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Founded in 1869 by Marcus Goldman
Headquartered in New York City, New York
Joined the New York Stock Exchange in 1896
Employees 38,700 worldwide
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2010 total sales were $39.161 billion with $5.014
coming from the investment management
division, which is 12.8% of the total
Ranker 1st of 148 in market capitalization
10,000 Small Businesses- $500 million initiative
to create the potential for small business
growth throughout the United States
Political•
SEC regulations
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In 2010 charged with civil fraud over complex
mortgage securities
FDIC regulations
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Became a bank holding company in 2008, to provide
safety from what happened to other investment
banks
Economic•
Rising commodity prices
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Global economic recession
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Through the sale of derivatives they will gain a
profit
In 2010 total net revenues fell by 13.3%
All-time high for mortgage foreclosures
Currency exchange rates
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Only offer securitised derivatives to: Germany,
Switzerland, France, Italy, Japan, and Hong Kong
Socio-cultural
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Business Ethics
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Used cross currency swaps to hide how much debt
the Greek government had on their books to become
accepted into European Union
Consumer becoming more savings conscious
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From 2008 to 2010 consumers savings increased from
$447.93 to $655.78, or 46.4%
Technological
•
Mobile applications
•
Increasing population with smartphones that have
downloadable applications
Factor
Trend
Evaluation
Impact (1=low,
5=high)
Rank in terms of
importance
Political
SEC regulations
Threat
4
1
FDIC regulations
T/O
5
Rising commodity
prices
Global economic
recession
Currency exchange
rates
Opportunity
4
Opportunity
3
Threat
4
Business Ethics
Consumers becoming
more savings
conscious
T/O
5
Opportunity
2
Mobile Applications
Opportunity
2
Economic
Socio-cultural
Technological
2
3
4
Defined:
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Diversified Investments Industry
Investment Management Services Include:
 Asset and Private Wealth Management
 Securitised Derivatives
 Bank Deposits
 Closed ended investments
 Direct private investing
 Mutual Funds
 Securitised products and structured fund solutions
Buyers:
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Financial Institutions
Corporations
Governments
High-net-worth Individuals
Suppliers:
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The Federal Reserve
United States Treasury Department
Competitors:
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JP Morgan Chase & Co.
Morgan Stanley
Citigroup Global Markets Inc. (private)
Bank of America Securities LLC (private)
UBS Investment Bank (private)
Deutsche Bank AG
Substitutes:
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Other bank holding companies
Consumers- spending rather than saving
Corporations- contracting rather than
expanding
Governments- budget cuts rather than
spending
Potential Entrants:
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Very low risk of potential new entrants (since
2008 there have been approximately 320 bank
failures)
During that time some of the biggest banks
were bought out such as: Bear Stearns, Merrill
Lynch, Wachovia, and National City Corp.
Factor
Evaluation
Buyer Power
Benign ( services can be purchased on an individual or large basis
whether it be by a corporation, government, or individual and may
have a switching cost to terminate a contract)
Supplier Power
Strong Force ( rates and other factors are set forth by officials, so
there is no bargaining power)
Intensity of Rivalry
Strong Force ( there are approximately 8,000 banks in the U.S.
alone so there is a large amount of competition)
Threat of Substitute Products
Strong Force ( the largest threat is outside substitutions for
services, can have switching cost so the force wouldn’t be as
powerful)
Threat of New Entrants
Benign ( very low threat to which it is almost non-existent as in the
recent years there has been a large number of bank failures and
acquisitions)
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Key Force- Intensity of Rivalry
Goldman Sachs is the 5th largest bank holding
company
To keep a competitive advantage Goldman
Sachs must evaluate their competencies to
eliminate any that may drive their profits down
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Biggest threat is brought about by the rivals of
Goldman Sachs
If the securitised derivatives market is
profitable, expand into other countries and
regions of the world instead of limiting options
Continue to create a positive image with
public through their charitable fund “Goldman
Sachs Gives”
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JP Morgan Chase & Co.
Morgan Stanley
Deutsche Bank AG
Citigroup Global Markets, Inc. (private)
Bank of America Securities LLC (private)
UBS Investment Bank (private)
Goldman Sachs
JP Morgan Chase & Co.
Morgan Stanley
Deutsche Bank AG
Sales (in
billions)
$39.16
$102.694
$16.366
€28.567, $40.25
Sales Growth
(quarterly)
(10.1%)
45.2%
30.1%
30.4%
Net Income
$7.71
$17.37
$2.55
€2.33, $3.283
Sales
Distribution by
Division
Investment banking- 12.28%
Investment management11.93%
Commissions&Fees- 9.12%
Market making- 34.93%
Other principal transactions17.7%
Interest income- 14.04%
Investment banking- 6.02%
Principal transactions10.61%
Lending&Deposit Fees6.17%
Asset management- 13.14%
Securities gains- 2.89%
Mortgage fees- 3.77%
Credit card- 5.74%
Other- 1.99%
Interest Income- 49.66%
Investment banking26.24%
Other principal
transactions- 54.77%
Commissions&Fees13.89%
Asset management.64%
Other- 6.09%
Interest expense(1.63%)
Interest income- 50.08%
Commissions&Fees37.45%
Other income- 2.67%
Financial
assets/liabilities at fair
value- 11.74%
Financial assets
available for
sale- .7%
Equity method
investments- 7.01%
Employees
38,700
239,831
62,542
102,062
Competitor
Objectives
Goldman Sachs
Research from across economics, commodities and
strategy research to locate investment opportunities
across asset classes. We focus on key themes,
recommendations and how to implement them.
