Business Strategy Analysis of Klarna Bank: Macro and Internal Factors

This report provides a comprehensive analysis of Klarna Bank's business strategy. It begins with an introduction outlining Klarna's mission, objectives, and values. The report then delves into the macro-environmental factors impacting Klarna, including political, social, economic, technological, environmental, and legal factors, along with a stakeholder analysis. The internal environment and capabilities are examined using VRIO and McKinsey's 7S models, assessing resources, management, technology, customer loyalty, and networking. Porter's five forces are applied to evaluate the competitive landscape. Finally, the report outlines a strategic plan for Klarna, aiming to achieve its objectives. The conclusion summarizes the key findings and recommendations.

Unit 32 - Business Strategy

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1 Macro environmental analysis ..............................................................................................3
LO2..................................................................................................................................................6
P2 Internal environment and capabilities ....................................................................................6
LO3..................................................................................................................................................8
P3 Porter’s five forces analysis ...................................................................................................8
LO4..................................................................................................................................................9
P4 Strategic plan .........................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy is various steps and plans of company in order to take competitive
advantages in the market by attracting customer through bring innovation and idea in particular
industry. Therefore, it helps business in gaining competitive position and promote growth and
success of business in the market. This report analysis of Klarna bank that is one of the largest
bank offers online financial services to customers. It has more than 2500 employees located at 14
branches working for common objectives of company. Company mission is to provide better
customers experience through making their payment procedure easy and simple, safe and secure
(About Klarna, 2019). Objectives of company is to make modern purchase system smoother and
easier so that quick and fast relationship among customers can be made thus it aims to provide
payment solution to large number of people. Company has follows ethics and value in order to
build strong brand image and satisfy needs of customers in better possible manner for growth
and success of Bank (Klarna year-end report January – December, 2018). Therefore, this report
explains about macro and internal capabilities that impact on functioning of company by
providing opportunities to grow and expand business. It also evaluates competition level within
industry and plan for strategies in order to achieve objectives of company.
LO1
P1 Macro environmental analysis
Macro-environmental factors refers to various components which exit in particular
economic and that adversely impact on functioning of company such as economic condition,
political system and situation, changes in technology and customers trend and new legislation.
Such factors are out of control of company but directly and indirectly impact on operation,
performance and growth of firm (Joslin, 2018). Various factors that impact on performance and
function of Klarna bank are as follows:
Political Factors: It refers to policies of government that impact on functioning of banks and
other financial institution that operates its business in UK. Due to Brexit functioning of Klarna
bank has adversely affected as there is economic upheaval and non body is aware of effect of
such events on functioning of firms. Investment in the economic has reduced and high debt
among government and customers so increase in demand of more credit. Thus, many people are
even not able to pay their debt thus it impacts on company profit and performance. It can be

stated that political factors possess threat in growth and success of firm but company is able to
cope with situation because of strong brand image in the market.
Social Factors: It consists of various factors such as demographic structure, lifestyles and
various changes in environment that may provide opportunities to firm to grow and expand its
business across nation. Demographic structure of UK has influenced functioning of Klarna as
there are large number of ageing people so people try to use their saving money (Moyer, DeVries
and Spink, 2017). Thus, Bank has to make effort in order to meet needs of customers and reduces
its investment but there are some people that need credit so it helps in enchaining sales of
company.
Economic Factors: Uncertainty and various risk included in economy has influenced
performance and functioning of Klarna. Due to agreement between Britain to leave European
Union has reduces value of pound and other currencies such as Euro that impact on Klarna
adversely. Therefore, it has negatively impacted on functioning and operation of Klarna bank as
it impact on its clients, customers and employees of firm (Bauer and Rudebusch, 2016.). Another
factors less disposable income of customers has reduces saving of people in the bank so it has
impacted positively and negatively to firm.
Technological Factors: It is another factors that included technological development in the
country that helps in reducing price and performing various function within limited time.
Digitalisation helps in growth of banks as it can easily transfer payment of clients from one place
to another thus helps in providing quick and effectively services to large number of customers.
Therefore, Klarna is able to become one of leading bank in UK by continuous innovation in
technology and various ideas and helps in global transaction and promote development of
economic.
Environmental Factors: It included various steps that are taken by government in order to
ensure health and safety of employees and people working within organization. As resources in
the environment are limited so company is planning to make effort that ensure protection of
environment while firm is operating various function. Klarna has reduced carbon foot print and
also perform various activities related to CSR for welfare for employees and clients. Therefore,
able to gain competition position and expand its market share by meeting needs and demand of
customers (Mikucka, Sarracino and Dubrow, 2017). It also uses sustainable development

