SWOT Analysis of Goldman Sachs Group

 

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Goldman Sachs was founded in In conjunction with their new service products, Goldman Sachs has also changed the way they approach promotion. Goldman Sachs is a service company which was more focused on Investment Banking activities, the firm had a huge reputation of being a risk taking company and not a customer focused company. We have also established that in a financial services company, the only product is the people. The Goldman Sachs Commerce Department timely reviews the current economic environment, tailwinds that could support the recovery and potential risks for the economy.

The Weaknesses

20/12/ · On November 13th, Goldman Sachs hosted the Sustainable Finance Innovation (SFI) Forum, which convened + leading corporates, investors, public sector representatives and non-profit organizations alongside Goldman Sachs representatives to discuss the key themes shaping markets and sustainability.

In fact, environmental analysis should be continuous and feed all aspects of planning. The Companies Internal Environment Goldman Sachs is extremely selective when it comes to the resources.

It is a well known fact they employ the Best Brains in the Industry and their resources are claimed to be one of the main assets that the Company has, the other 2 being capital and reputation. To qualify as a vendor to Goldman Sachs, prospective suppliers are evaluated on several criteria, including:. It comprises of a number of broader forces that affect not only Goldman Sachs but other microeconomic factors corresponding to the firm.

A lot of vigilance and effort has been incorporated to enumerate the consequences of possible changes regarding to the population like the purchasing drifts, spending patterns, inclination towards certain specific classes of financial services.

Also, Goldman Sachs strives to leverage what it calls the most underutilized asset for any country —women. Economic Forces These factors would include changes in interest rates, unemployment, inflation overall economic growth and exchange rates. All these factors have a significant impact on the performance of Goldman Sachs.

Technological Forces The technology infrastructure for Goldman Sachs is indeed sound having in view its impact on the cost and the quality of the services offered to the clients. Goldman Sachs is bound to use the latest technology like computers with fast microprocessors to meet the computational requirements and to provide internet based services to their clients. However, compliance of maintaining standard technology footprints is one of the major responsibilities that cannot be over ruled.

Global Warming, Climate Changes, renewable energy issues, carbon footprint and attention to clean energy are some of the natural forces that require attention from the environmental point of view.

The above diagram shows the carbon emissions from Goldman Sachs hub offices, central offices and data centers. SO Strategies -International Expansion in emerging markets. Being in a leading position and the brand value that it has earned in the market have brought many benefits to Goldman Sachs. The international reach of Goldman Sachs has a big advantage over rivals especially when its clients conduct a lot of business in different countries.

For instance, majority of business travellers need to access their money in another country. Global access of Goldman Sachs means that a consumer from one country can feel comfortable banking at any of its branch across the world. In addition to having the best people, Goldman Sachs has a clear, well distributed corporate structure.

Goldman Sachs strives to maintain an innovative culture which effects production of new and inventive products. These products, besides providing the brand boost, have helped Goldman Sachs to stay competitive in the ever expanding markets. Possessing the best quality product in one segment directly helps Goldman Sachs to gain a better market share in that segment.

The fact that Goldman Sachs lacks diversification is considerably risky, because if one or more of its main products collapses, then the business could face serious issues or maybe even bankruptcy.

Also, loss of one client who is using multiple services of Goldman Sachs would eventually lead to loss of a considerable amount of business to it.

As per the ranking released by Fortune, Goldman Sachs stands 7 th in the Social Responsibility which depicts the fact that it undermines social cause to a large extent when compared to other aspects of business like People Management and Financial Soundness where it ranks 1st and second respectively. April 16, , the SEC filed a lawsuit against Goldman Sachs for selling an asset to banks whose returns depended on a group of home mortgages being repaid by home loan borrowers. The alleged fraud foundation laid in the fact that Goldman Sachs did not inform the banks that those specific subprime mortgages were recommended by another Goldman Sachs customer.