JP Morgan Chase & Co.
Be a catalyst for meaningful, positive and sustainable
change within our highest-need neighborhoods and
communities across the globe.
Morgan Stanley
Our global citizenship is a direct reflection of the firm's
core values and enhances our ability to provide superior
service to our clients, our employees and our
communities.
Deutsche Bank AG
We compete to be the leading global provider of
financial solutions, creating lasting value for our clients,
our shareholders, our people and the communities in
which we operate.
Company
Product Diversity
Reach of
Sales
Number of
Divisions
Goldman Sachs
Investment Banking
Trading & Principal Investments
Asset Management
Securities Services
Global
4
JP Morgan Chase &
Co.
Investment Banking
Commercial Banking
Treasury & Securities Services
Asset Management
Retail Financial Services
Global
5
Morgan Stanley
Institutional Securities
Global Wealth Management Group
Asset Management
Global
3
Deutsche Bank AG
Corporate & Investment Banking
Private Equity
Asset Management
Corporate Investments Division
Global
4
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Reputation
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Investment Strategies
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Who is going to provide the best customer service to
the client to earn their future business as well
Is your client willing to take on more or less risk
Competitive rates on savings vehicles
Competitive rates/fees on lending instruments
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The goal of Goldman Sachs along with their
key competitors is to provide the quality of
customer care to each of their clients, along
with competitive and affordable rates
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Need good customer service
Lowest fees and interest for lending instruments
Higher rates of return for their savings vehicles
Company
Number of Countries Products
Marketed In
Goldman Sachs
30+
JP Morgan Chase & Co.
25+
Morgan Stanley
25+
Deutsche Bank AG
60+
Company
Core Competencies
Goldman Sachs
Providing excellent diversification for
wealth and asset management
worldwide
JP Morgan Chase & Co.
Considered one of the “Big Four” banks
in the U.S. and is highly competitive in
market capitalization
Morgan Stanley
Providing global financial services to a
diversified group of corporations,
governments, and financial institutions
Deutsche Bank AG
A large presence in Europe, the
Americas, Asia Pacific and emerging
markets
Company
Market Cap (billions)
Market Capitalization
Rank (industry)
Goldman Sachs
$87.02
1st of 147
(Diversified Investments)
JP Morgan Chase & Co.
$181.58
26th of 217
(Money Center Banks)
Morgan Stanley
$41.17
10th of 175
(Investment Brokerage)
Deutsche Bank AG
$54.48
7th of 10
(Foreign Money Center
Banks)
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Rise in unemployment
This has caused a greater increase in demand for
savings vehicles
 From 2008 to 2010 consumers savings increased from
$447.93 to $655.78, or 46.4%
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More strict regulations due to the collapse of
the housing markets
Research shows that over the next 10 years that
global GDP will grow 4% annually
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400 million people projected to move into
Chinese urban centers by 2050, which will
result in an increasing demand for
commodities
Pools of capital in sovereign wealth funds in
both developed and emerging economies are
expected to grow from $3 trillion to $10 trillion
over the next decade
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Comparing the quarterly sales growths by each of
the following organizations it is easy to see the
potential.
Compared with their key competitors Goldman
Sachs growth is limited on the basis of services
provided, but there are many growth markets they
are pursuing.
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One of the biggest reasons as to why Goldman Sachs had
a quarterly loss was due to the fact in 2009 their revenues
had jumped by 50% from the previous year.
Company
Target Consumer
Goldman Sachs
High-Net-Worth Individuals
Corporations
Governments
Financial Institutions
JP Morgan Chase & Co.
Financial Institutions
Governments
Institutional Investors
Multinational Corporations
Retail Investors
High-Net-Worth Individuals
Morgan Stanley
Corporations
Governments
Financial Institutions
Individuals worldwide
Deutsche Bank AG
Corporations
Financial Institutions
High-Net-Worth Individuals
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One of the most efficient ways to advertise
today being able to reach everyone with the use
of internet
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Facebook
LinkedIn
Twitter
YouTube
Flickr
Podcast
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To successfully compete in the diversified
investments market it is important to highlight the
service differentiations, so that you are always
separating yourself from your competition.
