Strategic Analysis of Klarna: Macro and Internal Environment

This report provides a strategic management plan for Klarna, a financial services company. It begins with an introduction to business strategy and Klarna's mission, vision, and objectives. The report then analyzes the macro-environment using PESTLE analysis, exploring political, economic, social, technological, legal, and environmental factors impacting Klarna's strategy. Ansoff's growth vector matrix and stakeholder analysis are also applied. The internal capabilities of the organization are then evaluated using strategic capabilities, resource-based view, and McKinsey's 7S model. Finally, the report applies Porter's Five Forces to assess the competitive forces within the market and discusses Porter's generic strategies and Bowman's strategy clock, offering strategic recommendations for Klarna. The report concludes with a summary of the findings and references.

Business strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Impact and influence of macro-environmental factor on organisational strategy..................3
TASK 2............................................................................................................................................6
P2 Evaluation of internal capabilities of an organisation............................................................6
TASK 3............................................................................................................................................9
P3 Application of porter's five forces to evaluate competitive forces of a market sector...........9
TASK 4............................................................................................................................................9
P4 Application of different models, theories and concepts to interpret strategic planning.........9
Porter's generic strategies.........................................................................................................9
Conclusion.....................................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy is defined as a long view plans which includes vision, mission and the
provided direction to an organisation. The key objective of implementing a business strategy is
to make a sequential plan so that to help management in attaining organisational tasks and aims
within stipulated time. The company taken in this report is Klarna which is a bank and having
their operations in UK. It was established in 2005, in Stockholm. Further this report includes
macro environment factors which affect the strategy formulation of a business, as along with this
internal factors are observed with the help of several approaches. At last Bowman's strategy and
five forces of porter is analysed in order to examine market competition level and other strategies
(Petrovski and Pestana, 2017).
TASK 1
P1 Impact and influence of macro-environmental factor on organisational strategy
Strategies are having an essential role in the business in order to design and implement
and effective strategy in a sequential manner so that to provide assistance to the business in
attaining overall objectives by monitoring these strategies n timely basis. Strategies are helpful
for companies in evaluating level of success hold by them. With the view of Klarna,
organisational strategies aid the company in following the path which is adapting continuous
improvements in business process.
Mission: The key mission of Klarna is to deliver a hybrid and quick services over
payment system in order to online bill payments.
Vision: Vision hold by Klarna is to increase the market capture at a international and
national level so that to gain goodwill in the market, further Klarna is aiming to render online
payment services to tehir customer so that to provide easiness in any payments.
(https://www.indeed.com/cmp/Klarna/about)
Objective: The key objective of Klarna is to get into a brand new market so that to
enhance customer base within the time period of 90 days. Another objective hold by Klarna is to
provide secured online payments to their customers so that get top position in financial industry
in the marketplace.

.
PESTLE analysis:
PESTLE framework is a tool which helps the business in understanding the external
factors which may influence working of a business. In the context of Klarna, PESTLE analysis
help them in examining all macro environmental factors which is impacting their business.
PESTLE is explained as under: (Perera, 2017)
Political factors: Political factors include all the rules and regulations of a country which
are implemented in a country (Bryson, 2018). With the reference of UK, they provide better
opportunities which lead to flexible working in Klarna. This flexibility is helpful for Klarna in
measurement of level for growth, but due to Brexit, UK is facing political instability so that
many challenges are faced by the companies in growth path. This factor influences the business
strategy of Klarna as they are required to implement flexible strategy so when the decision of
Brexit comes out they do not have to face any difficulties. (Lawless and Morgenroth, 2019)
Economic factors: These factors include GDP rate, inflation rate, foreign currency
fluctuations etc. These factors influence the business with reference to money aspect so that all
the working can be completed within sphere of implemented strategies. Economic factors assist
Klarna in making their business success in the marketplace with lowest cost application by
procured resources and implementing most suitable in order to earn more profits. Due to
economic factors, Klarna is supposed to introduce new services with cheaper rates so as to attract
every class f people. (Hill and Munday, 2016)
Social factors: Numerous aspects are included in this heading such as personal attitude,
shared values, beliefs, opinions and attitude pertained by living people in the country. UK is
having society with open minded perception and high buying power with high incomes. For
instance Klarna, facilities provided by them in term of financial support are used by UK citizens
so as to enhance their growth in long run. Due to emerging changes in customer needs and
demands the prepared strategies are to be in favour of these needs so that to grab more attention
and more customers.
Technological factors: These factors are associated with usage of new emerged
technology by the peoples of UK. So in this context Klarna is required to update their methods of
promotions and operations so as to deliver the best services to their customers and to enhance

