Klarna Business Strategy Analysis Report: Macro & Internal Environment

This report provides a detailed analysis of Klarna's business strategy. It begins with an introduction defining business strategy and its importance, then moves on to analyze the macro-environment using PESTLE and stakeholder analysis frameworks, and SWOT. The report then delves into Klarna's internal environment, assessing its capabilities through the 7S model and resource-based view. Furthermore, the report evaluates competitive forces using Porter's Five Forces model and concludes with strategic planning recommendations. The report covers Klarna's vision, mission, and objectives, and provides strategic planning methods, including benchmarking and business transaction analysis. It examines political, economic, social, technological, and legal factors impacting Klarna, along with its strengths, weaknesses, opportunities, and threats. Finally, the report considers strategic capabilities and their components, offering a comprehensive overview of Klarna's strategic approach and providing valuable insights into the company's operations and market position.

Business strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
P1 Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies..........................................................3
TASK 2............................................................................................................................................7
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
framework...............................................................................................................................7
TASK 3............................................................................................................................................9
P3) Evaluation of competitive force through Porter's five forces model...............................9
TASK 4..........................................................................................................................................11
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation........................................................................................................11
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy is defined as the group of decisions and techniques which are helpful to attain
business objectives. Business strategy is aim to make an action plan which are required to be
followed by every single person so that to to get to know about market situation. The company is
taken for this report is Klarna which is a Swedish bank providing financial services to the
customer with high standards and customer satisfaction. This report includes environment driven
forces and methods to overcome those influences by the help of several strategies (Bele,
Panigrahi and Srivastava, 2017).
P1 Applying appropriate frameworks analyse the impact and influence of the macro environment
on a given organisation and its strategies.
Vision: The key vision of Klarna is to enhance working performance as per the set
benchmark of performance in order to perform with efficiency on national and international
platform as well.
Mission: The foremost mission of Klarna is to protect and safeguard the online payment
system so as to increase trust of customers and earn higher profits.
Objectives: The prime objective of Klarna is to expand their business on international
level so that to capture more markets.
To enhance market share by 30% in the time period of 3 months so that to increase
revenues for the company.
With the purpose to increase profits the company is offering faster payment system so
that to monitor all the payment undertaking in a considerable and systematic manner.
The strategy is defined as action plan adopted by strategic manager of Klarna to achieve
aims and objectives in the given stipulated time. Further the strategy is specified as the broad
way of directing which are adopted and followed by employees of Klarna in order to perform
their workings and operations in an effective manner. Similarly with the help of following
appropriate strategic decision, attaining of success become convenient for the business so that to
get greater goodwill and market capture in an efficient manner by acquiring both national; and
international market (Chelliah and Swamy, 2018).
Methods for strategic planning:

 Benchmarking: This is defined as monitoring aspect for the business so that to provide
standard to the working with the purpose to get efficiency in the organisation. As in the
context of Klarna all the projects and operational activities are associated with internet
services, so by the help of benchmarking it is beneficial and easy to design and formulate
strategy for online payments and online services (Frias‐Aceituno, Rodríguez‐Ariza and
Garcia‐Sánchez, 2014)
 Business transaction analysis: In current scenario all the business activities such as
rendering of services, selling of products or activities related to payments are performed
with the help of latest technology into all the departments and sub departments. So with
the help of correct data and other information it become easy to interpret and evaluate all
the translation of a business in a considerable manner.
Frameworks to analyse macro environment
Stakeholder analysis: Analysis of stakeholder is a procedure which helps in recognising
those persons who are influenced by performance of any project and operation in a business.
With the help of appropriate stakeholder analysis is become easy for the employees and other
stakeholders to work efficiently and as per their interest criterion. The procedure for stakeholder
analysis is as under:
First step: First step is to generate a list including overall potential stakeholders of
Klarna and the operational projects (Groesser and Jovy, 2016). As investors, consumers and
related financial organisation are the foremost critical stakeholders that are related directly with
the business without any gaps.
Second step: After preparing list of potential stakeholder now the organisation bifurcate
them as according to the priorities and demand of their customer which are followed by
employees engagement, level of interest and operational engagement of labours and so many
other factors. So the decision making process become easy for the managerial person as
according to the interest and power.
Third step: Under this step the manager communicates the forecasted strategy to their
stakeholder in order to introduce cooperative behaviour so that to level up the working
performance of employees with respect of aims of the business.
External analysis

