Business Strategy Report: Klarna's Macro-Environment Analysis

This report provides a comprehensive analysis of Klarna's business strategy, examining the impact of macro-environmental factors using PESTLE analysis, and assessing its internal capabilities through the VRIO model and McKinsey's 7S model. The report delves into Klarna's mission, vision, and objectives, highlighting its stakeholder analysis and strategic planning. It applies Porter's five forces to evaluate competitive forces within the financial sector, specifically addressing aspects like bargaining power of suppliers and buyers. The report also explores strategic capabilities and various models to interpret and devise strategic planning, offering insights into how Klarna navigates the complexities of the online payment industry and maintains its competitive advantage. Furthermore, the report provides a detailed overview of Klarna's operations and its approach to overcome challenges and gain competitive advantage. The report also highlights the importance of understanding the macro-environment to make informed decisions.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Impact and influence of macro-environmental factor on organisational strategy.................1
TASK 2............................................................................................................................................5
P2 Assess about internal environment and capabilities of organisation.....................................5
TASK 3............................................................................................................................................7
P3 Implement of Porters-five-forces model to evaluate competitive forces of a given sector...7
TASK 4............................................................................................................................................8
P4 Implement of various theories, models and concept that interpret and devise strategic
planning.......................................................................................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy can be defined as a long term plan that defines vision, mission and
direction to a particular business. The main concern to formulate business strategy is to develop
an effective plan, policy and strategy which leads management to accomplish organisational
goals and objectives within minimum time period. Along with this business strategy provides
visions to all departments and workforce of organisation. This report is written from perspective
of Klarna which is operating their business in financial industry by performing their in bank
sector. It was established in the year 2005 in Stockholm (Amran and et. al., 2016). Moreover,
this report highlights on macro-environmental aspects which impact on business strategy of
organisation. Along with internal capabilities will be included by implementing right models. In
the last, Porters-five-forces-analysis and Bowman's strategy is also included in the forthcoming
report.
TASK 1
P1 Impact and influence of macro-environmental factor on organisational strategy
Strategy provides essential norms that leads organisation to design and develop an
effective strategy for accomplishing company goals and objectives by monitoring and
understanding all essential aspects. This norms also helps company to measure or evaluate
success of company. In context of Klarna strategy leads company and its management for
performing all work as a continuous improvement plan.
Mission- The main mission of Klarna is to offer and provide fast and safe method to pay
bills or invoices.
Vision- Vision of Klarna is to enhance their market size at global level by providing best
and secured online payment services for providing easy payment methods to consumers.
Objectives- The first objective of Klarna is to enter into new market within a period of 3
months to increase their customer base.
Suitability is one of the most important aspect for organisation which leads management
to retain in market for longer period.
With acceptability objective it is easy for organisation to gain top position in market by
formulating products as per customer needs.
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Feasibility is one of the most important by which Klarna management develop those
plans which are practical, feasible and flexible.
Another objective of company is to gain top position in online payment industry by
ensure and formulate safe payments application and website.
This is essential for all organisation specifically those business which are expanding there
business at global level. From the perspective of Klarna all task managed by company ensure
that they are not impacted due to macro-environment. This results it is easy for management to
perform all task within appropriate manner. So it is important for company to better results such
as sustainability in market. Strategy is one of the most effective plan which is implemented by
organisation for accomplishing company targets (Chiang, Chen and Ho, 2016). The main motive
to develop business strategy is to provide right direction to companies by leading management to
overcome form uncertainties in market. Example- to manage task and operations of organisation
in a organised and sequential manner in order to gain competitive advantage from rival
companies.
Stakeholder analysis- The stakeholder analysis work as a process which is followed by
organisation for identifying business each and every individual activity that relates with business
project (Ekuase-Anwansedo, Craig and Noguera, 2018). So by understanding stakeholder aspects
it is easy to formulate effective strategy for accomplishing Klarna goals and objectives.
Moreover, steps of stakeholder analysis are as follow:
STEP 1- It is one of the essential step that specify stakeholder which are customers,
government and suppliers. This directly influence on projects and their participation.
