Case Study Description of Goldman Sachs Group, Inc.: Sustaining the Franchise
This case traces the history of Goldman Sachs from its origins as it grows from a partnership to one of the most valuable franchises in the global securities industry and ultimately a listed corporation, and its transformation into a bank holding company under the regulatory oversight of the Federal Reserve. Even by the standards of the financial services sector - significantly restructured in recent decades - Goldman Sachs has undergone transformative configurations while straining to hold on to the attributes that made it an industry leader. There are successes and failures, and the case focuses on the future direction of the firm in a market and regulatory environment very different from the past.
Swot Analysis of "Goldman Sachs Group, Inc.: Sustaining the Franchise" written by Sohail Rana, Ingo Walter 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 Goldman Sachs Group, Inc.: Sustaining the Franchise case study are - Strategic Management Strategies, Regulation and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Goldman Sachs Group, Inc.: Sustaining the Franchise casestudy better are - – challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China,
technology disruption, increasing commodity prices, etc
Introduction to SWOT Analysis of Goldman Sachs Group, Inc.: Sustaining the Franchise
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Goldman Sachs Group, Inc.: Sustaining the Franchise 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 Goldman Sachs Group, Inc.: Sustaining the Franchise can be done for the following purposes –
1. Strategic planning using facts provided in Goldman Sachs Group, Inc.: Sustaining the Franchise case study
2. Improving business portfolio management of Sachs Goldman
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sachs Goldman
Strengths Goldman Sachs Group, Inc.: Sustaining the Franchise | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sachs Goldman in Goldman Sachs Group, Inc.: Sustaining the Franchise Harvard Business Review case study are -
Ability to lead change in Finance & Accounting field
– Sachs Goldman is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Sachs Goldman in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Sachs Goldman has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Superior customer experience
– The customer experience strategy of Sachs Goldman in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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 Goldman Sachs Group, Inc.: Sustaining the Franchise 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 Goldman Sachs Group, Inc.: Sustaining the Franchise Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
Sustainable margins compare to other players in Finance & Accounting industry
– Goldman Sachs Group, Inc.: Sustaining the Franchise 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 Finance & Accounting industry. The sustainable margins have also helped Sachs Goldman to invest into research and development (R&D) and innovation.
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 Goldman Sachs Group, Inc.: Sustaining the Franchise - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Sachs Goldman is present in almost all the verticals within the industry. This has provided firm in Goldman Sachs Group, Inc.: Sustaining the Franchise 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.
Highly skilled collaborators
– Sachs Goldman has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Goldman Sachs Group, Inc.: Sustaining the Franchise HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Sachs Goldman is one of the leading recruiters in the industry. Managers in the Goldman Sachs Group, Inc.: Sustaining the Franchise are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Goldman Sachs Group, Inc.: Sustaining the Franchise | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Goldman Sachs Group, Inc.: Sustaining the Franchise are -
Products dominated business model
– Even though Sachs Goldman has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Goldman Sachs Group, Inc.: Sustaining the Franchise should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Goldman Sachs Group, Inc.: Sustaining the Franchise 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Sohail Rana, Ingo Walter 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.
Need for greater diversity
– Sachs Goldman has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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 - Goldman Sachs Group, Inc.: Sustaining the Franchise, 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Goldman Sachs Group, Inc.: Sustaining the Franchise HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Sachs Goldman has relatively successful track record of launching new products.
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 Finance & Accounting 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.
Slow decision making process
– As mentioned earlier in the report, Sachs Goldman has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Sachs Goldman even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High cash cycle compare to competitors
Sachs Goldman has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Goldman Sachs Group, Inc.: Sustaining the Franchise, in the dynamic environment Sachs Goldman has struggled to respond to the nimble upstart competition. Sachs Goldman has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
Opportunities Goldman Sachs Group, Inc.: Sustaining the Franchise | 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 Goldman Sachs Group, Inc.: Sustaining the Franchise 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 Goldman Sachs Group, Inc.: Sustaining the Franchise case study. Sachs Goldman can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Sachs Goldman in the consumer business. Now Sachs Goldman can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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 Finance & Accounting segment.
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 Finance & Accounting sector.
Better consumer reach
– The expansion of the 5G network will help Sachs Goldman to increase its market reach. Sachs Goldman will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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.
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, Goldman Sachs Group, Inc.: Sustaining the Franchise, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Sachs Goldman to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sachs Goldman is facing challenges because of the dominance of functional experts in the organization. Goldman Sachs Group, Inc.: Sustaining the Franchise case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Goldman Sachs Group, Inc.: Sustaining the Franchise External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Goldman Sachs Group, Inc.: Sustaining the Franchise are -
Easy access to finance
– Easy access to finance in Finance & Accounting 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.
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.
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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Sachs Goldman.
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 Finance & Accounting industry.
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.
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.
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 Finance & Accounting industry regulations.
Consumer confidence and its impact on Sachs Goldman demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Sachs Goldman needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sachs Goldman can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Goldman Sachs Group, Inc.: Sustaining the Franchise .
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.
Weighted SWOT Analysis of Goldman Sachs Group, Inc.: Sustaining the Franchise 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 Goldman Sachs Group, Inc.: Sustaining the Franchise 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 Goldman Sachs Group, Inc.: Sustaining the Franchise 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 Goldman Sachs Group, Inc.: Sustaining the Franchise 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 Goldman Sachs Group, Inc.: Sustaining the Franchise 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.