Unit 32: Business Strategy Report for Klarna (2020)

This report provides a comprehensive analysis of Klarna's business strategy. It begins with an introduction to Klarna, a major European banking company, and outlines the report's structure. The report then delves into the macro-environment using PESTLE analysis, examining political, economic, social, technological, legal, and environmental factors impacting Klarna's operations. It also includes a stakeholder analysis. The micro-environment is assessed using value chain analysis and VRIO analysis, identifying Klarna's internal capabilities and weaknesses. Porter's Five Forces model is applied to analyze the competitive landscape. Finally, the report discusses the development of a strategic management plan based on the frameworks and analyses conducted. The report aims to provide insights into Klarna's strategic positioning and potential future directions.

Unit number and Title: UNIT 32 BUSINESS
STRATEGY
Academic Year: 2020

Table of Contents
INTRODUCTION...........................................................................................................................3
P1 Appropriate frameworks analyse influence & impact of macro environment on the
company & its strategies........................................................................................................3
TASK 2............................................................................................................................................6
P2 Analysis of internal environment and capabilities............................................................6
TASK 3............................................................................................................................................8
P3 Porter’s five forces Model.................................................................................................8
TASK 4..........................................................................................................................................10
P4 Theories and concept to develop strategic plan..............................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy involves various activities and a series of step which is followed by an
organisation in order to attain their desired goals & objectives. This plan of action assist
companies to develop effective measures and techniques so that organisation gain competitive
advantage within the market (Peng, 2017). Moreover, business strategy guides companies in
aligning activities by considering targets and thus aid in achieve higher growth and success. By
the assistance of business strategy, an organisation can develop an opportunity to increases its
market presence which in turn raise profits of company. In the present report, Klarna which is a
biggest European banking company is taken into consideration. It was established in year 2005
and at present it has more than 80 million customer in around 18 countries. Its head office is
located at Stockholm, Sweden. The bank offers online financial service to customers such as
direct payments, payment solutions, and post purchase payments etc. In order to cope up with the
market trends and technology, its senior authorities is decided to launch new mobile applications
that allows customer to easily access accounts, solve queries on time and many more. This will
help company to attain higher and development which is beneficial for Klarna in terms of profit
and market share (Linder and Williander, 2018). The present report cover framework such as
PESTLE analysis in order to know the effect of macro environmental on the strategies of
organisation. Along with this, SWOT analysis and VRIO analysis is discuss for the purpose of
micro environmental comprehensibility. Moreover, the report involves porter’s five forces
analysis that assist company to know the competition level in market. Lastly, Strategic
management plan is developed by the help of different frameworks as well as strategies.
P1 Appropriate frameworks analyse influence & impact of macro environment on the company
& its strategies
In order to smoothly function out all activities of an organisation in an effective manner, it
is required to evaluate macro environment which have a high influence on the working
conditions of a company. For this, the higher authorities of Klarna has adopted PESTLE analysis
in order to evaluate the impact of uncontrollable factors on the operations of company. This
analysis involves six factors which are as follows:
Political Factors: This factor states the level of government intervention upon the
activities of a company. It also involve factors such as tax, political stability and many more
(Bees and Williams, 2017). In relation to Klarna, it is a Swedish banking company and the