And that same customer planned to bet against the same mortgages ever being paid by the home loan borrowers. Strong international presence and expansion should increase growth and profits. Expansion over abroad brings synergies to a company, because they would have a larger customer base. Expansion leads to more financial stability, because while one country may suffer economically, other countries may not have the same issues.

Additionally, expansion could help a company discover synergies in marketing expenses and new ideas — through experimentation — that may work well in one market. Demand from emerging markets is helping growth and margins. Emerging markets create new opportunities to expand products from the developed world. Paper products, computer services and other industries will all benefit as emerging countries increase demand for industrial and agricultural products. Goldman Sachs has many related business lines; they have the opportunity to cross sell to consumers who arrive for one specific need, but leave with many different products and services.

Cross selling is particularly lucrative, because it will allow Goldman Sachs to earn extra money from consumers without having to specifically target them with advertising or other promotional material.

Goldman Sachs provides advice on a diverse range of strategic transactions, including mergers, sell-side and buy-side advisories, leveraged buy-outs, joint ventures, strategic alliances, anti-raid and raid defenses, fairness opinions and spin-offs, split-offs, divestitures and other restructurings. Goldman Sachs has been offering its merger advisory services since Some of its major instances are listed below Reduced competition from an economic slowdown and competitor bankruptcies should increase the profit margins of all firm who avoid bankruptcy.

Less competition means higher prices and more money for remaining competitors. The credit market crisis increases the cost of borrowing for financial firms.

This increasing cost lowers margins and decreases the free cash flow to shareholders. As free cash flow rises, so does the value of the firm. If costs are high, then loan growth slows down and further weakens cash flow for the business.

Employee attrition means a company must go through the expense of hiring new employees, training those employees, and finding the right niche for them in an organization. When these employees move to other firms, they take their knowledge and expertise with them. This means that the existing equity investments in the Goldman Sachs will stand worthless.

Mortgage loans are not worth what was paid for them, but their value remains uncertain in the market. Apart from increasing uncertainty risk for the company, they also increase the discount rate applied to future cash flow. Thus the net value of the stock is reduced. A sharp rise in interest rates most likely to stop inflation seriously damages the profit margins of businesses like Goldman Sachs that rely on raising money to finance their expenses.

A rise in rates would most likely hurt the financial sector, which profits from borrowing money at low rates and lending it out at higher rates. It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macro environmental factors that a company has to take into consideration. The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses.

As long as that remains the case, Goldman will doubtless remain on top, to the perplexity of those who fail to grasp the significance of the Goldman Sachs-D. For a firm like Goldman Sachs which focuses on international marketing, the marketers need to consider the state of a trading economy both in the short and long-terms.

Inflation is the greatest concern when we talk about investments like pension funds and related endowments. Following is an illustration of how inflation linked bonds will provide the return, taking principal amount of million Dollars. The impact of unemployment on the performance of Goldman Sachs can be understood with a simple example that if any firm is running at its full capacity, there is more pricing power for business.

So far, Goldman Sachs has been quite accurate in its predictions regarding the unemployment scenario. Below are the illustrations. The Goldman Sachs Commerce Department timely reviews the current economic environment, tailwinds that could support the recovery and potential risks for the economy. Then it provides a summary of our projections for the economy in the coming year.

The social and cultural influences on business vary from country to country. It is very important that such factors are considered. Each of our businesses has an important role to play in furthering market-based solutions to meet the environmental and societal challenges we face.

To encourage the responsible flow of capital, have a positive impact on the communities where our clients and we do business, and drive attractive returns for our shareholders, we look for opportunities to invest in and finance transactions that have social and environmental benefits.

We take the same disciplined approach to these investments and market opportunities as we do with our traditional investments and markets: The guidance provided by our Framework. The power plant will have a capacity of 50 megawatts.