PESTLE analysis: PESTLE is a strategic tool which is used by organisations in order to
evaluate and understand macro environment. This framework assures that all the functional
operations are executed by the management in accordance with the external environment and in
proper way (Haywood and Van der Watt, 2016).
Political factors: Political factors includes all the political aspects of the respective
nation such as governmental rules and regulations, rates of tariff, tax rate etc. In the context of
Klarna this factors works as a positive aspect as this is a bank having headquarter in Sweden and
as due to assertive relations with well developed nations, this bank is rendering quality financial
services to to their customers. In contrast the customer from inter national borders are influenced
due to any political changes in such a way that any disadvantageous decision taken for
international buyers is directly hampers the objectives of the business.
Economic factors: All the factors associated with money transaction , monetary policies,
buying power of customer are termed as economical factors. As due to Brexit economy of UK is
not sound so the economic factors are not as accordance with the organisational requirement and
performance. This affect the business in earning profits due to which the overall performance of
an organisation decreases. In the reference of Klarna this become complicated to get deposits
from general public in the slump economy as the involvement of investors decreases.
Social factors: An organisation is required to operate as per the needs and demands of
the customer and society which is essential for the business in order to grow. Social factors
includes consumer behaviour, shared values and beliefs thereon which are thrived by the society.
With the respect of Klarna social factors works as a catalyst for the management so that to
perform their task and to lead the societal needs to enhance the sale of product and services
offered by them. The customers are highly influenced by these social factors because ultimately
these factors are associated with customers only, so for getting sustainability in the market the
Klarna is required to manage all these factors in an accurate manner (Hofmann and et. al., 2014).
Technological factors: In the current trend of industries they are pertained to operate at
worldwide level by using latest technology. So for Klarna it is necessary to introduce emerging
technology as in their operations. Being a bank Klarna is operating through out the globe due to
which fast and effective services are provided to the customers. Employees of Klrana get
influenced as in respect of technological factors with respect of performance and task

completion, by this positive environment is created inside the organisation due to adoption of
new technologies.
Legal factors: Government of every nation develop and implement carious laws and
legislative regulations in order to ensure that all the working are adhered to the established
ethical and legal frameworks. As after Brexit, Financial conduct authority is the governmental
body who is monitoring all the transaction of a country related to monetary terms. Further UK is
having Employment laws and which are required to be followed by every business organisation
which impact the company, stakeholders and employees in a positive manner (Neugebauer,
Figge and Hahn, 2016).
SWOT analysis
SWOT framework is a functional tool which lead the business in order to execute their
working by emphasising on their own strength and in effective manner. SWOT assist the
business so that to implement and formulate strategies so that to grab opportunities and subdue
their threat so that to grow and get success in the market. Klarna is executing SWOT analysis in
order to get efficiency over their project, which is as under:
Strength Weaknesses
 Klarna is the leading company in
banking industry and having assistance
of digitalise tool and methods.
 High coverage over global customers
due to operations at global level.
 The needs of customers get satisfied by
the appropriate transaction of cash
flows (Jannesson, Nilsson and Rapp,
2016).
 As occurrence of huge expenditure it is
very hard to manage work at big level.
 The success of Klarna is dependent on
the decisions of investment taken by the
investors, so it is very complicated to
get such decision often.
 The recoding of financial transaction is
not flexible at such huge level
operations.
Opportunities Threats
 Developing and already developed
countries are using cashless
transactions in order to cover more
market area.
 Breach of trust takes place when any
cyber attack arise during online
transactions.
 Usage of digital card usage affect the

 By the use of electronic devices such as
mobile phones and online websites it
require less efforts in order to approach
more number of customers.
business performance a sometimes it is
hard to record transaction immediately
due to poor server network.
By the help of SWOT analysis it is assessed that numerous tasks are executed by the
managerial team of Klarna in order to get top position and efficient working style. For example
digital platform of Klarna is the top most strength which help them in enhancing their
performance. On the contrary to subdue the negative aspects so that to increase flexibility in the
working in order to increase effectiveness. Lastly the strength and weakness are used in order to
get opportunities and to avoid threats (Parmentier and Gandia, 2017).
TASK 2
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
framework.
Strategic capabilities with their components: Strategic capabilities are defined as the
procedure that help a business in order to introduce numerous strategies sue to which
competitive edge can be developed in the market. Strategic capabilities includes value, vision,
strategic intent and purpose of strategies with the key function so that to implement those
strategies with an effective manner.
View strategy based on resources: Resource strategy is defined as finishing and
monitoring working with the help of using required resources which are employed by the
business in order to get sustainability and competitive edge in the market. On the other hand
resource strategy are based on tangible and intangible sources which are utilised by an
organisation in order to work more efficiently and in a systematic manner. This strategy assist
the business in completion of the projects on time with the use of tangible and intangible
resources.
7S model of McKinsey's
7S model of McKinsey's is an efficient tool in order to assist the organisation in
interpreting organisational functions which are carried out by recognising numerous intrinsic
aspects. In the context of Klarna all the business units in order to function properly and manage
tasks of the business in an effective manner.