stability of European government is good that assist company to smoothly function out all the
activities. Whereas, increase in tax rate from 25% to 32% of European countries affect
negatively on the business activities of Klarna. Thus, it is important for association that they
should develop effective strategies which did not affect on their activities as well as profits if any
of the political difficulties arises.
Economical Factor: This factor involves inflation rate, exchange rate, tax rate and so on
which have a huge impact on the productivity of an organisation. It has been analysed that
European market is one of the biggest market as economic conditions of EU is strong which is an
opportunity for Klarna (Vintilă, 2017). In addition to this, raise in inflation impact negatively
on the overall value of Klarna that might affect on its stability also.
Social Factor: This factor involves beliefs, value, culture, norms, and trends of people
prevailing in market. All these factors change the purchasing behaviour of users towards goods
and service provided to them by an organisation. In relation to Klarna, it provide online solution
due to which people save time and money that affect on its reputation in a positive manner. In
addition to this, change in lifestyle of customer’s impact negatively as Klarna has no mobile
application which is now a new trend to opt banking services by customers.
Technological Factor: Nowadays, there is rapid change in technology as it becomes more
innovative and change the overall buying behaviour of people. Customers give preference to
those goods and services which is new, innovative as well as unique in market which directly
impact on overall performance & profitability of a company. With reference to Klarna, it has no
particular mobile application so that customers can easily access as it negatively on overall
performance of company. In addition to this, launching of mobile application and using
innovative technology enhance the profitability of Klarna and impact on its growth in a positive
manner. Change in technology occurs cost to company and affect negatively on oveall
profitability of Klarna.
Legal Factor: There are numerous numbers of legislations that impact on the activities as
well as operations of a company. This includes consumer rights, health and safety law and so on.
In relation to Klarna, it follows all the laws and maintain the personal data of is customers
secured that builds it positive image in market which in turn increases its profitability level.
Moreover, alteration in legislations as well as policies arises cost to company that automatically
decline profit ratio of Klarna.

Environmental Factor: This include all those factors which is associated with
environment such as targeted population, lack og raw material, change in climate and so on. An
organisation sustain for longer time frame in market, if it considered all environmental factors.
The people s become more concerned and protective towards environment and which is the main
reason of increase in usage of eco- friendly products by customer. With reference to Klarna, it
provide online solutions that automatically reduce the usage of paper which impact positively on
its efficiency and profit level. In addition to this, customer can apply online for credit cards and
solve their queries online that reduces environmental footprints and affect Klarna in a positive
manner.
Stakeholder Analysis
Stakeholders are people who take interest in overall business activities of company and
reach organisation towards growth and success (Kent and Zunker, 2017). A company can
enhance its market share as well as develop brand image, if it have loyal and trustworthy
stakeholders prevailing in the organisation. The stakeholders of a company includes employees,
customers, government, suppliers and many more. The stakeholder analysis is discuss below
with relation to Klarna:
Stakeholder Interest/ stake Effect on Klarna
Customers
The customer is interested on
the unique solution provided
by Klarna to them.
Klarna offers on time as well
as quality service to their
customers which build positive
mind set of people and
increases number of loyal
customer of company. In
addition to this, it offer
services at low prices in order
to raise their customer base
which impact positively on
their profits.
The interest rate which is
charged by companies is the
The company follow all the
laws and policies that is made

Governments stake of government. by government which help
Klarna in smoothly and
effectively perform out
business activities as well as
functions. All these strategies
impact positively on the
efficiency of Klarna.
Shareholders
The shareholders shown
interest on profits earned by
Klarna as they gain money
from it.
One of the most important
stakeholders that gives finance
to companies due to which
Klarna gain higher growth and
attain success in market.
Employees The employees perform
activities in proper manner in
order to raise efficiency of
company as increase in
performance affect positively
on their salary structure also
(Yoo, 2018).
Another important
stakeholders of Klarna which is
the main reason of its success
in market. It have highly
talented & effective manpower
that reaches company towards
growth. Lang with this, its
higher authorities fulfils all the
requirements of employees in
order to encourage them which
increases their efficiency and
productivity level.
TASK 2
P2 Analysis of internal environment and capabilities
Value chain analysis: This strategy is used by an organisation in order to develop
competitive edge & implement business activities in proper manner. With the help of this mode,

