Unit 32: Business Strategy Report on Klarna's Financial Services

This report provides a comprehensive analysis of Klarna's business strategy, focusing on the impact of the macro-environment and competitive forces. It begins with an introduction to Klarna's business strategy, mission, vision, and objectives. The report then applies PESTLE analysis to examine the political, economic, social, technological, legal, and environmental factors influencing Klarna's operations. It delves into Klarna's internal environment using VRIO analysis to assess its resources and capabilities. Porter's Five Forces model is applied to evaluate the competitive landscape of the market sector. Finally, the report explores strategic options for Klarna, including a strategic management plan and Ansoff matrix, to enhance its competitive advantage and market position. The report concludes with a summary of the key findings and recommendations for Klarna's future strategic direction.

Unit 32 Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies..............................................................1
M1 Critical analysis of macro-environment to communicate strategic decisions......................3
M2 Critical analysis of internal environment..............................................................................6
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector...........................................................................................................................................6
M3 Strategies to enhance competitive advantage and market position......................................7
P4 A range of theories, concepts and models, interpret and devise strategic planning for a
given organisation.......................................................................................................................8
M4 Strategic management plan...................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business strategy defines as a competitive moves and actions that are duly undertaken by
organisation as to fulfil objectives and goals. Such form of action aid entity to adopt favourable
techniques and measures. It assist organisation to stimulate their performance and achieve targets
to become leader in particular industrial sector. In simple words, business strategy is a
combination of decisions with the help of which entity managers can convert organisational
mission and vision into real strategy (Brewster, 2017). Present report has been conducted on
Klarna. This entity performs their functioning as a bank and offer financial services such as post
payments, direct payments and more. In this report formative discussions have been made on,
impact of macro environment upon different sections of business decision making. In addition to
this, SWOT and PESTLE analysis is being covered in this report in order to conduct capabilities
and resources evaluation. Along with this, Porter's Five Force is also included in this project as
to determine formative insight about entity competitive environment. Lastly, available strategic
options for company is being evaluated with strategic management plan and Ansoff matrix.
LO 1
P1 Applying appropriate frameworks analyse the impact and influence of the macro environment
on a given organisation and its strategies
Primary objectives as well as goals an organisation assist them to fulfil desirable set of
success. Klarna also posses certain objectives that can be duly achieved with the help of efficient
plan of actions. In order to devise formative plan it is essential to undertake strategies that can be
accomplish by conducting analysis of factors within business environment in which company
operate their functions (Blidholm and Johnson, 2018). This has been evaluated that, in order to
successfully conduct business operations successfully entity is required to continuously engage
in the function of conducting external environment analysis (Biamont, 2017). In relation with
this, Klarna manager undertakes use of PESTLE analysis in order to evaluate impact of macro-
environment:
Mission – Klarna operate their functioning with a mission of offering effective financial
services in best effective manner. It has been signified that main mission that has been hold by
Klarna is to offer best effective financial services.

Vision – Main Vision of Klarna is to emerge out as leading financial corporation in USA
and United Kingdom. This indicates that, Klarna holds a vision to become leader of financial
corporation in both United Kingdom and USA.
Objectives – Most important objective of Klarna is to generate high sales and revenue
along with enhancing standards and consumer interaction. In addition to this, it has been
identified that Klarna main objective is to maximise overall sales as well as revenue generation
capability of entity. (Goffee and Scase, 2015).
Business strategy is defined as a set of different types of techniques, measures and plans
that are being undertaken by an organisation in order to accomplish their goals and objectives on
a well defined and effective manner (Niranjanamurthy, Nithya and Jagannatha, 2019). In context
with Klarna it has been determined that entity manager undertake use of wide range of effective
strategies and measures as to gain more prosperous growth and profitability.
Organisation can effectively able to achieve their organisational vision and strategic
factors by engaging in the process of determining environmental factors. In order to conduct this
evaluation mentioned below PESTLE analysis is done:
Ilustration 1: PESTEL Analysis
(Source: PESTEL Analysis, 2019)
Political factor:

