Unit 32 Business Strategy

This document discusses the concept of business strategy and its importance in achieving organizational goals. It explores the impact of macro environment on business operations and the internal capabilities of Klarna Bank. It also analyzes Porter's five forces model to evaluate the competitive forces in the market sector. The document provides insights into various frameworks and models used for strategic planning.

Unit 32 Business Strategy

Table of Contents
INRODUCTION..............................................................................................................................4
P1 Appropriate framework to analyse the impact and influence of macro environment ...........4
Task 2...............................................................................................................................................7
P2 Internal environment and capabilities of a business organisation .........................................7
Task 3...............................................................................................................................................9
P3 Porter's five forces that are uses to evaluate the competitive forces of given market sector..9
Task 4.............................................................................................................................................10
P4 Range of theories, concepts and models that are uses for strategic planning ......................10
CONCLUSION..............................................................................................................................13
REFERENCE.................................................................................................................................14

INRODUCTION
Business strategy is considered as set of decisions that assist and supports entrepreneurs
to achieve the business objectives. Every organisation is have different options for management
planning as it helps in securing competitive position in market and carry out operations. In
business, it is important to have a strategy that can help to meet desired goals in sufficient time
(Amran and et al., 2016). To understand the concept of business strategy Klarna has been
chosen for this project. It is Swedish bank, that provides online financial services. It was founded
in 2005 in Stockholm, Sweden with the aim of making easier and smooth ways for people to
shop online. The online services of it includes direct payment, transfer, post purchase payment,
payment solution for online store fronts and many more. The strategic manager of the
organisation make plans and strategies that helps to complete task and attain business goals.
This report covers various topics such as frameworks that are having impact and influence upon
macro and internal environment as well as capabilities of organisation. Additionally, Porter's five
forces model along with different theories and models are also used in this report for strategic
planning of business.
Task 1
Brief introduction of organisation

Klarna Bank is a Swedish bank that was founded in 2005 by providing online financial
services like payment solution for online store fronts, direct payments, post purchase, payment
and so on. This organisation is employing more than 2500 people. It is managing and operating
business successfully by providing online payment methods. It understand the needs of people
and offers them banking services which helps to make profits.
Vision – The vision statement is to offer variety of financial services and increase the
economical condition of nation.
Mission – To make paying as simple, safe and above all. Moreover, making payment
process smoothly and simple.
P1 Appropriate framework to analyse the impact and influence of macro environment
Macro environment: A set of external condition that affects a business operation and
development either positively or negatively. This is difficult for organisation to control over such
factors that make higher profits by ignoring them. Klarna is a online financial service company
that has flexibility to adopt quickly to external changes is definitely a high attribute since it react
positively
and shaping business model around new shifts (Anwar and Hasnu, 2016). This organisation is
using the PESTLE analysis to assess the external environment that states how they are impacting
on business performance that are as defined:
Political factor: Banking industry means an financial institution that make easy
workings for its customers by providing finance and many other facilities. This factor involves
government laws, trade restrictions, tariffs and political stability of a nation that affects the
operation and develop of enterprises. Klarna is a financial institution in Sweden that provides
online financial facility for customers such as direct investment, payment, transfer and deposits.
Government has affected positively the performance of Klarna by legislature and framing
government policy that helps to work accordingly budgets. Moreover, securitisation act has
given more power to chosen bank against defaulting borrowers. Therefore, with the help of
political system the business operation is increasing that shows as positive impacts (PESTLE
analysis, 2020).
Economical factor: The economy of a nation and banking industry are tied that effects
the development and operation of a organisation either good or bad. It consider interest rates,
inflation rate, monetary policy, buying behaviour etc. has affected business. In Sweden, Sveriges