funding and update technology in order to provide better satisfaction to customers by making
their payment easier and quicker.
Legal Factors: All legal laws made by government has to be incorporated by firm for smooth
operation of business in the industry. Bank has to follow rules and regulation of each country in
order to promote smooth financial services through online store-fronts and post purchase
payment. Therefore, Klarna Bank by considering legal laws while operating various function
within firm is able to gain competitive positioning in the industry and meet customers
satisfaction.
Stakeholder analysis
Stakeholder analysis is a process that evaluates and analysis stakeholder interest, level of
participation and influenced in the functioning of company (Hancock and et.al., 2018).
Therefore, this models helps in identifying stakeholder that company needs to consider on prior
basis while operating various function within firm. Therefore, stakeholder analysis of bank can
be explained through following matrix:
Stakeholder Analysis of Klarna Bank:
Keep satisfied: Stakeholder such as investors, directors and owner of the banks are needs to be
satisfied for smooth operation of business. Bank closely monitor and supervise various activities
of firm that helps in meeting and satisfying needs of directors and investor that have main power
within firm.
Illustration 1: Stakeholder Matrix
Source: Stakeholder analysis, 2019.

Top priority: Customers and government highly influence company operation but they have
limited or now stake in the shareholders so there needs and preferences are to be satisfied by firm
(Lee and Malerba, 2017.). Karna ensures that it follows all rules and regulation of government
while operating function in order to meet demands of customers.
Low priority: Consultant, auditors of bank have low share in stake and influenced less in the
operation of business so Bank give less priority to satisfy and meet needs of its employees.
Keep informed: Charity foundation have high share in stakeholder of company but their
influence in decision-making of bank is low so firm keep informed about various changes and
steps that company is taking to meet customers demands.
LO2
P2 Internal environment and capabilities
Internal environment and capabilities of firms helps in facing various threats and taking
advantages of different opportunities available in the market. It includes potential employees,
organisational culture and behaviour of individual within firm that helps in gaining competitive
advantages by effectively meeting needs and preference of customers. Internal capabilities and
environment can analysed and evaluated through two frameworks such as VRIO and Mckinsey's
7s Model.
VRIO frameworks: It is strategic tool that helps company in identifying various things that
helps it in gaining competitive position such as its employees, resources and culture (Mahamid,
2016). Klarna by utilising VRIO frameworks is able to effectively identify thing that are rare,
imitable and organised within firm that help in optimum utilisation of resource.
Basis Valued Rare Imitable Organised
Employees Yes No Yes Yes
Management Yes Yes Yes Yes
Technology Yes Yes No Yes
Customer loyalty Yes Yes No Yes
Networking Yes Yes Yes Yes