Political system in a nation majorly affect performance of organisation in many different
ways. It has been analysed that UK is having strong and stable political system (Kolios and
Read, 2013). This facilitates Klarna to ensure their long term sustainability. Apart from this,
BREXIT may lead organisation to affect their functioning by lowering down their sales. Thus, in
order to gain strategic edge Klarna is required to abide all political obligations that are confined
to country banking system (Cavusgil and et. al., 2014). This will aid company to significantly
increase their growth rate in marketplace in best effective manner.
Economic Factors:
It include factors like foreign exchange rate, interest rates, economic growth index and
GDP of a country (Zahari, and Romli, 2019). All these factor affect business functioning of an
entity in many different ways. With having stable economic conditions Klarna can effectively
able to ensure its growth. Apart from this, Brexit act as economical drawback for company.
However, it duly facilitate growth as well as nurturing of various financial institutions (KLARNA
Revenue, Growth & Competitor Profile. 2020). Thus, this higher ROI duly attracts many foreign
investors that significantly provide opportunity for Klarna to make significant expansion of their
operations.
Social Factors:
This factor include factors that are mainly interlinked with society in which organisation
operate their functions (Nandonde, 2019). Elements such as belief of individuals, moral,
lifestyle, habit and preferences of customers are involved in social factors. All these factors are
dynamic that will affect organisational functioning in number of ways. Thus, it becomes
essential for Klarna to engage in continuous research and monitor every change in social
transformation as to ensure long term sustainable growth.
Technological Factors:
Technology is changing at a fast rate that makes entities to keep themselves update with
every advancement in technological aspect as to remain in competition (Team, 2013). United
Kingdom offer entities with an innovative and advanced platform that benefit companies to
increase their growth. Klarna, is required to analyse every up-gradation in technological aspect
and implement effective one within organisational structure as to stay one step ahead of
competitors while ensuring sustainable growth.
Legal Factors:

It include legislations, laws and legal aspects of a nation within which an entity operate
their functions (Chang, 2016). Government of UK frame many legal legislations that are required
to be abide by every organisation within banking industrial sector. It has been analysed that
legislations like international financial law somehow affect functioning of Klarna that lead entity
towards slow growth. By implementing all the necessary laws and legislations company can
effectively able to operate their functions while ensuring sustainable growth.
Environmental Factors:
In modern era, entities those who are inclined towards community interest get positive
support from local as well as governmental bodies (Dcosta, 2011). In this, it is essential for
Klarna, to ensure that their business activities does not harm environment in any manner. As this
will impact upon goodwill and growth of company. However, by engaging in the activities like
social awareness campaigns Klarna bank AB can effectively enhance brand positioning of
organisation within market in a positive manner.
M1 Critical analysis of macro-environment to communicate strategic decisions
According to the PESTLE analysis of Klarna, it has been demonstrated that different
types of negative elements are mainly linked with macro-environment elements. In relation to
this, BREXIT duly influence organisational functioning in relation to economical and political
factors. In addition to this, dynamic change in consumer lifestyles (social), inefficiency in
implementing unique techniques (technological), infringement of legislation (legal) are some of
the factors that impact upon growth and performance of entity. In order to overcome this, it is
essential for Klarna managers to formulate strategies and ensure that all the related laws and
legislations are being abided in organisational structure as to gain significant growth
opportunities.
P2 Discuss the internal environment and capabilities within organisational contexts
Strategic capabilities consider as an ability of leader of a group that duly assist
organisation to gain strategic competitive advantages with the help of appropriate strategy. With
the assistance of proper planning organisation can undertake appropriate course of action from
different types of alternatives that are available in market in order to achieve business objectives
(Huang, 2019). Klarna, operate their functioning as largest Swedish bank and offer numerous
online financial services to customers. Main aim of entity is to duly handle, consumer payments
and solve claims of customers. In order to effectively examine entity entity internal resources

firm undertake use of VRIO analysis as to ensure more competitive advancements (Vargas-
Hernández and Garcia, 2019). It involves different types of aspects such as patent, workforce,
food products and financial resources in relation to inimitable, organisation, valuable and rare.
Mentioned below VRIO analysis in being mentioned that are being undertaken by Klarna
manager.
Resources
V
Valuable
R
Rare
I
Inimitable
O
Organized
Financial
resources
Yes Yes Yes Yes
Patent Yes Yes Yes No
Skilled workforce Yes Yes No No
Food products Yes No No No
Valuable: It has been evaluated that Klarna financial resources are highly valuable. It
offer entity with an opportunities to significantly raise funds (Hernández, Lemus and Medrano,
2020). As local food products of organisation is highly valuable that duly males them different
from other competitors within prevailing market. In addition to this, Klarna employees are skilful
and act as an asset to entity as company offer them effective training and development measures.
Further it has been evaluated that employees within entity are highly potential, loyal and talented
that significantly increase organisation productivity in best effective manner (Spender, 2014). In
addition this, choosing right individual and assign them with proper task as per in accordance to
competencies is also essential for organisation as to stimulate high productivity and future
growth of entity and offering them with benefits and rewards in order to motivate subordinates in
a progressive direction (Vargas-Hernández, Quijano and Benítez, 2020). The patent provides the
concerned firm with licensing revenue to the manufacturers that results in greater revenue due to
which they are valuable.
Rare:It has been identified by Klarna managers that patent are rare resources of
organisation that makes them different from prevailing competitors (Yudiono, Wilopo and Iqbal,
2019). As it is hard for rivals to copy products easily, this provide bank with the opportunity for
enlarging their growth aspect. In addition to this, it significantly increase overall sales volume of