Strategy: Strategies are implemented in order to get competitive advantage in the market
and achieving organisational goals. In the banking industries strategies are implemented so that
to clear investors confusions and to give clear vision to the customers (Pearson, 2016).
Structure: This is defined as the methodologies by which task are performed in an
organised manner with the help of all the divisions and departments. In the reference of Klarna
inappropriate structure influence the performance of the business in considerable manner.
Systems: This is acknowledged by the procedure that are present in the organisation in
order to finish routine works and routine activities. So with the help of implementation of
sufficient method of working in a sequential way so that to attain objectives in an efficient way.
Skills: Capacities, skills and competencies are included in this, in the respect of Klarna
these competencies are adhered by Klarna in order to tackle complexities in the business
environment.
Style: This is adverted to the methods that are handled by the business organisation in
order to finish the task as according to the requirements of to level with the help of effective
communication between employees. This help Klarna in achieving top position in the market
with higher sustainability.
Staff: All the active workforce who are engaged in working with a business including all
the employees from every projects so that to employ candidates as per the skills that are required
by the top management.
Shared values: This step is the last step which are executed by an organisation in order
to work as accordance with the standards and measures taken by Klarna's managerial staff. So for
all the workforce it is required to perform task as per the considered values and beliefs.
VRIO framework
VRIO framework inside Klarna states that to examine all the intrinsic factors and
resources in an effective and efficient manner which is helpful for business in order to get
competitive edge and sustainability in the market. With the help of sufficient implementation of
VRIO it becomes easier for the business to set a path to attain those goals and objectives with the
fuller utilisation of available resources. VRIO framework is explained as under:

Valuable:
 The most valuable aspect for Klarna is their financial resources and digital platform
which assist the managerial staff of Klarna in dealing with any extrinsic threats which
influence the business of them (Peng, 2016).
 All the active workforce and digital gadgets are the another most valuable resources in
the business of Klarna which assist them in doing their work in a new and creative way in
order to stay ahead in the market.
Rare:
 For Klarna the techniques which are used by them in order to monitor th available
financial resources are the most rare resources for them. This help Klarna so that to
achieve their goals in lesser time and lesser cost in order to enhance profit and market
share.
 Klarna hold intellectual property rights so that to safeguards their rights, so this is the
another rare resource for Klarna by this Klarna is able to get competitive edge in the
target market.
Imitable
 By working at global level financial organisations are earning high profits in order to
capture more market share. So it is not easy for others to imitate the similar products with
homogeneous characteristics.
 All the workforce of Klarna is emphasised to enhance their performance with the
reference of efficiency, so for this Klarna is rendering them special training which is
required to boost the working performance and is not imitable by other competitor.
Organisation
 The financial resources employed in Klarna are employed so that to acquire more
customers by recognising their demand and needs, this will increase the overall
productiveness by using threat of competitor as opportunity.
 Klarna is operating their busies at global level so they use distribution channels which are
systematised, this help them to stay in the market for a longer duration and with
suitability.

TASK 3
P3) Evaluation of competitive force through Porter's five forces model
Porter's five force model is a strategic framework that facilitate an organisation in taking
various decisions on the basis of analysis of various forces that has impact on the organisation.
With the help of these five forces the structure is identified that facilitate formation of corporate
strategy for the organisation. It enables the organisation to understand the level of competition
within the industry, so that the profitability can be improved for the organisation. The analysis of
five forces for Klarna is given below:
 Threat of new entrants: For the businesses it is important to understand the impact on
new entrants on the organisation. This is because they can enter into the market with
latest and updated technology that can improve the services to the customers. The impact
of this force is moderate on Klarna as it may be easier for the entrant to enter into the new
market but building trust is not that in easy in financial market. For managing the
influence of this force they need to make their customers by building healthy relations
with them (Prajogo, 2016).
 Threat of Substitute Products: With this the help of this force the organisation can
determine the impact of various substitute products available. Klarna has high impact of
this force as there are many recognised and trustable players in the market that has direct
influence of their business. For managing the impact of this force on the organisation it is
important for them to provide services with effective technology and at lower costs. Also
they need to focus upon the quality of their services so that the customers can be made
loyal.
 Threat of Rivalry: The level of competition is very high due to which the companies
need to understand and analyse each and every move of their competitors. This enables
them to introduce changes in their policies accordingly. The presence of the financial
service industry in each and every market impact the businesses as due to this it becomes
difficult for the organisation to determine the opportunities for their expansion. For
reducing the impact of such force the Klarna can go for the strategies of merger and
acquisition with some other banks so that they can ensure their survival.
 Bargaining powers of the Suppliers: This force facilitate to understand the impact of
various suppliers of the material, capital and resources etc. For the banking industry the