STEP 2- According to this step Klarna specify all stakeholder in order to engage them in
company functions and operations. Further, it is delegated as per power and interest which is
mention as follow:
High power, high interest- This is the phase under which Klarna demonstrate priority to
stakeholders because they are more interested in project and also hold more power to
complete work (McDonald, 2016).
Low power, high interest- According to this aspect stakeholders are more interest in projects
but they are not in power to involve in decision-making. Example- employees who
perform work at low level.
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High power, low interest- According to this grid Klarna focuses on all stakeholders for
ensuring that project satisfies stakeholder needs and they are low interested towards
projects.
Low power, low interest- Under this grid company inform all individuals about project
because stakeholder are interested in projects.
STEP 3- This is last stage under which Klarna formulate right communication channel to
maintain transparent communication way with stakeholders. It results this is easy for
company to complete their project (Guillén and Capron, 2016).
PESTLE Analysis- With implement of PESTLE analysis it is for Klarna to understand
macro-environmental aspects of the organisation. So all aspects of PESTLE are mention
as below:
Political- Political aspects of the organisation defines rules, regulations of a country which is
developed by ruling government of a country. In the context of UK it is one of the
country which provides flexible as well as balanced conditions to provide better
opportunities for performing better work in Klarna for measuring growth of company.
But to changes in Brexit some challenges are faced by organisation to complete their
work (Gurcaylilar-Yenidogan and Aksoy, 2018).
Economic- This states various aspects to complete work which includes GDP, inflation,
monetary aspects etc. to complete work with in proper manner as it leads to manage all
projects within strategies. This results it is for organisation to complete all work that
ensures monetary aspects of company such as to reduce cost of company projects. This
also refers company adopt policies which enhances overall profits for firm.
Social- The social aspect include to understand all aspects of society through monitoring
belief, value, culture, lifestyle, trend etc. which are followed by society. In context of
Klarna it work as a positive aspects that directly increases productivity of organisation.
Moreover, by understanding strategies as per society it is easy for company to work as
per flexible policies that enhances market size of company.
Technological- Technological aspects impacts on all operations of company as Klarna is
performing their business at international level in online payment sector. So it is
essential for organisation to implement technological aspects in all projects due to which
its task are completed within proper manner. Along with this technological factor also
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leads management to influence company operations by providing training to workforce
of company.
Legal- All acts, policies, rules and regulations work with motive of performing all task that
increases profits and development of country. After Brexit, UK governance formulates
new laws due to which business or industries are directly impacted. Therefore, with
Financial conduct authority it is easy for management to perform decisions in effective
manner.
Environmental- This includes all factors which are related with development as well as
procurement of environment. UK develops all functions to perform work as per carbon
footprints that leads company to complete all task with proper technological to reduce
waste through performing operations on digital methods.
TASK 2
P2 Assess about internal environment and capabilities of organisation
Strategic capabilities refers to those methods and techniques of business which is used to
measure long term success of organisation by formulating essential strategies for all specific and
similar operations. Further, it is consist of six major components that includes goals, strategies,
vision, tool for analysis, action planning and value. This help company to perform work by
implementing right strategy effectively (Jaber and et. al., 2015).
Strategy work as a plan that is used to accomplish more goals in complex and uncertain
situations. An organisation achieve and manage its projects to accomplish various goals. It is also
used to make long term results through which more profits are earned by management of Klarna.
Klarna implement resource based strategy in business and its operations as it leads
company to take competitive advantage through implementing right strategy in business. Along
with this resources are divided into two different aspects such as land & capital, instrument and
machinery that increases goodwill of company.
McKinsey's 7S model- This model is used by company for identifying that 7 components which
leads to achieve organisational goals are mention as follow:
Strategy- This is developed by organisation for gaining competitive advantage against rivals by
formulating and implementing right strategy for all operations and functions of company.
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Structure- With an effective structure it is easy for management to complete all functions as per
organised manner. In a case if organisation not follow right structure than it is complex to
manage all functions of company.
Systems- This demonstrate all daily task which is performed by business to evaluate
organisational success. Further, it helps Klarna this allow organisation for completing their task
within decided time period.
