength
that this company is holding at present,
which raised ample number of benefits
for the company, where making
payments, report a problem, manage
returns along with the supporting chat
system in order to support customers 24
Weaknesses:
Risk management strategy followed by Klarna
is not that effective in nature, which impacted
upon company's performance level in all over
United Kingdom and among different nations
as well, where company has lost it's market
share (Ferreras-Garcia, Hernández-Lara, and
Serradell-López, 2019). Also, the promotional
campaigns developed by these organisations
has raised various issues
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into 7.
Opportunities:
 Company could effectively reach to
new countries and start offering
customers with Klarna app, where it's
customers could effectively manage all
the purchases along with the
repayments as well, report a return and
get help with any questions.
Threats:
 Major threat is rising competition
within the market, which impacted
upon profit ratios of this organisation
along with the productivity as well.
Also, Klarna would require to consider
updated technology as well so that right
amount of services could easily be
delivered to customers based on their
requirements.
The manager of Klarna has used the VRIO ans McKinsey analysis in order to determine
the competitive position within the market.
VRIO analysis: This analysis provides the framework to a firm to analyse the internal
factors and thus provide a greater competitive advantage across the globe (Götz, 2020). It
consist of various dimensions such as valuable, rare, imitable and organisation that provide the
indicator of overall performance of a company. With reference to Klarna, the same is presented
as follows:
Resources V
Valuable
R
Rare
I
Inmitable
O
Organized
Food Yes No No No
Employees Yes Yes No No
Patent Yes Yes Yes No
Financial
resources
Yes Yes Yes Yes
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Valuable: The financial resources of Klarna are highly valuable as it provide various
growth opportunities by combatting external factors. The workforce of Klarna are highly
efficient and trained and thus help in improving the overall productivity and efficiency of a firm.
Its patent are regarded as highly valuable that allow respective firm to sell its product in order to
gain competitive position within the market (Hervert-Escobar, and Alexandrov, 2018). The
local food are highly valuable becauses it focus on providing unique and efficient services to
their clients in order to gain maximum customer satisfaction across the globe.
Rare: The financial resources according to the VRIO analysis of Klarna are found to be
rare that is not easily possessed by its competitors such as Stripe, Bread, Adyen and so on. The
patent are regarded as rare in case of Klarna as it provide license which incur high cost and
would not be easily copied by any other firm. Employees are considered as the asset for the firm
because they are highly trained and thus provide better work environment so that they could
retain for a long period of time.
Imitable: The financial resources are costly to imitate according to the manager of
Klarna because these are earned through profits which was accumulated in previous years.
Employees are regarded as the highly and efficient trained so as to improve the skills and
learning ability of individuals within an organisation. This provides a competitive advantage and
also increase the efficiency and skills of employees.
Organisation: The financial resources of a firm are highly organised and make sure to
use it in right place at the right time by grabbing each and every opportunities by combatting the
threats of a firm. This help the manager of Klarna to gain sustainable advantage through [proper
strategic planning so as to ensure systematic working in an organisation.
McKinsey model: This model is described as the management model in which seven
internal factors such as structure, style, skill, system, staff and so on so as to adopt the changes in
an organisation and this results in achieving an high level of effectiveness. In the context of
Klarna, these are presented as follows:
Strategy: The top management of Klarna prepare an appropriate plan so as to achieve a
significant and competitive position within financial sector.
Structure: It is described as the organisation chart that aid the respective firm to divide
the work appropriately so as to achieve coordination.
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System: the manager of Klarna describe the proper procedure and process of a company
and also provide proper clarity of objectives among employees so that they could work with
greater efficiency.
Skill: The leader of Klarna provide efficient training in order to increase the skills and
knowledge base of an employees so that they could work with greater efficiency and thus
achieve the desirable results.
Staff: Klarna is one of the leading bank that contain large number of employees that is
2500 staff. It also focuses on encouraging and motivating employees so that they could retain for
long period of time.
Style: The top management of Klarna follow a systematic hierarchical structure so that
they could work with greater efficient and thus promote the success of an organisation.
Shared Values: The manager of Klarna provide the norms and standards that guide the
behaviour of employees and it provide the foundation of every organisation (Kailer, and Weiß,
2018).
P3 Analyse the Porter five force model
Porter force is a model that help in determining the level of competition and
attractiveness of an industry that provides an assistance to gain a significant position within the
market. It help in determining the strength and weaknesses of a firm so as to grab the
opportunities by reducing the threats. In the context of Klarna, the same is presented as follows:
Threat of new Entrants: The magnitude of this force is acknowledged to be weak due to
high capital requirements which possess a big threat to the company. Also there are strict
government rules and regulations that does not allow a firm to gain competitive position within
the financial sector. Customers always prefer for differentiated products and strong emphasises
of advertisement that posses a big threat for new entrants.
Bargaining power of suppliers: This factor is usually regarded as a weak force. There
are lot of suppliers present in the market which provide similar products or services to satisfy the
needs of customers within the market. The manager of Klarna could purchase raw materials from
the suppliers at a low cost so as to provide product differentiation and thus increase the profit
margin and thus reduce the cost production.
Bargaining power of Buyers: The power of this force is considered as low. The
competitors of Klarna are several such as Bread, Adyen, Skrill and so on but they provide
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products at high cost and thus provide competitive position from different parts of the country.
