The battle against Krauser is split into two parts. During the first part, you must explore some old ruins, while engaging Krauser in short fights from time to time. The second part is much more like a normal boss fight, where you will have to inflict a certain amount of damage to him before he dies and the achievement pops.
The only things you require to best Krauser are your knife and some quick reactions, so don't bother wasting your money or your ammo. Every time you encounter Krauser during the first part, just wait until he gets close and then knife him. During these encounters, he will occasionally try to do a special move, which will activate a QTE. Succeed in the QTE to fight Krauser off, then continue your assault with the knife. After taking enough hits, he will throw a flash grenade and disappear.
For those of you getting confused about where to go or what to do during the first part of the fight, I have included a step-by-step guide below. If you feel comfortable going ahead with just the knowledge I've already provided, you can skip this section.
1 - As soon as the cutscene ends at the beginning of the fight, head straight ahead and kick in the door to the small building. Break the boxes here and collect any items, then take the ladder upstairs and do the same. By this time, Krauser should have made his way to you. Get your knife ready, and when he's near, slash him until he throws a flash grenade and disappears.
2 - Drop downstairs and use the door to your left. Krauser will rush you from behind a pillar here, so be ready to knife him as soon as you see him run at you. Again, just keep knifing him until he vanishes.
3 - Turn right and start heading past some pillars and towards another building. Krauser will appear on the roof of the building and start shooting at you, so hide behind one of the pillars until he's done shooting. Quickly run towards the building, where Krauser should try to engage you again. Just use the same method from before.
4 - Head around the right side of this building (right side as you were approaching it, not right side according to the map) and go up the set of stairs. You will become caged in this new area. Krauser will be standing above you on a ledge, throwing grenades and trying to shoot you. Just dodge the grenades when the dodge command pops up on the screen, and hide underneath the ledge he's standing on when he starts to shoot. Eventually, he will jump down to your level, so you can begin knifing him again. Once he's had enough, a statue will pop out of the ground, and you must push this onto a pressure plate to lower the small gate covering the switch that lets you out of this area.
5 - Once the gate is open, proceed down the stairs and when you reach the building from before, go to your right, go straight and then around the next corner. There should be a gate straight ahead of you. Around the corner just next to the gate Krauser is waiting to ambush you again, so dispatch him as usual.
6 - Afterwards the gate will open, so drop down into this new area. Some robots will appear at this point, so shoot them with your pistol quickly to make them blow up. Robots will sometimes be hidden in the ground, so tread carefully, and shoot any that you see sticking up slightly. In this new area, go the left, and continue round to a tunnel, killing any robots as you go. After making it through the tunnel, Krauser will have a very brief conversation with you, after which you will be quickly ambushed by a few more robots. Take them out, then continue through the gate and up the ladder. Climb up the next ladder to reach the second part of the fight.
In the second part of the fight, Krauser will mutate, growing a massive and deadly arm. He will repeatedly come at you with special attacks, so you'll have to pay great attention to the button cues that appear, especially as one of these moves can instantly kill you. Just keep dodging and wait for an opening, then knife him quickly. Keep repeating this and he will eventually go down, giving you your achievement. This solution can also be used to defeat him on Professional difficulty with ease. If you are having any trouble with this final section of the fight, I have attached a YouTube video that should hopefully prove helpful.
I apologise for the incredibly in depth solution, but this can be a long and confusing fight, especially for those new to the game, so I thought it was best to try and cover every base possible. If you have any questions, anything to add, or noticed a mistake I made, please feel free to leave a comment and I will try to address it as soon as possible.