Skills- With recruiting right skills individual and potential candidates Klarna easily overcome
from organisational issue and complex situation that generates problems for organisation
(Melville, 2018).
Style- With appropriate style it is easy for management to complete all task in effective manner.
For Klarna management is focused in adopting participative style to complete its functions.
Staff- Klarna operates their business at global level so large number of workforce is involved in
organisational operations. Therefore, company implement training and development methods to
retain employees for longer period in organisation.
Shared values- Shared values refers to standards and norms that is followed by organisation for
maintaining sustainable environment in company.
VRIO Model- This is used by organisation for identifying resources and capabilities that leads
company to overcome from competitors challenges. So VRIO model is mention as follow: Valuable- It refers to capabilities of organisation that improves business policy and
structure of organisation. Klarna holds strong financial position of organisation so it is
easy for management to complete their targets within time (Jordán and et. al., 2018).
Similarly, organisation also implement right recruitment process due to which better
employees are recruited to complete work as a strength for organisation and strategy. Rareness- Financial position is one of the rare aspect for organisation that directly
impacts on organisational performance. But in context of Klarna company hold strong
financial position so it is rare aspects for competitive organisation. Along with this
employees and training methods implement by Klarna is also rare. Imitable- Financial position which is imitated by organisation is focused to gain better
results that leads company to gain competitive advantage in market. Patent is one of the
most essential aspects that imitate company products to complete their work in a legal
format.
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 Organisation- Financial task, resources and human resources are managed by company
through understanding requirement of business.
 Resource
/
Capabilit
y
 Valuable  Rare  Difficult
to imitate
 Is it
organised
 Technolo
gy
 Yes   
 Employee
s
 Yes  Yes  No 
 Patent  Yes  Yes  Yes  No
 Monetary  Yes  Yes  Yes  Yes
TASK 3
P3 Implement of Porters-five-forces model to evaluate competitive forces of a given sector
Porter's five force model- This is one of the most effective model which defines different
competition which is faced by organisation (Knott, 2015). It results company gain huge success
in market due by performing company plans for longer period. All competitive forces are
mention as follow:
Bargaining power of supplier- Klarna control suppliers those who provides them to complete
their work according to raw-material, infrastructure and resources. Therefore, in context of
Klarna company manage their business with digital mediums. So supplier are high in force
because most of the business operations are depend on technology.
Bargaining power of buyer- This defines power of customers which switch from one company
to another company. In present scenario, most industries are performing their work at global
level. So it work as a positive point for customers or buyer. Therefore, to ensure interest of
buyers company implement those strategies which deliver more valuable services to customers.
Thus, bargaining power of buyer is high in market.
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Threat of substitute- One of the major challenge which is faced by Klarna relates with substitute
products. This also refers that insurance, mutual funds, investment consultancy that impacts on
business operations of banks (Lane and Maxfield, 2018). So the threat of substitute products is
high in market as it directly impacts on goals and objectives of Klarna. To deal with substitute
products organisation manage strategies that perform work to deal with in effective manner by
overcoming challenges from substitute products.
Threat of new entrant- In the context of banking industry it is complex to enter into the market
by new companies. As there are various challenges faced by organisation which refers that it is
directly impacts on methods and strategies of new companies. Along with this time and
investment required by organisation is also high. So threat of new entrant is low in the industry.
Due to low power of new entrance Klarna bank is entering into market to attract more customers.
Rivalry among the existing competitors- The rival organisation demonstrate the competition
faced by organisation such as Stripe, wepay, retail banks etc. are directly impacting on online
banking system (Marx, 2015). So the competition within companies is too high due to which
competitors must develop right strategy to perform their work within effective manner. With
monitor of competitive analysis in market management develop strategies that improves overall
performance of organisation.
Ansoff growth vector matrix- This strategy is utilised by Klarna for measuring growth of
company some methods of Ansoff growth matrix is mention as below:
Market penetration- According to market penetration Klarna provides right, relevant and
effective services to customers that increases market share of company. It also help company in
performing their work with best services and price method.
Product development- This method is implement by Klarna to offer new services by which
consumers perform their work with unique and creative method (Schawel and Billing, 2018). In
this company concern to provide new methods for completing their work effectively.