entity products and automatically generate high profitability of company while increase overall
performance. Present organisation offer specialised training and courses to their subordinates as
to make increase in work efficiency of firm as to fulfil organisational goals in best effective
manner (Oktaviyari and Sumirat, 2019). According to VRIO analysis financial resources of
entity is rare as strong financial resources are possessed by few entities as that are mainly are
earned through drawn-out profits.
Imitable: Resources that has been duly acquired by company is costly to imitate which is
mainly earned via profit reserves of company from previous years. Further it has been
determined that, patent is hard to imitate, as determined by Klarna manager because it is legally
not allowed to copy a patent product (Hernández, Lemus and Medrano, 2020). In addition to this,
it has been evaluated that organisation assure that within workplace structure of entity there is
optimum utilization of resources as they are very costly as well as precious. This makes
competitors hard to purchase these resources as it required lot of funds to invest as to conduct the
process of research and development. Further it has been determined that financial resources of
entity is mainly costly to imitate as they are earned by profits that has been duly earned during
previous years.
Organisation: It has been evaluated that distribution network of Alliance Governance at
Klarna duly covers large network all around the world in order to acquire access of large base of
customers (Andrade, 2019). Respective organisation make sure that all of their products as well
as services are available in all of their outlets as to ensure more competitive advancements. This
signifies that entity with an assurance that they are properly utilizing resources in a right place by
taking advantage of opportunities and overcoming threat as to gain advantage of more growth
opportunities.
Mentioned below SWOT analysis in context with Klarna is being defined:
SWOT Weakness
 Within Klarna effective training and
development courses are provided to
their employees. As employees are
greatest strength of this entity that play
significant role in improving
profitability of entity
 Major weakness that has been hold by
Klarna is that, company current assets
is low comparatively to their current
liabilities.
 Company also lacks in formulation of

(Niranjanamurthy, Nithya and
Jagannatha, 2019).
 Klarna offer large asset base that duly
provide better solvency.
strong financial planning.
Opportunities Threats
 By undertaking use of social media,
Klarna can undertake use of significant
opportunity with the help of which
entity can ensure great competitive
advancements (Kudriavtceva, 2019).
 Klarna can also undertake use of
expansion opportunity in order to
enlarge their business growth.
 Political instability of UK pose threat to
Klarna in order to operate their
functioning in a smooth manner
(Hajizadeh, 2019).
 Due to presence of large number of
competitors company is facing threat to
operate their functions in smooth and
effective manner.
M2 Critical analysis of internal environment
This has been evaluated that Klarna internal environment provide certain form of
advantages along with shortcomings. In relation with this, employees of organisation are
considered as an essential resource of company. As workforce within entity is inimitable,
valuable, organised and rare (Oktaviyari and Sumirat, 2019). In addition to this, it has been
evaluated that organisation somehow lacks in undertaking use of efficient marketing initiatives
and formulation of best strategic marketing plan as to make significant increase in organisational
overall selling of company. Further, it has been evaluated that there is immense level of
competition in banking sector due to the presence of organisations like HSBC and Barclays.
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
Porter's Five Forces involve different types of factors that are combined to effectively
deal with external environment if a business (Peng, 2017). All these factors are required to be

effectively consider by an organisation as to gain strategic edge and ensure prosperous growth.
In context with Klarna, Porter's Five Forces analysis is being conducted below:
Illustration2: Porter Five Force Analysis Model
Threat of new entrants: Low
It has been identified that within financial sector threat of new entrant is basically low. As
in order to make entry into financial sector, organisation require huge amount of funds to set
their market positioning (Baxter, 2019). In addition to this, it has been evaluated that there are
various laws that are being imposed upon financial institutions that are required to be abide by
entities. By undertaking advantage of this situation Klarna can effectively able to increase their
profitability and sales.
Threat of substitutes: High
In relation with banking sector, threat of substitutes is relatively high due to presence of
tough competition because of small and new financial institutions and banks (Chlopecký, Danel
and Ameir, 2019). Services provided by these institutions effectively satisfy need of customers.
This, it is essential for management of Klarna to undertake effective use of latest financial
services to customers in order to attract their attention towards organisational offerings in best
effective manner.
Bargaining power of customers: Low