Riksbank declares its 6 month policies by implementing monetary policies and inflation rate are
low that increases organisational productivity. Klarna affected positively because by reducing
inflation rate and monetary policy savings of people are increasing that encourages customers to
deposits their savings in banks. Hence, this factor boom activities and organisational
performance (Barberá and et al., 2012).
Social factor: When organisation is able to meet with customer's needs and satisfied
them, can run its business successfully. This contains change in lifestyle, literacy rate,
population, growth rate and societies that influences corporations. For example in Sweden,
literacy rate is low as compared to other developed countries. Illiterate people do not knows and
hesitate to transact with bank that can be threat for Klarna to influence people in order to
increase deposits. So, this impacts negatively on chosen financial services and may reduce
productivity.
Technological factor: This is playing an important role in banks as it helps to control
internal mechanism and service which is offered by them. The technological aspects contains
R&D activity, technology incentives, changes and automation that brought radical changes in
banking sector and affected activities. For instance, Klarna has stated home banking by
telecommunication, mobile application and computer technology. It positively affected banking
activities and customers feels happy to make the balance inquiry, getting account statement and
fund transfer which helped to increase effectiveness. Moreover, it has introduced credit card
facility that encouraged cashless society resulting high performance (PESTLE analysis, 2020).
Legal factor: Laws and regulation are also important factor that is important to follow by
organisation in order to run and improve business activities. Legal frameworks contains
consumer protection act, privacy, trade structure, health and safety and foreign direct investment
regulations that can affect the business of corporation. This is impacting favourably on Klarna
operation as it ensures customers that their private data and account information are secured
which increases customers by including national and internal level. Therefore, such factor is
affecting the operation and performance in good ways (Bharadwaj and et al, 2013).
Environmental factor: This is also related with banking sector where banking institution
has spread their activities by increasing effectiveness. For instance, Klarna has reduced the
paper footprint by introducing mobile banking apps and new technology. In short, this helps to
reduced the paperwork which drives clean environment and making it green. Therefore,

environmental factor affected the operation of chosen banking sector and maintain good
performance.
Stakeholder analysis: This is a framework which is used by business organisation to
assess the power and interest of shareholders. It states what strategies and stakeholders can affect
the business. Klarna is using stakeholder analysis to gather and analysis the qualitative
information to know about interested customers in business activities. The stakeholder analysis
matrix is defined below:
LEVEL OF
INTEREST
LEVEL OF
INTEREST
LEVEL OF POWER HIGH LOW
HIGH Management, Owners Government
LOW Staff members Customers
According to above matrix, there are two main factors that helps to assess the information
about stakeholders. The factors are level of interest and level of power that affects the business
organisation. In context to Klarna, the major stakeholders are defined below with their interest:
Management and owners: Management and owners are the main stakeholders of
organisation as they belonging to high power and high interest that encourages them to work
properly. For instance in Klarna, managers are single person who have authority and power to
make strategic decisions and carry forward workings by implementing plans effectively. Their
roles and responsibility is very important in organisation as to decide goals and make plans to
attain them effectively that affects operations in good ways. In case, lack of coordination and
sharing information by managers organisation can face challenges because they make decisions
as per their wish.
Staff members: These are another important stakeholders in organisation that have low
power but high interest in company in the form of salary, bonus, promotion, gifts and incentives.
In Klarna, staff members are playing their role by providing proper assistance to customers and
suggest them best option to invest their money that impacts positively on business performance.
In case, lack of proper assistance and guidance such people cannot work effectively due to facing

many hurdles that may impacts badly on organisation and its performance (Blackburn, Hart and
Wainwright, 2013).
Customers: This is main factor of analysis on which the success of or any organisation
depends. In Klarna, customers are those who get open their accounts, get account statement and
many facilities which helps to run a business effectively. They have low power and low interest
but playing role by buying products and services that effected operations of Klarna positively. In
case, customers do not make buying decision from such organisation due to increasing
competition and high interest charges then entire business can be reduce its profitability.
Task 2
P2 Internal environment and capabilities of a business organisation
Internal environment – This is a main component of business environment that states
various elements which are present inside the organisation. With the help of this tool a
organisation can assess its internal capabilities and make decisions accordingly. Klarna is
analysing its internal environment in order to know capabilities and getting positive outcome by
evaluating skill set (Buckley, 2014). Therefore, Mckinsey framework is used to analyse the
internal capabilities such as:
McKinsey's 7S model: This is a framework which is used by organisation to evaluate their
internal capabilities and improve the organisational performance. With the help of this a
organisation attain its business goals. In Klarna, management wants to improve their
performance by introducing more financial and banking services. So, this analysis help to assess
the activities such as:
Strategy: This is main element of organisation which is used to improve the
organisational performance. Such as the main strategy of Klarna, is to increase its number of
customers by increasing financial services. In this, managers and employees conduct research to
introduce new services like online credit card, fund transfer etc.
Structure: Klarna is providing financial services that has hierarchical structure. In this
structure management and superior follows regulations and share their information in hierarchy
form that helps to share the information.
System: In Klarna, employees and management are following MIS system that is
management information system helps to keep all information together. Moreover, with this