From the above table it can be illustrated that Klarna is able to gain competitive
advantages because of it internal strength and capabilities. Such as employees of company are
valuable but are not rare as other competitors also have highly skilled and knowledgable people
working together for common objectives. Management of company is highly organised so that
each individual can perform its function and activities effectively without any delay and
confusion. Technology used by bank is patent and copywriting so that nobody else can use same
type of technology to meet needs and demand of customers (Ndirangu, 2017). Banks has loyal
customers as it has strong brand image in the industry to provide better services to customers so
thus helps company in increasing its market share and profitability. Networking of company is
highly valued and rare that also provide opportunities to Klarna bank grow and expands its
business across nation providing qualitative and standard services.
McKinsey’s 7 s Model
This models helps in evaluating and analysing company organisational structure and
design by considering various elements such as structure, system, shared value, style, staff and
skills and strategy of firm that promote growth and success of enterprise in the industry. Klarna
is a large organization with number of employees working in different branches so it has aligned
all such things in an effective manner to achieve objectives of company.
Strategy: Klarne is one of the leading global payment providers that provide better and
qualitative services to customers so that they can easily and quickly make their payments. Its
strategy is to continuous innovate technologies and bring new ideas so that it can deliver quick
and effective services to large number of customers within less time and cost (Breault and et.al.,
2019). Company strategies is to continuous make investment to strength its capabilities thus
make optimum utilization of people fund. Therefore, it helps company in gaining competitive
advantages and achievement of organisational goals.
Shared value: Klarne has high brand image and its services are high valued by large number of
customers as its helps in quick exchange and effectively utilization of funds of people. Company
has follows ethics and various rules while operating numerous function within organisation in
order to motivate and influenced employees to work effectively for growth and success of
institution.
Structure: Definite structure of Klarne helps in effectively coordination among various
department and cooperation among employees to work together for achievement of company

objectives and mission (Wulandari and Kusairi, 2017). Klarne has follows division
organisational structure as it operates in different nation so it has classified on basis of
geographical location of office. Thus, it helps company in effectively coordination and
cooperation and gaining competitive positioning in the industry.
System: Effectively arrange and predetermined role and responsibilities of each employee within
bank is able to meet demands of customers quickly. It has use appropriate system in order to
communicate with each other and clients so that Klarna can enhance its sales and profit margin.
Skill: Employees of bank are highly skilled and qualified and have many years of experienced
related to particular job thus it leads to specialization and standardization of products and
services render to customers (Kehoe and Mélanie, 2019). Therefore, it helps bank in building and
maintaining strong brand image of company in the market.
Staff: Klarna has highly motivated and knowledgable employees as they are happy and satisfied
to work with such an company that have one of the leading position in global market. Thus,
highly motivate employees put there extra effort in order to meet changing customers trends and
requirements.
Style: Firm has provided opportunities to employees to easily and openly communicate with
manager of department so that they can share their ideas, view and opinion to manager that helps
company to grow and expand its business. But all crucial decision of Klarna are taken by top
management of company so that appropriate decision can be made that promote growth and
success of enterprise across various nation. Thus, strategies are formed by considering view,
opinion of employees.
LO3
P3 Porter’s five forces analysis
It is tool that is used to identify level of competition in the industry by enumerating
various factors such as competition level in the industry, power of consumers and suppliers and
threats of new entrance (Porter and et.al., 2019). Therefore, it can be stated that growth and
success of Klarna in global environment is because of such factors have provided opportunities
to company. It can illustrated through porter five force model such as:
Threat of new entrance: New firms cannot easily enter into such industry as it requires large
amount of capital, investment and brand image in order to gain customers trust. As customers are
mostly willing to invest their saving in such bank that are high reputable and have strong brand

