Klarna: Business Strategy and Macro-Environmental Analysis Report

This report provides a comprehensive analysis of Klarna's business strategy, examining its macro-environment through PESTLE analysis, and assessing its internal environment and capabilities using the McKinsey 7S model and VRIO framework. The report investigates the impact of political, economic, social, technological, legal, and environmental factors on Klarna's operations. Furthermore, it applies Porter's Five Forces model to evaluate the competitive landscape and strategic positioning of Klarna within the market. The analysis includes an interpretation of data and information to determine Klarna's strategic decisions and competitive advantages. The study concludes with recommendations for improving Klarna's market position and achieving its organizational objectives.

Business Strategy

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Application of appropriate frameworks analysing the impact and influence of macro
environment on an enterprise.......................................................................................................1
M1: Critical analysis of macro environment to determine strategic decisions of management. .4
D1: Interpretation of information and data applying environmental and competitive analysis. .4
TASK 2............................................................................................................................................4
P2: Analysis of internal environment and capabilities of a company.........................................4
TASK 3............................................................................................................................................6
P3. Applying Porter's Five Forces Model to align organisation vision and strategy in
competitive market......................................................................................................................6
M3. Appropriate strategies which improve competition and market position related to
outcomes......................................................................................................................................9
TASK 4............................................................................................................................................9
P4 and M4 Application of models, theories, concepts and models interpreting strategic
management planing for achievement of organisational objectives:-.........................................9
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
A business strategy can be referred as a combination of decisions and actions taken for
the achievement of objectives of a business (Bishev and Boskov, 2016). It is necessary for a firm
if it has to achieve a competitive position in the market . It acts like a roadmap leading to goals
of business. For this project, Klarna has been selected which is a Swedish bank providing online
financial services. It was founded in the year 2005 in Sweden. In this assignment, a detailed
explanation will be made on analysis of impact and influence macro environment has on an
organisation, assessment of an organisation's internal environment and capabilities. Also,
evaluation of outcomes of analysis using porter's five forces model has been analysed.
Additionally, application of models, theories and concepts to assist with the understanding and
interpretation of strategic directions available to an enterprise have been covered in this report.
TASK 1
P1: Application of appropriate frameworks analysing the impact and influence of macro
environment on an enterprise
The direction and scope a business has over the long-term is known as strategy. It plays
an important role in achievement of goals and objectives of the organisation. It helps in
developing a framework for operational planning, clarity in direction of activities, increase in
effectiveness of organisation (Brenes and et.al., 2016). Also, it is needed for personnel
satisfaction. Klarna has to make strategy for its long-term business planning and acquiring a
distinct edge over its competitors.
Vision- Klarna's vision is to be “one stop shop” which can help merchants with their
different needs related to customer's checkout experience .
Mission- Klarna' mission is to make online shopping easier for its customers and making
online payments a easy, safe and smooth process.
Objectives- Klarna's objective is to make modern purchase experience smoother by
facilitating relationship between customers and merchants. Also, it aims to make buying
experience better for customers and the selling experience simpler for merchants.
PESTLE analysis- It is a tool which is used by the managers of an organisation to
analyse the impact of macro-environmental factors on the functioning of the enterprise. The
PESTLE analysis in the context of Klarna is as follows-
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Political factors- It is related to all the interference government can have in the business
of company and the overall political situation in the country (Cao and et.al., 2019). These factors
are government policy, tax policy etc. For, Klarna it is necessary to take these factors into
account while framing its strategy.
 Opportunity- If there is political stability in the country and also the tax structure is
made more lenient for companies then it offers Klarna an opportunity to grow itself over
the years . This will allow Klarna to grow in its role and will lead to maximization of its
profits.
 Threat- If the government imposes restrictions on trade in the country then it will
seriously impact the overall business of Klarna. This is so because business laws in the
nation will become more tougher which will affect the operations of company. This can
decrease the level of profits of the company.
Economic factors- These are growth rate, disposable income of consumers impacts the
strategic planning of a business enterprise. In the context of Klarna, micro and macro economic
factors have an impact on its long-term planning.
 Opportunity- If the country is witnessing an economic boom and the disposable income
of people is rising steadily then it offers an opportunity for Klarna. This is so because
more people will prefer to keep their savings in bank. This can lead towards more
revenues as this opportunity can be maximized by the company.