funds are important which they procure from various sources that are through mortgage
loans, deposits of the customers etc. Due to this the bargaining power of the suppliers are
high as the services to the customers depends upon the supply of funds by them. The
powers of the suppliers depends upon the market situation as if funds are easily available
in the market the managers at Klarna can procure funds from market for managing their
operations.
 Bargaining powers of the Buyers: The buyers has influence on the business directly
irrespective of the nature of the business. In the banking industry the buyers faces high
switching cost. For managing the customers effectively various competitors reduces the
cost of switching so that the customers can be attracted to them. But due to the level of
trust the customers do not often changes the banks with the aim of ensuring safety and
security. Due to excessive use of internet the bargaining powers of the customers has
increased as various services are available to them at on platform. Also services through
internet platform are quite cheaper due to which the customer prefers them. For meeting
up with the impact of this force it is important for Klarna to innovate their services which
will enable them to reduce the prices of their services (Reilly and Jones III, 2017).
TASK 4
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given organisation.
Porter's generic strategies
Porter's generic strategy states numerous advantages which are received by the business
in order to get more capture over the market and competitive edge. Some factors of this strategy
are explained below with the view of Klarna:
Cost leadership: The major interest of cost leadership approach is to persuade those
customers who are price sensitive. Klarna is operating to assure their customers that payment
made online are easy going and safe to be done. So with the help of user centric website
consumer influence can be enhanced in a positive manner.
Differentiation: As according to the differentiation strategy in the business introduces
innovative products and services to their customers. This assess the management team to do

work more efficiently and in effective manner. By the help of differentiation Klarna will be able
to gain the market position in a considerable manner.
Focus: This strategy involves two assorted aspects i.e. cost and differentiation. With the
view to Klarna, the managerial staff is capable to execute tasks with the view to get maximum
output from various functional operations (Temminck, Mearns and Fruhen, 2015).
Bowman strategic clock: Bowman's model states that leading companies are required to
implement numerous strategies in order to gain the top level position in the market. Aspects
related to this framework are explained as below:
Low price and low value added: This position is the least competitive position in
respect of Klarna as because similar products and services are sold by different organisation this
diminishes the market value of a company which lead to generation of power of lesser attraction
towards company by the customer.
Low price: In the respect of Klarna the business recognise the tools and techniques
which are helpful in decreasing the processing cost. As because of huge sales the total profits of
a company in a short span span of time deemed to be increased.
Hybrid: Hybrid strategy involves those factors which are related with low cost and
differentiation in product. This strategy assist the business in order to frame those strategy which
are most effective to the business.
Differentiation: This is the strategy under which the business try to introduce some
innovative and unique technique in order to increase sale of Klarna.
Focused differentiation: Under this strategy the business are emphasised on increasing
their values by keeping high prices of their product in the market, this will help Klarna in earning
high profits. This strategy is helpful for Klarna in order to increase brand value and customer
satisfaction.
Risky high margins: This is the strategy which is adopted by the businesses in order to
sale their product in a brand new market portfolio. This strategy lead to introduction of high risk
as overall diversification is adopted by the company.
Monopoly pricing: As in the context of monopoly, it states that only an individual
organisation is there in the market to sale the product in that particular industry. so the
organisation is price maker and set the prices as according to the profit ratio kept and cost

occurred. For Klarna it is easy to perform under monopoly market also by providing best
services.
Loss of market share: This strategic market position states that to get competitive edge
in the market the business is required to perform in a better manner with fuller efficiency so it
will be easier for Klarna in order to high earn and high gain of market share (Ward, 2016).
After the examination of various strategic models associated with strategic outcome is
discussed that a business is required to accept and practice strategy of differentiation in order to
capture more customers. This resultantly provides creativity and uniqueness to the organisation
in order to get market share.
CONCLUSION
From the above report it can be deduced that by adaptation of suitable strategy a business
can flourish in long run. PESTLE, SWOT are the strategic tool which are helpful in analysing
external driving forces. With the help of Porters five forces and porters generic strategy the
business is able to choose the most suitable strategy and to get competitive edge in the market.
Further the micro and macro environment helps the company to get into the market share so that
to earn high profits and market capture in the prevailing industry so that to enhance goodwill and
market value.

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