As a result of the ongoing developments, we recently completed our first run-of-river hydroelectric generating plant that has 23 megawatt capacity. Three additional run-of-river hydroelectricity projects are under development totaling megawatts. This new exchange offers effective and innovative financial tools to consumers, industrials, project developers, investors and others who wish to participate in these developing markets.

This builds on earlier investments that aim to build market infrastructure for environmental commodities, such as APX and Markit. Goldman Sachs is classified as a company whose services are directed at intangible assets Lovelock, An effective marketing mix should be well blended; matching customer needs with corporate resources and create a competitive advantage. Spotts and Weinberger identified that corporations with high brand evaluations are more susceptible to publicity, both positive and negative.

Fortune magazine lists Goldman Sachs in the top 50 most admired companies. Therefore, the negative publicity Goldman Sachs received in the wake of the global financial crisis should cause some concern for the effect on its corporate reputation. Goldman Sachs long standing company and brand history allow it weather the effects of the crisis well. However, they have not ignored the potential problems of continued bad publicity and have launched a new set of marketing efforts in response. Their new marketing efforts specifically target this deficiency and encompass key pieces of the marketing mix, while meeting corporate goals.

Goldman Sachs has changed its product offering to include more socially responsible initiatives. They have expanded their core competency of business advising to include environmental markets and their core competency of asset management to include emerging markets. The company also no longer offers securitised derivatives in the United States. Environmental Market Services Traditionally, marketing using the environment has been primarily in the manufacturing industries. Recently, there has been a gradual shift in emphasis of green advertising from business to consumer buyers Leonidou and Leonidou, placing a higher importance on service firms like Goldman Sachs to respond to the pressures from government and other stakeholders.

Goldman Sachs Environmental Markets Group deals with all facets of environment and business. They invest in clean energy companies, trade in environmental commodities, offer environmental advisement, and insure their own company meets environmental standards. Goldman Sachs also has a set of guidelines they use for every deal or transaction they undertake. We note that economic growth is listed before communal growth. Effective marketing must meet company objectives.

Our concern is that while these services are designed to increase Goldman Sachs corporate reputation, they do not directly address the true reason for the low scores in social responsibility. Goldman Sachs complicity in securitising predatory mortgages and subsequent complacency after realising the financial dangers is why the public rates them as an irresponsible company.

We recommend that in addition to the offer of environmental advising services, that Goldman Sachs install new metrics to rate the effectiveness in public opinion of the firm. Asset Management Emerging Markets Goldman Sachs has begun expanding their asset management business into emerging markets such as India and China. In the United States, giving economic assistance to these nations is a common way of appearing socially responsible.

However, while assisting newly developing countries with investment advising is seen as culturally helpful, Goldman Sachs new services are targeted only at the wealthiest individuals in the country. Asset management is most easily described as full service investment advice.

Goldman Sachs efforts are primarily focused on reaching out to current advisors in the emerging markets, and training them on Goldman Sachs products and services. This type of expansion is much different than investing in the regions. In our analysis, we identified wealth management and global presence as strengths for Goldman Sachs already. Therefore, while these new services are useful for Goldman Sachs to increase profit, they do little to address the weaknesses or threats that the corporation faces.

We recommend that they continue to offer asset management in emerging markets, but do not consider them an effective part of their new marketing strategy. One of the key definitions of a service firm is that the product is variable. This variability needs to be carefully controlled when dealing with foreign markets. The company was started by Marcus Goldman as a short term loan provider.

The company has headquarters in New York. The company also has major offices in major countries across the world such as UK, Germany, Japan, China, etc. The company has several branches across the world. The customers who travel frequently feel more ease banking with the same company in the foreign state too. The company lacks diversification, and it can be a huge problem. Many customers are scared after that lawsuit.

The company should devise a proper plan to overcome these weaknesses, especially to cover the history with bad lawsuits. The company has already a good history and a high-profile brand name in the international market. The company can sue the brand name to expand the services to other countries of the world.