 Threat- If the disposable income of customers is decreasing then it acts as threat for
Klarna. This will affect its business model as the customers will prefer making less
expenditure on online purchases. This will affect the overall business of Klarna.
Social factors- They are population growth, age distribution, health consciousness etc.
Klarna' strategic planning is affected by the influence of these factors.
 Opportunity- Rise in youth population is an opportunity for Klarna as the young people
are moving towards cashless purchases and payments . This gives Klarna an opportunity
to prioritize digital payments and this can increase its overall business.
 Threat- The rigid attitude of some people in society towards adopting online payments
acts as a threat for Klarna. It is so because many people in society still prefer to make
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payments through cash. This can affect the company as it will lead to a decrease in its
overall business.
Technological factors- These are new innovations, new technology, development of new
methods etc. Klarna is affected by these factors as its business is dependent on them (Cascio and
Boudreau, 2016).
 Opportunity- New innovations in online payments and introduction of new technology
offer Klarna an opportunity to significantly boost its profits. This gives Klarna an
opportunity to innovate and boost up its profits.
 Threat- If the new innovation brought is not successful in the market then it will directly
impact the business operations of Klarna as it can lose its customers. This can lead
towards losses for the company.
Legal factors- They include health and safety, equal opportunities, consumer rights and laws etc.
In the context of Klarna, these factors are very important as they can impact it trades in different
countries and each of them has its own rules and regulations (Faziljanovna and Yongqian, 2016)
.
 Opportunity- If there are equal opportunities offered to people of different segments
then it acts as an opportunity for Klarna. It is so because it offers business opportunities
for it. The company can earn more profits due to equal opportunities offered.
 Threat- Tougher laws for trade framed by government can threaten to impact the
business model of Klarna as it can reduce its profits. This can impact the profits of
Klarna.
Environmental factors- These are scarcity of raw materials, issues concerning the environment
etc. For Klarna, they are important as it needs to ensure that all its business activities are within
the environmental rules (Garud, Gehman and Tharchen, 2018).
 Opportunity- Go Green Initiative of the government offers Klarna an opportunity as
more people will shift towards digital mode of making payments. This gives the company
an opportunity to bring such products which are eco-friendly as well as can earn more
profits for the company.
 Threat- If the environmental laws are made tougher and Klarna is not able to follow it
then the government can also impose penalties on it . This can significantly impact the
business of the company.
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M1: Critical analysis of macro environment to determine strategic decisions of management
It is important for Klarna that it analyses all the factors considered in PESTLE analysis
carefully. This is necessary to frame strategy for decision-making by the management. The effect
every factor can create on a micro and macro level for the company has to be considered.
Political, economical, social, technological, legal and environmental factors offer different
opportunities and threats for Klarna. It is important for the organisation to capture these
opportunities and evade threats.
D1: Interpretation of information and data applying environmental and competitive analysis
From the interpretation and information of data, it can be concluded that a distinct
competitive advantage stands with Klarna after considering the effect of factors. Also, micro and
macro environmental factors are working in its favour. This allows it to have a distinct advantage
over its other rivals in the market.
TASK 2
P2: Analysis of internal environment and capabilities of a company
Internal environment- Internal environment of an enterprise refers to intrinsic factors
which affect its operations in business (Glass, Cook and Ingersoll, 2016). These factors are work
culture of organisation, attitude of its members etc. Klarna is affected by these factors as they
have an impact on its functioning.
Strategic capabilities refers to a business' ability to use its resources, capabilities in order
to gain a competitive advantage. Its components are ability to compete, thriving in the free
market, identifying critical competencies and strategic value analysis. It is necessary for Klarna
to have these capabilities as it needs to have as strong presence in the market .
Mckinsey's 7S Model is a tool which is used for strategic planning in management. It is
used by managers of Klarna to make and implement their strategy effectively and efficiently
(Heileman and Pett, 2018). The use of model in context of Klarna is as follows-
Strategy- It refers to a plan developed by a firm to gain competitive advantage and
compete successfully in the market. Klarna has to identify its competitors and develop strategies
to counter them.
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Structure- It is the way business units are organized and is important for a firm's success
in the market. Klarna has to organise its structure in an efficient manner so that proper
accountability can be created.
Skills- It includes abilities and competence of a company's employees. During
implementation of dynamic changes, Klarna has to depend upon skills and abilities of employees
.