system employees become able to attracts customers and increase financial services to provide
them (García‐Rodríguez and et. al., 2013).
Skills: In Klarna, employees are having communication, learning, technical and
management skills that can help to share information and increase productivity (Chen and
Jermias, 2014).
Shared values: The management of Klarna are believing in different values like
equality, opportunities to employees and providing proper assistance to customers. This strategy
attracts customers and encourages them to get financial services from this bank that can lead to
high productivity.
Staff: For every organisation employees are important who understand goals and give
their efforts in order to attain it. In Klarna, employees are performing their role by
understanding organisational goals and contribute in financial activities.
Style: To increase the sale of Klarna, management need to run training & development
programme that can help to influence customers. Hence, sale activities will increase resulting
achievement of organisational goals (Fox, 2012).
VRIO analysis: This framework is used by organisation to evaluate ideas and thoughts
in order to take competitive advantages. In other words, VRIO is used to assess the inside
situation of business for improving given area and resources effectively. The VRIO analysis in
context to Klarna organisation is defined as:
Resources Valuable Rare Inimitable Organised
Financial
resources
Yes No No No
Brand image Yes Yes No No
Skilled
employees
Yes Yes Yes No
Investment
banking
Yes Yes Yes Yes
Valuable: This means sources which are available in organisation are valuable or not. In
Klarna, having financial resources, brand image, skilled workers and investment banking that

all are valuable. Financial resources helps to increase administration and other financial activities
with the help of skilled workers. Moreover, investment baking attracts customers to deposit their
investment that increases financial performance. Therefore, all resources are valuable for
organisation that helps to improve the productivity and profitability.
Rare: This means resources which are rarely available in corporation and helps to take
the competitive advantages. In context to Klarna financial resources are not rare because it can
be obtain easily by other business. On the other side, brand image, skilled workers and
investment banking is rare for other organisation that can help to take competitive advantages
(Johnson, 2016).
Inimitable: When other organisation is not able to imitate products and services, is
consider as inimitable that helps to make unique corporation. Klarna is having skilled
employees and investment banking services are inimitable for other companies. It helps to
increase business capabilities and processes to get competitive advantages by chosen company.
Organised: Investment banking is the another resource for Klarna that is organised
helps to provide investment services to customers. This services attracts customers and
encourages them to get investment banking that helps to improve productivity and profitability
(Kourdi, 2015).
Task 3
P3 Porter's five forces that are uses to evaluate the competitive forces of given market sector
In business era, it is needed to get competitive advantages by increasing sales and
attracting customers. Different types of planning and strategies are formulated by management
that helps to improve organisational productivity and profitability. In context to Klarna,
managers evaluating competitive advantages by using porter's five forces that are as defined:
Competitive rivalry: This states competitive extent which are exist in similar type of
business and affecting productivity. In context to Klarna, many competitors like ICA Banken,
Resurs Bank, Skandiabankenm and many more who are providing financial services to
customers and increasing competition. There is high level of competition that can reduce the
organisational productivity and profitability. To reduce this impact organisation need to provide
unique financial services that will help to improve the performance.

Bargaining power of suppliers: In context to Klarna, the bargaining power of suppliers
like government and central bank is high that can affects the business performance negatively.
Therefore, it can be a challenging point for chosen organisation and may affects business
negatively.
Bargaining power of buyers: In Sweden, there are many customers who buys products
and services, playing important role in organisation. In context to Klarna, the bargaining power
of buyers is low because it provides online banking services to customers that make happy. It set
interest rate according to them because it ensures customer that their money will be safe and
deposited properly which encourage them to buy services from this. Therefore, it helps to take
competitive advantages by providing financial services (Li and Tan, 2013).
Threat of substitutes: In business era, there are different types of banking services
which are provided to make easy shop online and increase productivity. Traditional banking,
manual personal saving and giving borrow money is the substitution of banking financial
services. Currently, people are demanding home banking that become an opportunity for Klarna
as it help to increase number of customers and increase productivity. Therefore, chosen
organisation have an option to take competitive advantages by offering kind of financial services.
Threat of new entrants: In business environment, new organisation wants to enter in to
market by providing similar product and services. In context to Klarna, this is opportunity for
management to get competitive advantages because to enter in to new market there is need to
follow many regulation and financial resources. It is difficult for organisation to enter in to new
market and run their business. Therefore, Klarna is taking advantages of running its business by
providing different type of financial services (Maté, Trujillo and Mylopoulos, 2012).
Task 4
P4 Range of theories, concepts and models that are uses for strategic planning
Strategic planning is consider as process and procedure which is used to take the right
decisions in order to attain business goals. In other words, a process of documenting and
establishing a direction used by organisation to complete their task, is known as strategic
planning. In corporation, it is important to have strategic planning that can help to increase
productivity and profitability by attaining objectives. In context to Klarna, management are