The manager of a concerned firm provide an affordable prices of products to their clients across
the globe in order to gain a positive reputation (MANSIMOV, 2018).
Threat of Substitutes: The extent of this force is considered as low because there are
various alternatives available in the market that provide low cost and highly efficient services.
As the manager of Klarna aims to provide fast and efficient services to their customers and thus
gain a competitive and significant position across the globe.
Rivalry firms: The magnitude of this force is regarded to be low. Although the
competitors of Klarna are several such as Bread, Skrill, Stripe and so on but they provide
products or services at high cost (McKenzie, and Sansone, 2019). As compared to these, the
manager of Klarna aims to provide new and innovative technology to conduct fast operation of a
business. This ensures wining the hearts of customers and also provide sustainable growth to a
company.
TASK 4
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given organization
Generic Strategies were first introduced by Michael Porter in 1985 in his book,
Competitive Advantage. Porter suggested three generic business strategies '' Cost Leadership''
''Differentiation'' '' to gain competitive advantage. He subdivided the Focus strategy into two
parts: ''Cost Focus'' and ''Differentiation.'' Generic Strategies applied at business unit level. The
following four are Porters Generic Strategies.
Cost Leadership Strategy:- Objective of this strategy is to become the low-cost producer in the
industry (Nicolò, 2018). Increasing profit by reducing costs and reduction in cost helps in
increasing market shares and make good profit on every sale because of reduced cost. Low cost
leadership increase the productivity, help in utilisation of resources, retain customer for long
time, effectiveness in production. This strategy helps large scale businesses to become low cost
leader in the market or industry.
Differentiation Leadership Strategy :- Differentiation include making your products and
services different from your competitors. It means that your products and services have unique
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identity in the market. What makes you different from your competitors. Differentiation need
good research, development, creative skills , innovation, understanding of market.
Focus Strategy :- Focus strategy focus on both the Cost leadership strategy and Differentiation
(Pöchtrager, and Wagner, 2018). This strategy focus on developing low cost with unique product
and service in the market. This strategy is the combination of both the strategies.
Strategic Management:
Strategic management plan is defined as the document that contains information about
the strategies and plans developed by the organisations (Tipu, 2019). The strategic plan for the
Klarna been is mentioned below –
Mission: The mission of Klarna is to maximise the reputation and image of the company.
Vision: The vision of Klarna is to create competitive advantage in market.
SMART objective: To increase sales by 20% in 2 months.
TUCKMAN TEAM DEVELOPMENT
This theory was developed by Dr. Bruce Tuckman in the year 1970. This theory has five
stages:
Forming: This is the first stage in which staff of an organisation highly depend on their
leader, for guidance and direction. In Klarna , managers helps their employees with their roles
and responsibilities.
Storming: This is the second stage of tuck man theory in which employees need to be
more focused about the organisations goal and objectives.
Norming: In this stage, team members started doing their work more efficiently and
effectively (Volker, and Phillips, 2018). In context of Klarna, team members started resolving
conflicts between their team mates and focus on working together rather than individual.
Performing: The employees and staff are provided guidance for doing their job.
Employees of Klarna are The staff is sharing common vision, and they know about what they
are doing and why they are doing this.
Adjourning: This is the last stage of the theory, which means that the project comes to an
end. All the team members do their business effectively.
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CONCLUSION
From the above discussion, it is concluded that there are different strategies which an
organisation uses for managing different business activities and operations. This is essential for
any company to be competitive in market world. This is done by managing the various activities
effectively. There are a lot of business models used for analysing the strength and weakness of
the company. Both external and internal analysis is done for making companies competitive
within market.
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REFERENCES
Books and Journals
Bulatova, S. K., 2018. The concept of Business plan and marketing plan. In Индустрия
туризма и сервиса: состояние, проблемы, эффективность, инновации (pp. 129-
131).
Deligeorgiou, A., 2018. Business plan and enterpreneurship.
Ferreras-Garcia, R., Hernández-Lara, A. B. and Serradell-López, E., 2019. Entrepreneurial
competences in a higher education business plan course. Education+ Training.
Götz, J., 2020. Business Plan. In Seasonal Affective Disorder and Light Therapy (pp. 165-203).
Springer, Wiesbaden.
Hervert-Escobar, L. and Alexandrov, V., 2018. Territorial design optimization for business sales
plan. Journal of Computational and Applied Mathematics, 340, pp.501-507.
Kailer, N. and Weiß, G., 2018. Gründungsmanagement kompakt: von der Idee zum Businessplan.
Linde Verlag GmbH.
MANSIMOV, E., 2018. Business Plan (case study) (Doctoral dissertation, Masarykova
univerzita, Ekonomicko-správní fakulta).
McKenzie, D. and Sansone, D., 2019. Predicting entrepreneurial success is hard: Evidence from
a business plan competition in Nigeria. Journal of Development Economics, 141,
p.102369.
Nicolò, D., 2018. Carenze informative e vulnerabilità delle imprese giovani: il ruolo del business
plan. Management Control.
Pöchtrager, S. and Wagner, W., 2018. Von der Idee zum Businessplan. Springer Fachmedien
Wiesbaden.
Tipu, S.A.A., 2019. Business plan competitions in developed and emerging economies. Journal
of Entrepreneurship in Emerging Economies.
Volker, J. and Phillips, M., 2018. Six Points: A Plan for Success. Journal of Management Policy
and Practice, 19(1).
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