market share. In order to take advantage of technology, Klarna may update their machines and
other equipment .With adoption of new and advanced technologies Klarna can provide high tech
services to their clients and capture larger market size.
Legal factors: These macro environmental factors include all the legislative laws which
are to be followed by every business entity in order to stay adhere to those laws. In context of
Klarna all the employment laws are to be followed for working employees and all the financial
security laws are to be implemented in order to save money of public which is kept by the bank
and to avoid payment of any penalty which may occur due to non-following legal laws.
Environmental factors: These are the factors which are associated with safeguarding
environment and ecosystem, so that to ensure that hazards are not provided by the business. In
the context of Klarna by adopting such this will help them to enhance market sustainability. As
these factors plays effective role in strategy formulations of Klarna, as they are supposed to make
environmental friendly strategies so as to safeguard eco system.
Ansoff's growth vector matrix
Ansoff growth vector matrix is defined as a tool of formulating strategy which is adopted
by manager so as to ensure the business that appropriate strategy has been adopted for the
success of business. In the context of Klarna, this framework is explained as below (Tukdeo,
2016):
Product development: A new product is introduced under this strategy in existing market, so
the existing customers can buy the new product in huge quantity. For instance, Klarna as after
introducing a new product in existing market this will help them in boosting their sale of product
and service and resultantly increase in profit ratio can be seen
 Market development: Under this growth strategy, new market is catered with their
existing product. This strategy is helpful in procuring new markets in order to market
expansion. For instance, Klarna by exploring new markets they can establish themselves
as a market leader and enhance their sales in order to earn high profits.
Market penetration: Under this market expansion strategy, the company lower down the prices
of their products, in their existing market so that to capture more customers from the market in
which they are already catering. With the reference of Klarna, they can reduces prices of their
products and services so that to increase goodwill in current market.

 Diversification: This strategy is considered as the most risk bearing strategy, under this a
differentiated product or services offered to the customer from the different sector in
which the company has not dealt yet. For this Klarna can provide services which are not
related to financial industry to their customer so that so that to enhance their market
value.
From the above analysis this can be concluded that Klarna can opt for product development
strategy for their market expansion. For this Klarna will be able to activate their customer to use
their new services in a considerable manner. This strategy helps them in increasing their
customer base and profit as well due to which they may get competitive edge in the market
which may lead to long term sustainability and end user satisfaction.
Stakeholder’s analysis:
Stakeholder analysis is defined as those processes which help in identifying those people
which get influenced by business performance and any new project. This analysis is
advantageous for Klarna as they come to know about interest of stakeholder, their participation
and influence. Three steps are followed by the companies in this analysis which is explained as
under:
Step one is to identify all those potential stakeholders which can be influenced by the company
Such as employees, suppliers, shareholders, government etc.
Step two is to prioritise stakeholders as per their interest and level of participation
High power, high interest: These stakeholders are highly important for Klarna as they
assist them in their business operations so as to run the business without any problems.
High power, low interest: These stakeholders do not have much interest in the business
of Klarna but still they are influenced from their business.
Low power, high interest: These stakeholders have high interest in the business of
Klarna so they are required to be informed about every aspect of business.
Low power, low interest: These stakeholders are having least power and least interest
but still their power may influence the business of Klarna.
Step three is associated with arranging these stakeholders as per their interest and priority so that
to diminish any negative impact and to run business without any hurdle (Christ, Burritt and
Varsei, 2017)