It has been analysed that bargaining power of customers within banking sector is
relatively low. As many banks and financial institutions can not afford mas defections of
depositors. Thus, customers are mainly tend towards established and strong entities within
banking sector (Mahat, 2019). By undertaking advantage of this, Klarna can effectively able to
enlarge their growth prospects. By primarily concerning towards providing attractive offers to
new clients entity can significantly able to add additional accounts and can provide less
troublesome services to their customers (Hernández and Gutiérrez, 2019). This will help entity to
ensure their potential growth.
Bargaining power of suppliers: Low
This has been evaluated that, bargaining power of suppliers within banking industry is
low as they supply element at a very low level (Oktaviyari and Sumirat, 2019). This makes
Klarna, to earn high profitability along with expanding their business operations at significant
level.
Competitive rivalry: High
Competition within banking industry is significantly high. It has been analysed that
Klarna is facing intense competition from money-centre banks like Barclays and HSBC
(Abalkhail, 2019). In addition to this , it has been analysed that company is facing high
competition from form domestic and international level. Thus, in order to distinguish themselves
from competitors it is essential for Klarna to provide low cost services to their clients. In
addition to this, they are also required to undertake use of best effective strategies and measures
as to ensure more competative growth.
As per according to the above mentioned report it has been concluded that, there are
different types of factors prevailing in business environment and have significant impact upon
organisational functioning. In order to overcome negative impact of these factors and gain
significant advantage and opportunities for them, Klarna manager by undertaking use if effective
business strategy can stimulate their business growth. In addition to this, as to overcome high
competitive rivalry respective entity is required to undertake use of low cost strategy and offer
affordable products and services to client as to ensure more competitive edge. Along with this, it
has been evaluated that threat of substitute is also high in respective industrial sector, in order to
overcome this, Klarna manager is required to undertake use of latest financial tools and
techniques in order to serve customers with best (Chlopecký, Danel and Ameir, 2019). By

undertaking all these considerations into accounts Klarna can maximise their business growth in
effective manner and can further ensure long term sustainability in respective industrial sector.
M3 Strategies to enhance competitive advantage and market position
According to the evaluation, this has been determined that entity marketing plans as well
as activities are not that much effective (Alam and Wulandari, 2019). In addition to this, their
strategies also does not turn effective for company to influence interest of customers towards
organisational offerings. In this, Klarna by taking advantage of social media marketing,
promotional techniques, campaigns can effectively able to create awareness among public and
can duly attract customers towards entity products and services. By undertaking advantage of
effective strategies Klarna can effectively able to make significant increase in overall sales and
profitability of entity.
P4 A range of theories, concepts and models, interpret and devise strategic planning for a given
organisation
Ansoff Matrix consider as a tool that provide organisation with the benefit of identify
their strategic growth in order to achieve business goals (Chen and Jermias, 2014). With the help
of this managerial tool company can effectively able to analyse market conditions and can
further formulate strategies in order to duly fulfil organisational goal while ensuring effective
profitability. Mentioned below Ansoff Matrix in context with Klarna is being defined below:
Market Penetration: It is a strategy in which company sale their products or services in
existing market area (Kukartsev, 2019). For Klarna company market penetration will be suitable
as they can moderate its existing policies that'd enhance the market share company.
Market expansion: In this strategy company sale their existing products and services
services in new market area. As company can expand their business in other nations also with
existing products (Kader and Hossain, 2020). But before entering in new market area it is
essential for business firm to conduct proper market research for analysing taste and preferences
of customers.
Product expansion: This strategy result in product expansion as company brings new
product or services within their existing market area (Schawel and Billing, 2018). It will also
good tool for company which help them in their business growth. Product expansion strategy
will be not suitable for Klarna as they cannot introduce new product within market area.