Market development- According to market development Klarna offer same products and services
into new market area. It increases market size of company that also enhances customer base for
company.
Diversification- The term diversification implement strategies for organisation by which existing
market and policies is directly impacted. This also results banking industry is performing work to
manage all task as per environment and online payment transactions.
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TASK 4
P4 Implement of various theories, models and concept that interpret and devise strategic
planning
Porter's generic strategies- The main function of Porter's generic strategy is to identify
all those aspects that provides competitive advantage to organisation. It results porter's generic
strategy leads company to perform their work in global market (Kolios, Read and Ioannou,
2016). Cost leadership, differentiation and focus strategy are key factors of Porter's generic
strategy which are mention as follow:
Cost leadership- With implement of cost leadership strategy it is easy for companies to attract
more customers by offering right prices as per quality of products. In context of Klarna company
offer services which ensure safety of online payments. So it work as positive aspect for
management to include price in organisational strategy.
Differentiation- The term differentiation consists to provide unique and new products to
customers but in context of banking industry management of Klarna differentiate its services
through offering them in right manner. Example- Klarna ensures that management offer fast,
secure and user-friendly services to complete all work in organised manner. It also results that
company manage its work in proper manner.
Focus- This involves both aspects with cost and differentiation as in cost focus company offer
their services at low price. It also leads company to complete all task and operations that is used
for online payment and methods as it help individual to perform work as per innovative services
(Son, 2015). Whereas, in differentiation services company make safe payment of their work it
also results management perform task with particular standards that check payment methods of
company.
Bowman's strategic clock
This aid to understand suitable strategic positioning by which Klarna position its services
effectively in mind of customers. Some effective points of Bowman's strategic clock are as
follow:
Low price and low value added- This feature leads management to ensure safe, easy and online
payment methods to its clients. As it also provides more information to complete work by
visiting clients.
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Low price- With implement of advance software system it is easy for organisation to offer right
service which are easy to follow step and lead company to perform work as per safe transactions.
It is mainly concerned to reduce cost of company operations.
Hybrid- Differentiation and low price strategy both are included in hybrid so it work as an
effective method to implement easy payment method.
Differentiation- With differentiation strategy it is easy to provide easy website and application
to increase sales ratio of company (Teece, 2018).
Focused differentiation- By focused differentiation strategy customers provides right
information and data to complete all work in proper manner due to which all confidential
message is not leaked by companies.
Risky high margins- Klarna come in market with implement of innovative services that
provides easiest payment mode to perform work with less risk. According to this information
relates with safe and secured method of payment company attract customers for purchase of
company services.
Monopoly pricing- In monopoly prices company offer services in market and not need to
include innovative features because they are single seller within market (Thompson, Strickland
and Gamble, 2015).
Loss of market shares- This work as a disaster within market so company set prices at low rates
due to which management of Klarna again increase their customer base.
Strategic planning leads company to achieve their targets within decided time period. So some
steps of plan are mention as follow:
Strategies- market development strategy is followed by organisation so it work as a positive
factor for organisation. It also results company is able to support all governance and stakeholders
of company.
Objectives- The main objective of Klarna is to implement most easiest, smooth, modern and fast
method by which individual pay their invoices in minimum time period.
Tactics- With the tactics company implement new methods that leads company to achieve their
objectives in short period. So marketing mix of company is as follow:
Product- All products are available on e-commerce platform so payment to company is also
done by online methods and techniques.
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Price- Klarna utilised relationship techniques to decide prices of services so it attract more
number of customers.
Place- To cover more market management approaches mobile application, website and online
shop methods to increase customer base.
Promotion- For promoting organisational products and services Klarna utilise online and offline
techniques to promote bank at large level.
CONCLUSION
In the last, by the above report it is concluded that Klarna implement different strategies
which increases growth and development of company for longer period. PESTLE, VRIO, are
some of the most effective methods through which organisation analysis company strength and
weaknesses. Moreover, with understand of micro and macro environment factors it is easy for
organisation to develop right strategy which increases customer area and market of company.
Along with this by Porters-five-forces model and generic strategy it is easy for company to
implement right strategy for all operations and functions.
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