The keys to competition in this industry is
reputation, investment strategies, and competitive
rates on savings vehicles and lending instruments
Social Media is a great and cheap way to advertise,
along with the potential to scout new talent for the
workforce, ie. LinkedIn
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Customer Service and Loyalty comes first
Their assets are their people, capital &
reputation
Provide superior returns to shareholders
Great sense of pride in the professional quality
of work provided
Creativity and imagination is in everything
they do
2006
2007
2008
2009
2010
Sales
(in millions)
$37,665
$45,987
$49,802
$45,173
$39,161
Profits
$9,398
$11,407
$2,041
$12,192
$7,713
21.4%
(118%)
697%
(163%)
Percentage
Increase/
(decrease) in
profits
• From 2006 to 2010 there is a sales increase of approximately 4%
•However from 2008 the sales actually decrease by 21.4%
•Their profits have a few good years but ultimately see a decline by 17.9%
• Goldman
Sachs is currently rated as having Aggressive
Accounting & Governance Risk (AGR) they are in the 16th
percentile among all companies, indicating higher
Accounting & Governance Risk (AGR) than 84% of
companies.
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On January 11, 2011, Goldman Sachs
announced it will be making certain changes to
their business segments, the company has
reported the following four business segments:
Investment Banking, Institutional Client
Services, Investing and Lending, and
Investment Management.
Also hoping to capitalize from more global
capital markets
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Cash and cash equivalents $39.788b (4%)
Cash & securities segregated for regulatory and other purposes $53.731b (47%)
Collateralized agreements $188.355b (31%)
Securities borrowed $166.306b (12%)
Receivables from brokers, dealers and clearing organizations $10.437b (17%)
Receivables from customers and counterparties $67.703b (22%)
Financial instruments owned $356.953b (4%)
Other assets $28.059b (5%)
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The percentage increase/decrease is compared with 2009 value
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Strengths
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Well diversified business mix
Best positioned versus its peers for long-term
earnings growth due to superior business mix and
culture
Dominant position in the most profitable segments
of investment banking and trading businesses, with
a history of outperforming during both strong and
weak market environments.
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Weaknesses
Weakness in equity markets is likely to affect
investor confidence
 As a bank holding company, Goldman faces
structural challenges including a potential shift of
more of its liability mix to deposits and away from
more wholesale-oriented funding
 Also Goldman has a very high accounting and
governance risk which could also affect confidence
within the company
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Opportunities
Expectation of more private equity gains, despite the
flattish equity markets.
 High leverage to the global capital markets, with a
leading presence in investment banking, trading,
and prime brokerage.
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Threats
A slowing US economy could result in a softer equity
underwriting business and low merchant banking gains.
 Many of Goldman’s businesses have net long positions in
various financial instruments. These investing and
trading positions are marked to market on a daily basis,
and declines in these asset values can directly affect
Goldman’s financial performance
 Goldman could also face challenges from Basel III and the
Dodd-Frank Act.
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Investing in Growth Markets
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The growth strategy for Asia has been Korea, where
Goldman has built a significant presence since 2007
through acquisitions, alliances, and product
expansion
The BRICs are a major target because these growth
markets are the anchors in the global economy.
 Brazil
 Russia
 India
 China
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Goldman should be in
the middle of this chart.
Market Penetration for their
exploration into potential
growth markets
 Product Development to
constantly try to create new
solutions for their existing
clients
 Market development in
emerging markets by
creating strategic alliances
 Diversification to better
help international clients as
they enter foreign markets
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Strengthening Client Relationships
Strengthening Reputational Excellence
Strengthening Committee Governance
Enhancing Transparency of Communication &
Disclosure
Strengthening Training & Professional
Development
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PZU SA
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Largest insurance company in Central and Eastern Europe,
2010 Goldman helped complete a successful IPO that launched
PZU on the path to becoming an independent company
This was the largest IPO in Europe since 2007 and the largest
ever in Central Europe, which led to Goldman Sachs
International established an office in Warsaw, Poland in 2010
Ports America Group (PAG)
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Goldman assisted PAG in raising $249 million for
Baltimore’s Seagirt Marine Terminal, with the
widening of the Panama Canal to be completed in
2014
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AIA Group Limited (AIA)
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$20.5 billion, AIA was the largest IPO ever listed on
a single stock exchange, the third largest IPO
globally and the world’s largest IPO in the insurance
sector
HRT Participacoes em Petroleo S.A. (HRT)
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With ambitious plans to explore and develop oil
fields in the Solimoes Basin of Brazil, as well as
offshore exploration areas in the Walvis and Orange
basins of Namibia. Goldman helped HRT raise more
than $1.5 billion through an IPO in October 2010
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Dai-ichi Life Insurance Company, Limited
(Dai-ichi Life)
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In April 2010 Goldman helped Dai-ichi Life bring an
IPO to the Tokyo Stock Exchange which resulted in a
$11.2 billion offering
This was the largest IPO in Japan since 1998, and
Dai-ichi has already had the opportunity to expand
internationally.
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Major focus towards service and loyalty to their
clients
Aggressive approach towards investments to
provide superior returns to shareholders
The expansion of creativity and imagination to
provide the best possible solutions to any problem
that arises
Taking great pride in the professional quality of
work
Expanding into potential growth markets, which
Asia is one of the biggest targets by Goldman
Sachs