TASK 2
P2 Evaluation of internal capabilities of an organisation
Strategic-capabilities and their key components:
Strategic capabilities are defined as process under which numerous strategies are
prepared and shaped so that to get high advantages against the rivals. Strategic capabilities is
having six major aspects such as strategic intent, major goals, planning of action, analytical tools
and values and vision. These aspects are helpful for the businesses so as to use their prepared
strategies in a considerable and profit giving manner. (Christ, Burritt and Varsei, 2017)
Resource based view strategy:
Review based view strategy is defined as a functional tool or concept which is utilise by
an organisation in order to recognise the major strategic resources which can be put to use for
getting competitive advantage and market sustainability. Two types of resources are included in
this strategy such as tangible and intangible resources. Tangible resources involve assets of the
company such as machinery, land, building and other equipments. On the other hand intangible
resources involve those assets which do not posses any physical presence but treated as assets in
Klarna such as software, goodwill, patent, copyright etc.
McKinsey's 7S model
This concept is helpful in examining design of the organisation with the help of seven
main internal aspects. These aspects are required to be followed in an efficient manner, in Klarna
by using this framework they will be able to achieve business goals and aims in considerable
manner. These components are explained as below:
Strategy: This is an action plan which is prepared by companies in order to get
competitive edge so that to have efficient competition with their rivals. As if Klarna does not
have big boned strategy for business operations then the customer base and sales of the company
may reduce (Yuliansyah, Gurd and Mohamed, 2017).
.
Structure: This entails the way in which units of the organisation and sectors are
organised and maintained. If Klarna is having improper built of organisation structure then the
efficiency of the business may diminish which will lead them to surrender their market share to
other rivals.

Systems: This aspect of the business aiming to routine decision making process of a
business. A good and proper system is helpful for the managers in modifying their strategy as per
the organisational change.
Skills: This is associated with personal capabilities and characteristics of working force
of an organisation. For instance, skilled employees of Klarna shares part in success of their
company as they deal with composite situations in a sequential and efficient way.
Style: This aspect involves the way under which business is handled by the managerial
personnel such as methods of communication, employees’ participation and leadership styles. In
the context of Klarna autocratic style is used so as to maintain control over the business.
Staff: This aspect is associated with the total number of working staff and the manner
which they are held in an organisation. For instance, Klarna candidates are recruited, trained and
benefited so as to make them motivated throughout the workings(Anwar and Hasnu, 2016)
Shared value: This is considered as key aspect of this model, it includes the standards
and beliefs which are set by the business and help the business in their operations. In context of
Klarna the behaviour of employees are examined and improved in a considerable manner so that
to create healthy internal environment.
VRIO framework:
VRIO framework is an abbreviated form of four factors which is value, rarity, imitability
and organisation. This is a startegical tool which is adopted by businesses in order to find out
internal capabilities and resource availability. In context of Klarna, this framework helps them in
achieving competitive edge in the market so that to compete with their rivals. VRIO framework
is explained as below:
Valuable: This is essential for marketing manager of Klarna that to utilise resources to its
fullest so as to compete with their rivals. If any valuable resources are hold by a business then
high profits can be earned by them. As in context of Klarna their valuable resources are their
employees and system of supply chain management.
Rareness: This concept is beneficial for the business in recognising rare quality of a
product which is manufactured by them. Rare product or service will help Klarna in getting
larger customer recall value and better market coverage so as to earn high revenues. Klarna is
aiming to render innovative and best services to their customer so as to remain rare in the
marketplace.

Imitable: Klarna is supposed to render all those services which are not imitable by any
other competitors. By imitating services of Klarna by some other competitor then market value
can be decreased. Services and stationery are imitable resources for the company.
Organisation: It is essential for the business to monitor their available resources in a
considerable manner so that minimise cost of the company. In the context of Klarna, this will
help them in competing with their rivals so as to give them a strong competition. This aspect
includes employees, suppliers, investors and other stakeholder (McAdam, Bititci and Galbraith,
2017).
TASK 3
P3 Application of porter's five forces to evaluate competitive forces of a market sector
Porter five force model is a strategical tool which is useful in taking decisions by the
business by allowing to analyse future situation. In the context of Klarna these five forces are
explained as under:
Rivalry among competitors: This force includes the number of rivals present in the
industry in order to compete. This force is high in case of Klarna as so many competitors are
available in UK market which is having identical services as Klarna such as WePay, bread,.
Threat of substitution: This force is described as the numbers of substitute are present in
the marketplace in order to provide assistance to the customer to use those product or services. In
the context of Klarna, this force is high as due to aggressive completion in the same industry in
which they are working.
Buyer’s power: This force describes the capability of customer to control the prices of
product and services offered in the marketplace. With the view of Klarna, as they are having
large customer base so this power is moderate in this case.
Supplier’s power: This force recognises the power hold by suppliers in order to vary prices
of their supplied items which may further impact the market. In context of Klarna, the supplier is
their customers only, so this force is high in this case. As due to supplier investment Klarna is
able to perform their activities in a considerable manner.
Threat of new entry: This force describes the new entry in a industry which result new
competencies in the business. This force is dependent upon restrictions and barriers arranged in

