Internal Governance and Control at Goldman Sachs: Block Trading SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
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Case Study SWOT Analysis Solution
Case Study Description of Internal Governance and Control at Goldman Sachs: Block Trading
Although the explicit problem presented in the case concerns pricing a block trade, the real issue involves the decision-making and oversight processes used to arrive at a price that is appropriate for both the client and Goldman Sachs. Asks students in assignment questions to map the decision and control processes used in this core activity and then to reflect on whether these processes are sustainable and scalable as Goldman Sachs grows from 5,000 employees to 20,000 employees within a 5-year period. Goldman Sachs' decision and control processes are based, at root, on trust, so the question becomes whether and how a culture based on trust is scalable.
Swot Analysis of "Internal Governance and Control at Goldman Sachs: Block Trading" written by Malcolm S. Salter, Ratna Sarkar includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sachs Goldman facing as an external strategic factors. Some of the topics covered in Internal Governance and Control at Goldman Sachs: Block Trading case study are - Strategic Management Strategies, Corporate governance, Decision making, Financial markets and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Internal Governance and Control at Goldman Sachs: Block Trading casestudy better are - – central banks are concerned over increasing inflation, there is increasing trade war between United States & China, increasing household debt because of falling income levels, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs,
challanges to central banks by blockchain based private currencies, there is backlash against globalization, etc
Introduction to SWOT Analysis of Internal Governance and Control at Goldman Sachs: Block Trading
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Internal Governance and Control at Goldman Sachs: Block Trading case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sachs Goldman, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sachs Goldman operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Internal Governance and Control at Goldman Sachs: Block Trading can be done for the following purposes –
1. Strategic planning using facts provided in Internal Governance and Control at Goldman Sachs: Block Trading case study
2. Improving business portfolio management of Sachs Goldman
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sachs Goldman
Strengths Internal Governance and Control at Goldman Sachs: Block Trading | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sachs Goldman in Internal Governance and Control at Goldman Sachs: Block Trading Harvard Business Review case study are -
Strong track record of project management
– Sachs Goldman is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Sachs Goldman digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sachs Goldman has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Learning organization
- Sachs Goldman is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Sachs Goldman is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Internal Governance and Control at Goldman Sachs: Block Trading Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Sachs Goldman is one of the most innovative firm in sector. Manager in Internal Governance and Control at Goldman Sachs: Block Trading Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Sachs Goldman has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Internal Governance and Control at Goldman Sachs: Block Trading - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Sachs Goldman is one of the leading recruiters in the industry. Managers in the Internal Governance and Control at Goldman Sachs: Block Trading are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Sachs Goldman has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sachs Goldman has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Diverse revenue streams
– Sachs Goldman is present in almost all the verticals within the industry. This has provided firm in Internal Governance and Control at Goldman Sachs: Block Trading case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Sustainable margins compare to other players in Strategy & Execution industry
– Internal Governance and Control at Goldman Sachs: Block Trading firm has clearly differentiated products in the market place. This has enabled Sachs Goldman to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Sachs Goldman to invest into research and development (R&D) and innovation.
Organizational Resilience of Sachs Goldman
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sachs Goldman does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Sachs Goldman are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Operational resilience
– The operational resilience strategy in the Internal Governance and Control at Goldman Sachs: Block Trading Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Weaknesses Internal Governance and Control at Goldman Sachs: Block Trading | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Internal Governance and Control at Goldman Sachs: Block Trading are -
No frontier risks strategy
– After analyzing the HBR case study Internal Governance and Control at Goldman Sachs: Block Trading, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Increasing silos among functional specialists
– The organizational structure of Sachs Goldman is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Sachs Goldman needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sachs Goldman to focus more on services rather than just following the product oriented approach.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Sachs Goldman supply chain. Even after few cautionary changes mentioned in the HBR case study - Internal Governance and Control at Goldman Sachs: Block Trading, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sachs Goldman vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Malcolm S. Salter, Ratna Sarkar suggests that, Sachs Goldman is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Internal Governance and Control at Goldman Sachs: Block Trading, it seems that the employees of Sachs Goldman don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Capital Spending Reduction
– Even during the low interest decade, Sachs Goldman has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Workers concerns about automation
– As automation is fast increasing in the segment, Sachs Goldman needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High operating costs
– Compare to the competitors, firm in the HBR case study Internal Governance and Control at Goldman Sachs: Block Trading has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Sachs Goldman 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Sachs Goldman has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Internal Governance and Control at Goldman Sachs: Block Trading, is just above the industry average. Sachs Goldman needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Lack of clear differentiation of Sachs Goldman products
– To increase the profitability and margins on the products, Sachs Goldman needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Internal Governance and Control at Goldman Sachs: Block Trading | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Internal Governance and Control at Goldman Sachs: Block Trading are -
Creating value in data economy
– The success of analytics program of Sachs Goldman has opened avenues for new revenue streams for the organization in the industry. This can help Sachs Goldman to build a more holistic ecosystem as suggested in the Internal Governance and Control at Goldman Sachs: Block Trading case study. Sachs Goldman can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sachs Goldman can use these opportunities to build new business models that can help the communities that Sachs Goldman operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Manufacturing automation
– Sachs Goldman can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Buying journey improvements
– Sachs Goldman can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Internal Governance and Control at Goldman Sachs: Block Trading suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sachs Goldman can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Internal Governance and Control at Goldman Sachs: Block Trading, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Sachs Goldman can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Leveraging digital technologies
– Sachs Goldman can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sachs Goldman in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sachs Goldman to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Sachs Goldman to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Sachs Goldman to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sachs Goldman can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Sachs Goldman can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sachs Goldman can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats Internal Governance and Control at Goldman Sachs: Block Trading External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Internal Governance and Control at Goldman Sachs: Block Trading are -
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Sachs Goldman in the Strategy & Execution sector and impact the bottomline of the organization.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sachs Goldman in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Environmental challenges
– Sachs Goldman needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Sachs Goldman can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Internal Governance and Control at Goldman Sachs: Block Trading, Sachs Goldman may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Sachs Goldman
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Sachs Goldman.
Regulatory challenges
– Sachs Goldman needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Sachs Goldman will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Stagnating economy with rate increase
– Sachs Goldman can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sachs Goldman can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Sachs Goldman business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Sachs Goldman high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Weighted SWOT Analysis of Internal Governance and Control at Goldman Sachs: Block Trading Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Internal Governance and Control at Goldman Sachs: Block Trading needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Internal Governance and Control at Goldman Sachs: Block Trading is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Internal Governance and Control at Goldman Sachs: Block Trading is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Internal Governance and Control at Goldman Sachs: Block Trading is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Sachs Goldman needs to make to build a sustainable competitive advantage.