Staff- It is the number of employees in an organisation the way they are recruited,
selected and trained. Klarna has to provide proper training to its staff so that they are productive.
Style- It is the way of management used by a company's managers. It is needed to ensure
that a firm reaches at the top of success and gets ahead of its competitors in the market. Klarna's
management needs to implement proper strategies so that efficiency in its operations is ensured.
Shared values- These are norms and standards set by an organisation which guide an
employee's behaviour. Klarna also has these standards set up for its workers which ensures that
they properly follow the system.
VRIO model- It is a tool for analysis which is designed for the enterprises to help them
find out the capabilities of their various resources (Hsieh, Ma and Novoselov, 2019). This is
used so that companies can get advantage over their competitors . Klarna can use it to find out
which of its resources are valuable, rare, inimitable and organised.
Capabilities Valuable Rare Inimitable Organised
Skilled
workforce
✔ ✗ ✗ ✗
Security ✔ ✔ ✗ ✗
Customer care ✔ ✔ ✔ ✗
Brand image ✔ ✔ ✔ ✔
Valuable- Skilled workforce, security, customer care and brand image are valuable
aspects for Klarna. It is so because they enhance its overall reputation and goodwill in the
market. These factors can lead towards achievement of efficiency and effectiveness in the
operations of the company.
Rare- Skilled workforce is not rare for Klarna because other banks also have a talented
workforce. Security is rare because other banks are not able to secure the transactions of
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customers. Customer care is rare as other banks don't pay much heed to listen to grievances of
their customers. Brand image is rare as it takes time to build trust for a brand among the
customers. The factors which are rare allow the company to raise its efficiency as compared to
competitors.
Inimitable- Skilled workforce is not inimitable as competitors are also having skilled
employees. Security is not inimitable as with the help of emerging technologies fraud
transactions can be controlled by other banks. Customer care is inimitable as customer care
operations of competitors are not helpful for customers. Brand image is inimitable as it takes a
long time to build it and it is not easy to copy it . The inimitable factors allow the company to get
a strategic edge over its competitors.
Organised- Skilled workforce is not organised as there are certain problems occurring in
manpower management of the company (Jia, Kenney and Seppälä, 2017). Security is not
organised as there are chances of lapses occurring in it. Customer care is sometimes unable to
provide a solution to the problems of customers and therefore cannot be classified as organised.
Brand image of the company is organised as it is the value which it has created among its
customers over the years. Organized factors allow the firm to raise its overall level of efficiency
and effectiveness.
TASK 3
P3. Applying Porter's Five Forces Model to align organisation vision and strategy in competitive
market
Organisation has competitive advantage to compete with their rivals. It is the specified
ability and capability of business to utilise its scarce resources in the best way to achieve
maximisation of profits (Lane and Maxfield, 2018). It leads to increase effectiveness and
efficiency by consumer satisfaction.
Porter's Five Forces Model:- This model was introduced by Michael E. Porter in 1979.
It determines the competitive advantage of an organisation which identifies the weakness over
strength. This model includes five competing forces which aims to build strength for its business
position to sustain in future . Managers of Klarna organisation implement Porter's five forces
model to improve their competitive advantage for utilising scarce resources effectively to
achieve success.
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Competitive rivalry:- This force is referred as the large number of competitors in market
competing for their sustainability. In this organisation are aware about the competing strategies
imposed by their rivals to achieve success. Managers of Klarna are using this force to compete
with their competitors through their marketing strategy of cost-effectiveness and differentiation
focus. The managers of Klama are beneficial with this strategy as they are able to develop their
competitive strategies in comparison with rivalries through internal strength to control weakness
and external opportunities to overcome threats.
Power of suppliers:- It is the force which is explained as the bargaining power of
suppliers. It usually maintains strong relation with suppliers to deal with them for their raw
materials in least cost. Managers of Klarna use this force to increase brand reputation, improving
product quality, maintaining relationships with consumers to identify their needs and desire for
maximisation of profits. The managers of Klama are advantageous as they supply their products
with least-cost effectiveness which enlarges customers to purchase more of their products.
Power of buyers:- Buyers are the king for an organisation as they are the main reason for
their achievement of success (McIntyre and Srinivasan, 2017). The buyers have the power to
low price of commodity by bargaining. Managers of Klarna use this force to identify the needs
and desire of consumers and producing that similar product for their target market with increase
in price. It creates the possibility of high sales volume with profitability. The managers of Klama
are helpful as they focus on their target market through promoting and positioning their product
with specialised qualities that result in maximisation of revenue and profits with customer
loyalty and support.