using porter's generic model and Bowman's strategy model in order to analyse strategic
directions and make competitive profits.
Porter's Generic model: This model is given by Michael Porter in 1985 that states how
a business can get competitive advantages by selecting a market scope. The description of
strategy is given underneath:
Cost leadership – This strategy is related to cost of products and services so competitive
advantages can be take easily. In this, organisation need to reduce cost and become cost low
industry that can attract customers. In context to Klarna, management have option to adopt cost
leadership strategy by reducing the interest rate that may attracts customers and increases
productivity than competitors (Mithas, Tafti and Mitchell, 2013).
Differentiation strategy – The relation of differentiation strategy is uniqueness and
differentiation that can help to increase number of customer by attracting them. In context to
Klarna, management can adopt this strategy by providing different services which are not
offering by others then only it can take competitive advantages. Herein, management need to
focus on new product and financial services that are related to bank can help to increase
productivity and profitability.
Focus strategy – This strategy is combining of cost and differentiation strategy where
organisation should provide unique products and services at low cost. This is effective strategy
which may influence customer toward buying products. In context to Klarna, management can
adopt this strategy by introducing new financial services at low interest rate that can attracts
customers and helps to take competitive advantages (Rothaermel, 2016).
From the above strategy it has examined that focus strategy is suitable and best strategy
for Klarna because it will help to take competitive advantages by providing different financial
services at low cost. As price is prime factor that influences customers and encourages them to
make buying decision. Moreover, different services by using new technology also helps to take
competitive edge. In other strategy organisation need to reduce interest rate that can do by other
financial institution. Therefore, management make plan to introduce new financial services at
low interest rate that can make happy and satisfied to customers. This gives positive outcomes in
competitive environment (Scholes and et. al., 2014).
Bowman's strategy model

This is a model which is used by corporation at the time of designing market strategy in
order to analyse its competitive position as compare to others. It helps to define relationship
between customer value and prices. This is given by David Faulkner with Cliff Bowman. This
strategy states that organisation is having three ways through which it can compete with other
rivals companies and provide a better customer satisfaction by setting the prices of products and
services (Shavarini and et. al., 2013). In context to Klarna, this is effective strategy as it
consider cost leadership, product differentiation and market segmentation that attracts customers
and increases organisational productivity. For instance, the goal of Klarna is to attracts
customers at high range and increase competitive advantages. For attaining this goal,
management should decide low pri_1582549765ces of its financial services, need to select a
market area and should provide different financial services that can attracts customers and make
competitive advantages.
Hybrid strategy- It is consider as another strategy which is used to seek simultaneously
to attain business goals. In this strategy, management make plans regarding differentiation and
low price of products, can attracts to customers and increase productivity. For instance, Klarna
is using hybrid strategy by delivering the ability to enhanced benefits to the customers at low
prices and make higher profits. With the help of this strategy organisation attain its competitive
advantages effectively (Thomas, Smith and Diez, 2013).
Strategic management plan that has tangible and tactical strategic priorities
Strategic planning - This is documented plan which is prepared by management by
sharing with all employees that helps to complete the task and attain business goals. In Klarna,
managers are preparing strategic management plan for the purpose of attain more customers and
gaining market share by offering different financial services. The description of plan is defined
as below:
Vision: “To become the largest organisation in financial services by providing variety of
products and services”.
Mission: “To adhere the simple payment and receiving financial services ”.
Objectives:
 To be most prestigious financial services provider company with the help of new
technology.
 Increase market share by 40% within 2022.

 Gain competitive advantages by facing challenges and attracting customers.
 Improve market position and brand image across the nation.
Strategies:
Klarna is a banking financial institution that uses different types of strategies in order to
improve organisational performance and attain business goals that are as defined:
Engage people in business idea and activities – Herein, management of Klarna
develop new ideas and technology in order to provide attarctive financial services where they get
involves employees. Employees helps to perform their roles and put efforts to increase
productivity (Verbeke, 2013).
Training and development strategy – When Klarna introduce new products and
services it should provide training and development programme to employees that can help to
attracts customers (Ward, 2012).
Implementation and control:
In Klarna, management have power and authority to implement the strategic plans that
helps to attain the business goals. For executing plan and evaluating performance managers are
suing KPI and benchmarking tool that help to monitor activities and suggest to use proper
planning in order to attain goals effectively (Zolkiewski and Feng, 2012). This tool will helps to
know difference between actual and budgeted performance and do corrections accordingly.
CONCLUSION
From the above report it can be concluded business strategy is related to planning which
is prepared by management in order to run their business and take competitive advantages. To
evaluate the external environment PESTLE analysis and stakeholder analysis is require that helps
to make decision accordingly. Stakeholder are having high interest in organisation who maintain
the business activities by giving contribution. Porter's five forces are used to take the competitive
advantages and running business effectively.

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Online
PESTLE analysis. 2020. [Online]. Available through:
<https://www.slideshare.net/Gstheproud007/pestel-analysis-banking-sector>