an organisation gain insight regarding how to develop value and cut down their cost. This
analysis undertake activities from starting to the ending of an activity. The higher authorities of
Klarna uses this strategy in order to minimize cost & maximise value in market (Indartono and
Wibowo, 2017). This analysis consist of two activities that is primary and support activities.
Primary activities: This activity is associated with adding as well as delivering product.
Primary activity includes inbound logistics, services, outbound logistics, marketing and sales and
many more. All these activities help an organisation to enhance productivity and efficiency level.
Support activities: By the assistance of support activities, primary functions is
implemented properly and gain competitive edge. This includes four main areas that is HRM,
technology, procurement and infrastructure as well. Performing of all the activities in effective
manner assist Klarna to gain success and attain competitive advantage at marketplace.
VRIO Analysis: It is defined as a framework which is used by an organisation in order to
identify internal capabilities and weaknesses. This analysis consist of four elements that is value,
rare, inimitable and organization. If it is talked about Klarna, its main resources are global
presence, cost strategy, differentiation strategy and Human resource as well. All the elements is
defined below:
Valuable: In every company, there is some valuable resources which helps in attaining
overall objectives and goals of an organisation (Thompson, Strickland and Gamble, 2015). In
context to Klarna, it provides its services in more than 17 countries which signifies it has high
global presence and leads to generation of higher profits (Su, 2018). Along with this, it helps
organisation to reach maximum number of customer and enhance their customer base level. The
higher authorities of Klarna follows differentiation strategy which help company to gain an
advantage of being competitive in market. Moreover, cost strategy assist in strengthen its
position in market due to which profitability and productivity of Klarna is increases.
Rarity: one of the rare concept is global presence. The company provides its service at
lower rates as compare to others in market thus it is a rare concept. Moreover, it offers smart as
well as unique solution to their customers (Johnson, 2016). In order to increase skill as well as
knowledge of employees and make employees effective to handle customer queries, Klarna
provides training sessions to its staff members which is also considered as a rare characteristic of
company.

Imitable: The Company provides online financial solutions to its customers and it is not
easy to grab this idea by other association. Global existence as well as its Human resource is one
strongest factor for company. Moreover, it is easy for offline as well as online banks to copy the
cost strategy of Klarna.
Organised: it is essential for higher authorities of Klarna to maintain and organise overall
resources of company in a proper manner which assist them to easily implement business
activities that in turn leads towards growth & development of Klarna. Along with this, company
is required to focus on differentiation strategy as it assist in gaining competitive advantage at
marketplace due to which company can generate higher profits.
Resource Valuable Rare inimitable Organized
HR Yes Yes
Global Existence Yes
Differentiation
Strategy
Yes Yes yes Yes
Cost strategy Yes Yes yes
TASK 3
P3 Porter’s five forces Model
Porter’s five forces model was developed by Michael Porter in order to identify
competitive factors that impact on the operations of an organisation. This model is used by
managers of an association in to gain knowledge about factors that impact on the strategies
and activities of company (Kharub and Sharma, 2017). Porters model consist of five forces
which facilitates an organisation to evaluate attractiveness of industries as well as its
strengths. This forces is discuss below in context to company:
Threat of new entrants( low): This threat is faced by an organisation if any of
the similar working company is enter in the market as it affect on the overall productivity
of an organisation. If it is talked about Klarna, it has a high brand image in market and in

order to maintain it, its managers is decided to introduce a mobile application which allows
easily access to customers. It is determined that it has low threat of new entrants because in
order to open a bank huge funds is required. In addition to this, nowadays people is not
easily trust on new banks and did not want to take their services because of fraud issues
and problems. Thus, this threat is low for Klarna.
Threat of Substitutes (High): It has been analysed that customer become price
sensitive if there are number of substitutes present in market is more as it impact on the overall
profitability of organisations in a negative manner. It is essential for companies to develop
effective plans as well as strategies as it assist them to retain their customers for longer time
period and loyal towards them. It is determined that customers did not prefer to change their
banks often as they take services from particular banks whom they have trust. Thus, threat of
substitutes is low for Klarna as it provide quality and on time service to its customers.
Bargaining power of Buyers(medium): It is essential for companies to develop as well
as maintain good relationship with customers as they are the key asset for an association and the
reason of success and growth of an entity. In relation to Klarna, it gives smart solutions which
attract more number of people that leads to enhancement of productivity & profitability of
company. Nowadays, customers are aware about bank services and easily compare them which
does not occur any cost to them. The bargaining power of customers in banks is moderate and
thus it is essential for Klarna to maintain good relation with its customers and to offer them
quality and on time service which help them to retain customers for longer time frame and assist
them to increase number of loyal customers of company.
Bargaining power of Suppliers(high): it is determined that reliability of customers,
brand power, number of suppliers affect on the bargaining power of suppliers, In relation to
Klarna, its major suppliers is securities, deposits of customers, loan & mortgages and so on. The
bargaining power is moderate for Klarna as it is depend on market conditions as well as
customers requirement.
Competitive Rivalry(medium): The competition is rely of various factors such as
quality of service, price competition, number of distributors, customer base level and many
more, in context to Klarna, the competition is high as most of the banks nowadays providing
online services & has their mobile applications which assist them to attract more customers and
enhance their profitability as well as market share (Xu, 2017). Thus, it is important for higher

