Goldman Sachs and Its Reputation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Goldman Sachs and Its Reputation
Goldman Sachs was a bank, but it did not take deposits, issue credit cards, make mortgage loans, or interact with consumers. For most of its history Goldman was organized as a partnership and operated as an investment bank engaging in underwriting new securities to raise funds for corporations and public agencies, advising clients as in mergers and acquisitions, and managing assets for clients. It began to engage in securities trading and risk arbitrage in the 1950s, when it developed its philosophy of being "long-term greedy," which the bank understood as focusing on long-term profitability rather than short-term performance. Goldman went public in 1999, forecasting that its investment banking business would continue to provide most of its revenue and profits. Soon, however, its proprietary trading and trading on behalf of clients began to dominate both its revenue and profit streams. The leadership of the firm also shifted from investment bankers to traders, such as Henry Paulson and CEO Lloyd C. Blankfein. Goldman was a major player in the events leading to the financial crisis and was a major participant in the CDO market. As with most financial institutions Goldman was heavily criticized for its role in the crisis. The disclosure that Goldman had allowed an investor to select securities for inclusion in a CDO that the investor intended to short caused an uproar, particularly because the purchasers were not informed of the investor's role. The media covered the issue extensively, Congress held hearings, the SEC filed a lawsuit against Goldman, private investors filed lawsuits, and some issuers of securities shunned the company. Goldman's reputation was damaged. The company faced the decision of how to rebuild its reputation as it addressed new regulations on banks as a result of Dodd-Frank and Federal Reserve actions.
Swot Analysis of "Goldman Sachs and Its Reputation" written by David P. Baron includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Goldman Securities facing as an external strategic factors. Some of the topics covered in Goldman Sachs and Its Reputation case study are - Strategic Management Strategies, Financial markets, Regulation and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Goldman Sachs and Its Reputation casestudy better are - – supply chains are disrupted by pandemic , technology disruption, there is increasing trade war between United States & China, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions,
talent flight as more people leaving formal jobs, increasing energy prices, etc
Introduction to SWOT Analysis of Goldman Sachs and Its Reputation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Goldman Sachs and Its Reputation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Goldman Securities, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Goldman Securities 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 and Its Reputation can be done for the following purposes –
1. Strategic planning using facts provided in Goldman Sachs and Its Reputation case study
2. Improving business portfolio management of Goldman Securities
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 Goldman Securities
Strengths Goldman Sachs and Its Reputation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Goldman Securities in Goldman Sachs and Its Reputation Harvard Business Review case study are -
Training and development
– Goldman Securities has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Goldman Sachs and Its Reputation Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Goldman Securities digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Goldman Securities 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.
Successful track record of launching new products
– Goldman Securities has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Goldman Securities 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Goldman Sachs and Its Reputation firm has clearly differentiated products in the market place. This has enabled Goldman Securities to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Goldman Securities to invest into research and development (R&D) and innovation.
Analytics focus
– Goldman Securities is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by David P. Baron can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Learning organization
- Goldman Securities 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 Goldman Securities is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Goldman Sachs and Its Reputation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Finance & Accounting field
– Goldman Securities 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 Goldman Securities in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Goldman Securities is one of the most innovative firm in sector. Manager in Goldman Sachs and Its Reputation Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Goldman Securities 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.
Low bargaining power of suppliers
– Suppliers of Goldman Securities in the sector have low bargaining power. Goldman Sachs and Its Reputation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Goldman Securities to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Goldman Securities is one of the leading recruiters in the industry. Managers in the Goldman Sachs and Its Reputation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Goldman Securities 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 and Its Reputation - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Goldman Sachs and Its Reputation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Goldman Sachs and Its Reputation are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Goldman Sachs and Its Reputation, is just above the industry average. Goldman Securities 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Goldman Securities is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Goldman Sachs and Its Reputation can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Goldman Securities 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. Goldman Securities 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.
Increasing silos among functional specialists
– The organizational structure of Goldman Securities is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Goldman Securities needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Goldman Securities to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Goldman Securities 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.
Products dominated business model
– Even though Goldman Securities 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 and Its Reputation should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Goldman Sachs and Its Reputation 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 Goldman Securities has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, David P. Baron suggests that, Goldman Securities 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Goldman Sachs and Its Reputation 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 Goldman Securities 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Goldman Securities 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.
Capital Spending Reduction
– Even during the low interest decade, Goldman Securities 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.
Opportunities Goldman Sachs and Its Reputation | 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 and Its Reputation are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Goldman Securities can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Goldman Securities in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Goldman Securities 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Goldman Securities can use these opportunities to build new business models that can help the communities that Goldman Securities operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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. Goldman Securities can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Goldman Securities can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Using analytics as competitive advantage
– Goldman Securities has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Goldman Sachs and Its Reputation - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Goldman Securities to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Goldman Securities can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Goldman Securities 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Goldman Securities 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 and Its Reputation, 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 Goldman Securities 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.
Better consumer reach
– The expansion of the 5G network will help Goldman Securities to increase its market reach. Goldman Securities 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Goldman Securities is facing challenges because of the dominance of functional experts in the organization. Goldman Sachs and Its Reputation 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 and Its Reputation 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 and Its Reputation 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 Goldman Securities in the Finance & Accounting sector and impact the bottomline of the organization.
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. Goldman Securities 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.
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 Goldman Securities.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Goldman Securities in the Finance & Accounting industry. The Finance & Accounting 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.
Technology acceleration in Forth Industrial Revolution
– Goldman Securities has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Goldman Securities needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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. Goldman Securities needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Increasing wage structure of Goldman Securities
– 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 Goldman Securities.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Goldman Securities 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 and Its Reputation .
High dependence on third party suppliers
– Goldman Securities 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.
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.
Regulatory challenges
– Goldman Securities 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.
Stagnating economy with rate increase
– Goldman Securities 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.
Weighted SWOT Analysis of Goldman Sachs and Its Reputation 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 and Its Reputation 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 and Its Reputation 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 and Its Reputation 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 and Its Reputation 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 Goldman Securities needs to make to build a sustainable competitive advantage.