SWOT Analysis / TOWS Matrix for Goldman Sachs (Germany)
Based on various researches at Oak Spring University , Goldman Sachs is operating in a macro-environment that has been destablized by – challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, geopolitical disruptions, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing energy prices, increasing household debt because of falling income levels, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Goldman Sachs can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Goldman Sachs, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Goldman Sachs 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 can be done for the following purposes –
1. Strategic planning of Goldman Sachs
2. Improving business portfolio management of Goldman Sachs
3. Assessing feasibility of the new initiative in Germany
4. Making a Investment Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Goldman Sachs
Strengths of Goldman Sachs | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Goldman Sachs are -
Sustainable margins compare to other players in Investment Services industry
– Goldman Sachs has clearly differentiated products in the market place. This has enabled Goldman Sachs to fetch slight price premium compare to the competitors in the Investment Services industry. The sustainable margins have also helped Goldman Sachs to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Goldman Sachs 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.
Strong track record of project management in the Investment Services industry
– Goldman Sachs is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Goldman Sachs in the Financial sector have low bargaining power. Goldman Sachs has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Goldman Sachs to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Goldman Sachs has one of the best training and development program in Financial industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Innovation driven organization
– Goldman Sachs is one of the most innovative firm in Investment Services sector.
Digital Transformation in Investment Services industry
- digital transformation varies from industry to industry. For Goldman Sachs digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Goldman Sachs 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 Sachs has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Goldman Sachs 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.
Superior customer experience
– The customer experience strategy of Goldman Sachs in Investment Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Goldman Sachs 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 Sachs is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Goldman Sachs emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy of Goldman Sachs comprises – understanding the underlying the factors in the Investment Services 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.
Diverse revenue streams
– Goldman Sachs is present in almost all the verticals within the Investment Services industry. This has provided Goldman Sachs 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.
Weaknesses of Goldman Sachs | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Goldman Sachs are -
No frontier risks strategy
– From the 10K / annual statement of Goldman Sachs, it seems that company is thinking out the frontier risks that can impact Investment Services industry. 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.
Low market penetration in new markets
– Outside its home market of Germany, Goldman Sachs needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners in Investment Services industry
– because of the regulatory requirements in Germany, Goldman Sachs 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 Investment Services industry.
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 Goldman Sachs supply chain. Even after few cautionary changes, Goldman Sachs is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Goldman Sachs vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Goldman Sachs is dominated by functional specialists. It is not different from other players in the Investment Services industry, but Goldman Sachs needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Goldman Sachs to focus more on services in the Investment Services industry rather than just following the product oriented approach.
Lack of clear differentiation of Goldman Sachs products
– To increase the profitability and margins on the products, Goldman Sachs needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Goldman Sachs has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Skills based hiring in Investment Services industry
– The stress on hiring functional specialists at Goldman Sachs 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.
Aligning sales with marketing
– From the outside it seems that Goldman Sachs needs to have more collaboration between its sales team and marketing team. Sales professionals in the Investment Services industry have deep experience in developing customer relationships. Marketing department at Goldman Sachs can leverage the sales team experience to cultivate customer relationships as Goldman Sachs is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Goldman Sachs 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 Investment Services industry using digital technology.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Goldman Sachs is slow explore the new channels of communication. These new channels of communication can help Goldman Sachs to provide better information regarding Investment Services products and services. It can also build an online community to further reach out to potential customers.
Goldman Sachs Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Goldman Sachs are -
Manufacturing automation
– Goldman Sachs can use the latest technology developments to improve its manufacturing and designing process in Investment Services sector. 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Goldman Sachs 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Goldman Sachs is facing challenges because of the dominance of functional experts in the organization. Goldman Sachs can utilize new technology in the field of Investment Services industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Leveraging digital technologies
– Goldman Sachs 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.
Loyalty marketing
– Goldman Sachs has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
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 Sachs 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Goldman Sachs 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 Goldman Sachs to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Goldman Sachs 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 Goldman Sachs to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Use of Bitcoin and other crypto currencies for transactions in Investment Services industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Goldman Sachs in the Investment Services industry. Now Goldman Sachs can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Goldman Sachs can develop new processes and procedures in Investment Services industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Creating value in data economy
– The success of analytics program of Goldman Sachs has opened avenues for new revenue streams for the organization in Investment Services industry. This can help Goldman Sachs to build a more holistic ecosystem for Goldman Sachs products in the Investment Services industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Investment Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Goldman Sachs can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Goldman Sachs can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Goldman Sachs can improve the customer journey of consumers in the Investment Services industry by using analytics and artificial intelligence. It 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.
Threats Goldman Sachs External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Goldman Sachs are -
Easy access to finance
– Easy access to finance in Investment Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Goldman Sachs can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Sachs.
Technology acceleration in Forth Industrial Revolution
– Goldman Sachs has witnessed rapid integration of technology during Covid-19 in the Investment Services industry. As one of the leading players in the industry, Goldman Sachs needs to keep up with the evolution of technology in the Investment Services 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Goldman Sachs may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Investment Services sector.
Stagnating economy with rate increase
– Goldman Sachs 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 Investment Services industry.
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 Sachs needs to understand the core reasons impacting the Investment Services industry. This will help it in building a better workplace.
Regulatory challenges
– Goldman Sachs 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 Investment Services industry regulations.
Environmental challenges
– Goldman Sachs 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. Goldman Sachs can take advantage of this fund but it will also bring new competitors in the Investment Services industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Goldman Sachs in Investment Services industry. The Investment Services 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 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 wage structure of Goldman Sachs
– 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 Sachs.
Shortening product life cycle
– it is one of the major threat that Goldman Sachs is facing in Investment Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Goldman Sachs 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 Goldman Sachs prominent markets.
Weighted SWOT Analysis of Goldman Sachs Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs 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 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 Sachs needs to make to build a sustainable competitive advantage.