authorities of Klarna to maintain effective relation with customers and give them quality services
so that they can remain loyal towards company.
By analysing the above factors, it is concluded that it is important for Klarna to smart and
quality solutions to their customers which help them to gain success at marketplace. In addition
to this, the company is required to maintain good relation with suppliers as well as customers as
they are the assets that help Klarna to sustain in market and attain growth effectively.
TASK 4
P4 Theories and concept to develop strategic plan
For developing an effective strategic plan, Managers of Klaran uses porter’s generic
strategies. It includes three strategies that assist companies to target right people and to
easily deal with market conditions. This strategies are as follows:
Cost Leadership: It is the first component of Porter’s generic strategy where the main
motive of an organization is to attain top position at the marketplace as well as to grab
competitive edge. In this context, main focus of the company is to produce high quality products
and services within less and affordable price. It is important for managers of business entity
focus on gaining competitive position at the marketplace by offering low or affordable price
services to their customers (Abdolshah, Moghimi and Khatibi, 2018). This assist them in
attracting new customers as well as retaining old and potential consumers for a longer duration.
Differentiation: In this strategy it is decided by the management team of an organization
to bring innovation and unique service and goods according to the market situation so they can
attract ample number of people towards their business entity. By adopting such strategy company
can easily attain growth at the market area and can beat the level of competition (Elias Mota and
et. al., 2020).
Focus: It is the last strategy where two strategies are included which are cost focus as
well as differentiation focus. By adopting this strategy, companies can gain competitive
advantages at the marketplace and can effectively beat the rivalry present at the market.
By analysing the above given strategies, it is determined that Klarna adopt cost focus
strategy as it helps them to attract more customers and increases their level of productivity &
profitability.
Strategic management plan:

It is defined as an overview of vision, mission, strategies, objectives as well as tactics of a
company (Desai, 2019). Strategic management plan helps an organisation to attain desired goals
within given time frame. The strategic management plan of Klarna is mentioned below:
Mission: “To attain leading position in industry by giving feasible & unique service to its
customers at lower rates” is the mission of Klarna.
Vision: The vision of Klarna is to improve lifestyle of people by providing high customer
experience.
Aim The main objective or motive of KLARNA is to grab opportunities and gain competitive
advantage at the market area with the aid of providing services at low cost so that needs and
requirements of customer will be satisfied in an effective manner.
SMART objectives: The objectives of Klarna is defined below:
 TO increase profit by 5% in coming 6 months by promoting its services in market.
 To raise 10% market share in coming 8 months by developing its existence in other
counties.
To attain competitive advantage at market place by offering unique and smart service to
customers.
Extensive Marketing: The marketing team of Klarna develop strategies and plans in
order to attract large number of audiences so that they can enhance level of sales as well as profit
(Echchakoui, 2018).
Market research: Market research is conducted by Klrana regarding their new mobile
application, it will assist them to analyse market situations and customer requirements.
Tactics: The Company adopts Cost strategy which help them to gain eyes of large people
and also assist them to gain competitive advantage.
CONCLUSION
From the above study, it has been concluded that development of business strategy in an
effective manner helps an organisation to achieve growth as well as success in market.
Along with this, it assist companies to achieve their desired goals within stipulated time
frame. PESTLE framework assist companies to identify affect of uncontrollable factors on
business activities and productivity of an organisation. Moreover, Ansoff Matrix is adopted
by companies to attain growth opportunities that leads to enhancement of sales as well as
profitability of an organisation.