image in the market. Therefore, Klarne enjoy competitive positioning due to strong brand image
and its global presence across various nation. It can be concluded that threats of new entrance is
low in banking industry that provide opportunities to Klarne grow and expand its business.
Competition in the market: Banking sectors is highly competitive as they are large number of
bank providing finance services to customers in order to optimum utilise their saving by
investing in various sources (Porter and Kramer, 2019). Therefore, competition rivalry is high
in case of banking industry but Klarna by providing effective and standard services to customers
is able to gain customers satisfaction and loyalty.
Power of suppliers: Financial institute get funds from its customers, mortgages and loans and
bank securities to operates various function within industry. Klarna has wide varieties of
customers that invest large amount of saving in bank in order to get better return of their money.
Many business man use bank services for making various personal payment to other people thus
it can be stated that power of supplier is low as company has high brand image. It can easily get
fund from various sources and effective operates its function in UK and across nation.
Power of consumers: Power of consumer is high as they can easily switch to other bank that
provide various banking facilities such as mortgage, saving, checking etc. Due to digitalisation
and increases use of social media customers can easily compare interest rate and various services
provided by other financial institution. Thus, Klarna by providing large varieties of services is
able to meet needs and requirement of each individual within firm and able to achieve its
objectives.
Availability of substitute products: Non- banking companies provide services such as mutual
funds, insurance can possess threats to financial institute and banks. Various services offered by
substitute are limited so not able to meets needs and requirement of each individual living in
society (Pargaonkar, 2016). Therefore, it can be explained that availability of substitute product
is low so company can easily expand and grow its business across worldwide provide better
customer experience.
LO4
P4 Strategic plan
Management of Klarna frame strategies with the support of following models.
Ansoff's Matrix

Ansoff Matrix is considered as product and market expansion model which guides
corporate organisations to take competitive advantages in the target market (Agbola and Otchere-
Ankrah, 2018). This model is well dynamic in nature as the model covers all the aspects and
factors that support corporate organisations to take competitive advantages in the target market.
Strategies covered under this model can be specified in the following manner.
Market Penetration: Market penetration involves in Ansoff Matrix focuses over taking
competitive advantages in the existing dealing market by making suitable strategies. This
emphasis over improving the sales of all the existing products of company. Strategies can be
utilised like reducing selling prices of existing products, giving discounts and other suitable
marketing strategies that can improve the sales.
Product development: Product development is also a crucial strategical tool corporate
organisation use under Ansoff Matrix Model. Product development involve launching new
product in the existing dealing market (Oliveira and Kayo, 2019). It also involves research and
development and other strategical partnerships that can enables company management to
implement the strategy.
Market Development: Market development is also a crucial strategical tool use under the
Ansoff Matrix Model. Under this strategical tool company management can make suitable
strategies to launch the existing products of company in the new market. Company management
can frame strategies like entering into a new domestic market or entering into international
market.
Diversification: Diversification is also a crucial aspect involve in Ansoff Matrix Model. This
strategical tool focuses on entering into a new market with the launch of new products in the new
market.
Company management can utilise the strategies like market penetration and product
development in order to take competitive advantages in the market.
Porter Generic Strategies
Porter generic strategies is also an effective strategical tool enables corporate
organisations to take competitive advantages in the target market. This model focuses over
taking competitive advantages with the support of strategies like cost leadership strategy and
differentiation strategy.

Cost leadership strategy: Cost leadership strategy is an effective strategical tool used in the
market in order to take competitive advantages in the target market. As per this strategical tool
company management can sale its products either at lower than the average industry price or at
the average industry prices related to company's products. Management of Klarna can reduce its
selling price in order to increase the sales turnover of company (Shen and Li, 2017). Low cost
strategy will enable company management to sustain existing customer base and also to attract
new potential customers.
Differentiation strategy: Differentiation strategy is also an effective strategical tool use by
company. Company can focus over creating a unique identity in the target market. Company can
also launch a new product that can consist a different image in target market. IN order to
implement the strategy company management can focus over launching new service or products
that are unique in nature or launching a campaign that can make a unique identity of company in
target market.
Management of Klarna can focus over cost leadership strategical tool in order to gain
competitive advantages in the target market.
CONCLUSION
From the above analysis it can be concluded that various factors of environment that
influence on functioning of Klarna banks. Company by considering such factors is able to gain
competitive advantages and expand its business across nation and worldwide. It can also be
explained from above report that internal environment and capabilities helps bank in
differentiating itself from other competitors in the industry. Last it can be explained that
strategies helps company in protecting itself from various threats and optimum utilisation of
various opportunities.

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Online
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2018/>.
Business Strategy. 2020., [Online]. Available through: <https://businessjargons.com/business-
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