the path of entry in an industry. With the purpose of Klarna, this threat is low, as in order to enter
into this industry huge investment is required and along with this government is having so many
laws with respect to financial institutions, all laws are required to be adhered so this force is very
low in this case.
.
TASK 4
P4 Application of different models, theories and concepts to interpret strategic planning
Porter's generic strategies
This strategy is advantageous for the businesses in recognising the path of getting
competitive edge in the marketplace (Abdolshah, Moghimi and Khatibi, 2018)
. Porter generic strategy consist of major three approaches which is explained as under:
Cost leadership: This strategy is helpful for those customers who get affected by
changes in price of a commodity or product. With the reference of Klarna, this strategy can be
adopted by them with offering product in lower prices to their target customer. For this purpose
they may introduce their services in lower prices to new customers so as to attract new customer
with the purpose of enhancing sales and customer base.
Differentiation: Under this strategy new and innovative feature in product or services is
introduced by businesses so that to differentiate their offering from rivals. Within this strategy,
Klarna may render some innovative service which is not provided by any of their rivals so that to
increase their sales.
Focus: This approach includes majorly two concepts; cost focus and focused
differentiation. In cost focus Klarna is supposed to render their services in lesser price when
compared to rivals and in focused differentiation Klarna is supposed to focus on a segment and
for that segment innovative services will be introduced so as to attract people of those segments.
Bowman's strategic clock
This model is helpful in discovering the most suitable strategy for the business so that to
position their product or service in marketplace. For this purpose strategies to be used by Klarna
is explained as under:

Low price and low value added: Even after having least cost of services which are
provided by Klarna, if their services are not well differentiated then the customer base will be
low for them.
Low price: Under this aspect, Klarna may position themselves as cost leader with the
help of keeping lowest cost to their services. Here profit for each service with low but as because
of high customer volume the total profit will be high in numbers.
Hybrid: This strategy is the mixture of low cost and product differentiation and could be
the best suitable strategy in positioning Klarna in marketplace. (Chang, 2016)
Differentiation: Under this aspect, Klarna is focused on rendering unique services to
their customer with a view to increase customer base.
Focused differentiation: Within this strategy, services of Klarna are offered to elite class
people in order to render luxurious services to them.
Risky high margins: Under this strategy Klarna is supposed to face some business risk
due to which business can be a failure. So to deal with this situation Klarna has set high prices
for their current offering.
Monopoly pricing: Under this strategy, the required product or services are provided by a single
business. If customer is in the need of services of Klarna then they will obtain those services
without being price sensitive.
Loss of market share: This position is considered as the worst situation under which
mediocre prices are set by business due to which company is having less market share.
With the reference of Klarna, they can adopt differentiation strategy so as so capture
greater market size and to establish themselves as a marker leader. This strategy will help them
in earning high profits in marketplace due to which market value of company will automatically
enhance.
Strategic Management Plan
Strategic Planning: A strategic management plans describes all the strategic tactics which are
used by businesses in the process of decision making and with the view of using the limited
resources to fullest so as to attain organisational objectives in the stipulated time frame.
Company overview:

Klarna is a renowned financial organisation which is engaged in rendering huge range of
e commerce payment solution to their customers. 85 million customers is currently client of
Klarna and it is operating their business in 17 countries world worldwide.
Vision of Klarna is “to deliver distinctive services in the sphere of online payments.”
Misson of Klarna is “to offer great experience to their clients by offering universal online
payment services.”
SMART Objectives
 To enhance sales volume by 20%
 To enhance profits by 15%
 To widen customer base by 25% within a time frame of 12 months.
Tactics: Marketing mix
Product: Klarna is dealing in rendering online payment services such as online
storefronts, post purchase payments to their customers. Kalrna is known for offering innovative
services to their clients so with this benefit it is easy for them to enhance their market share with
existing services.
Price: Klarna uses competitive strategy in order to retain their customer by offering same
prices when compared to their rivals. As Klarna is having a huge customer base so as to maintain
their customers they do not keep high pricing.
Place: Klarna is having their headquarter in Stockholm, Sweden and serving in 17
countries as of present.
Promotion: Klarna is using merchant marketing and social media marketing tool in
promoting their products, and in traditional promotional tool they uses banner and newspaper
advertisement in order to promote their services.
Evaluation and control
After implementation of strategies the next step which is followed by companies is
evaluation of those strategies so that to check success ratio. For this purpose standard
performance is compared with actual performance so as to recognise level of effective
implementation. With this several techniques are used such as KPI, benchmarking etc. along