Threat of substitutes:- This force is explained as the increase in substitutes of similar
product which creates high competition. As the same product with difference in quality, price
and brand attracts customer to have choice for their products. Managers of Klarna use this force
to identify the rivalry strategy to compete and to produce more of qualitative product at cheap
rate. The managers of Klama are profitable as they develop superior finished goods and services
which enlarge customers and they purchase their company products as compared to substitutes
which result in increasing competitive strategies.
Threat of new entrants:- It is the force which identifies the threat of new entering firms
with different strategic planning. Mangers of Klarna use this to determine their strategies to
compete in market and to implement new innovative idea with specialised product. The
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managers of Klama are beneficial as they are able to easily analyse the marketing strategies of
their competitors and to reduce their possibility of threats by being aware of it and taking
precautionary steps.
Balance Scorecard:- This is referred as the business performance management tool. It is
a framework to implement and manage strategic decisions, measure target achievement, etc.
Managers of Klarna use this to evaluate the effectiveness of performance on activity as compared
to strategic decisions of company (Micheli and Mura, 2017). Managers of Klarna are benefited
with the competitive advantage of better strategic planning, improve execution, better alignment
of projects, improve performance reporting, etc.
Ansoff matrix- It is a model which is essential for strategic marketing planning of a
company (Mytty, Pedak and Sun, 2016). It is so because it can look for new opportunities to
diversify itself and grow. Klarna can use this model for looking up to new markets where it can
diversify its operations for revenue growth.
The components of this matrix in the context of Klarna include-
 Market Penetration:- It is described as to increase sale for existing product in existing
market. Managers of Klarna can use this for improving quality of product for
maximisation of profitability.
 Product development:- It focus on introducing new products in existing market.
Managers of Klarna can use this to diversify their products for achievement of success.
 Market Development:- This strategy concentrates on entering new market with existing
product. Managers of Klarna can use it to expand their business in different market for
increase in sale.
 Diversification:- It is explained as entering with new product in new market. Managers
of Klarna can use this for diversification of products with different specialisation in new
market. It attracts large number of customers for their satisfaction.
From all the above described components of Ansoff matrix, Market development should
be selected by Klarna. This is essential for organisation to develop new customers by entering
new market with existing product. It helps to attracts more of customers for increase in sale and
maximisation of profits for its stability.
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M3. Appropriate strategies which improve competition and market position related to outcomes
The managers of Klarna implement Porters five force model for the competitive
advantage through determining the strategic planing and decision adopted by their rivals to
sustain. This is very essential for managers to influence innovative business strategy with
specialised product for long-term profitability to remain stable in competitive market. It leads to
achieve consumer satisfaction for success. This model focus on effective utilisation of scarce
resources to achieve its organisational objectives.
TASK 4
P4 and M4 Application of models, theories, concepts and models interpreting strategic
management planing for achievement of organisational objectives:-
The Porter generic strategies and Bowman strategy clock models are implemented by
managers for interpreting strategic planning in the achievement of organisational objectives
(Rialp-Criado and Komochkova, 2017).
Porter's generic strategies:- This theory was introduced by Michael Porter in 1985. It is
referred as the generic strategy applied on product and services of an organisation to achieve
success. This strategy determines the industry profits are high or low from its average. Managers
of Klarna implement it for low cost production and to focus differentiation.
 Cost leadership:- It is the strategy which focus on least cost and best quality products.
Managers of Klarna can use it to increase its sale with consumer satisfaction through
least-cost effectiveness and good quality products for maximisation of profits.
 Differentiation:- It focus to differentiation of products through specialised products with
varied nature. Managers of Klarna can use it to for producing products with new
innovative ideas to meet the consumer needs.
 Cost Focus:- It is the cost of an organisation which aims to lower-cost production for
small target market by taking care the need and desire of customers. Managers of Klarna
can use cost focus to satisfy their target market in order to make profit on sale.
 Differentiation Focus:- This strategy consists of an organisation to develop
differentiated and specialised product for small target market. Managers of Klarna can
use this to satisfy need and want of particular group with its differentiation to compete
from its rivals in achievement of success.
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