Emanuel Alvarez
Nelida Cortes
Alex Galindo
Alejandro Guerrero
Eddy Song
Raymond Ho Wai Yee
1
2
I. Past and Present Situations of Goldman Sachs
3
Goldman Sachs Time-line
1869: Goldman is
founded as a small
commercial paper
deal operating in a
one-room office on
Pine Street.
1929: GS suffers big
losses in the stock
market collapse by
its investment unit,
Goldman Sachs
Trading Corp.
1906: GS becomes a
major player in the
nascent IPO business,
handling initial equity
sales for companies such
as Sears, Roebuck & Co.
1930: Sidney
Weinberg takes
over Goldman and
builds its
investment bank
1956: GS is the lead
underwriter of Ford’s
IPO, a symbol of the
firms growing
investment banking
prowess.
1969: Gus Levy takes
over Goldman and
builds back up its
stock and bonds
trading business.
4
Goldman Sachs Time-line
1976: John Weinberg,
the son of Sidney
Weinberg take over
the firm, and continue
to expand its
investment banking
business
1990: Robert Rubin and
Stephen Friedman take the
helm, focusing on
expanding Goldman’s
global operations and its
mergers & acquisitions
advisory business.
1981: Goldman acquires J.
Aron & Co., a
commodities-trading
shop, where current
Goldman CEO Lloyd
Blankfein worked. Mr.
Blankfein joins Goldman
1994: Goldman faces
a serious crisis after
Goldman’s bets on
the bond market
suffer big losses.
Some partners flee
the firm.
Jan. 1999: Jon Corzine
abruptly steps aside as
the firm’s co-head,
leaving Henry M.
Paulson Jr. the sole
chief executive
Spring 1999: Goldman
becomes a major
underwriter of tech
company IPOs,
including such
offerings as eToys
5
Goldman Sachs Time-line
May 1999: After much
internal debate,
Goldman decides to go
public. At the time of
its IPO, the firm is
valued at about $33
billion
May/June 2006: Bush
administration taps
Paulson to be Treasury
secretary. Lloyd
Blankfein succeeds
Paulson as Chairman
and CEO
December 2007:
Goldman reports a
record profit of $11.6
billion on revenue of
$45.99 billion, on the
heels of the credit and
housing booms.
September 2008: With
the financial crisis
intensifying, Goldman
becomes a bank
holding company,
entitling it to greater
government protection.
Fall 2008: The Federal
Reserve Bank of New York
agrees to pay Goldman and
other firms 100 cents on the
dollar for its trading
position with AIG.
September 2008:
Warren Buffett invests
$5 billion in Goldman.
6
Goldman Sachs Time-line
October 2008: The
government buys $10
billion worth of
preferred shares
from Goldman as
part of TARP.
Jan 2010: Goldman reports
a record profit of $13.39
billion. The firm sets aside
$16.19 billion for
compensation, or 35.8% of
its net revenue to pay for
compensation and
benefits, about $3 billion
less than expected.
April 2010: The SEC
charges Goldman with
deceiving clients by
selling them mortgage
securities secretly
designed by a hedge fund
run by John Paulson.
September 9, 2010: UK’s
Financial Services
Authority fines Goldman £
17.5m for not alerting the
British authorities about
the original SEC probe.
16 July 2010:
Goldman agrees to
pay a $550 million
fine to settle the
SEC’s charges over
Abacus. The biggest
fine ever imposed by
SEC.
April 14, 2011: The Senate
PSI committee accuses
Goldman of deliberately
selling mortgage-linked
derivatives at inflated
prices knowing the
housing market was
about to crash.
7
Mission
 “Goldman Sachs commits people, capital, and ideas to
help our client, shareholders and the communities we
serve to grow.”
 With the reduction of regulation and increases in
International agencies, GS main objective is to enable
the elite to consolidate wealth from around the globe
by continually generating bubbles in different sectors
around the globe; reaping the profits in the form of
increased ROI, compensation, bonuses and salaries.
8
Overview
Goldman, Sachs & Co. (GS&Co.), a limited partnership
registered as a U.S. broker-dealer and futures commission
merchant, together with its consolidated subsidiaries
(collectively, the firm), is an indirectly wholly owned
subsidiary of The Goldman Sachs Group, Inc. (Group Inc.).
The company provides prime brokerage services, financing
services and securities lending services to mutual funds,
pension funds, hedge funds, foundations and high-networth individuals worldwide. As a result, the firm has
positioned itself as a global leader in mergers and
acquisitions advice as well as securities underwriting.
The firm participates in the following four banking activities
9
Investment Banking
 Goldman Sachs provides a variety of investment
banking services to a diverse group of clients including
corporations, financial institutions, investment funds
and governments.
10
Institutional Client Services
 The firm facilitates client transactions and makes
markets in fixed income, equity, currency, and
commodity products. It also creates markets on major
stock, options, and future exchanges worldwide.
Goldman Sachs also provides financing, securities
lending and prime brokerage services to institutional
clients.
11
Investing & Lending
 Investments and loans are provided to finance clients
and are usually long-term. The firm invests with funds
managed by them in debt securities, loans, public and
private equity securities, real estate and consolidated
investment entities.
12
Investment Management
 The firm provides investment management services
across a variety of asset classes to its institutional and
individual clients. They also provide advisory services
which include financial counseling and portfolio
management.
13
Current Performance Objectives
 Goldman Sachs has been one of the most profitable
investment banking and securities firms in history.
However, as consumers and businesses spend less, the
banks which rely on their borrowing to make money are
now hurting. As of October 10, 2011, analysts are predicting
Goldman Sachs to post its first loss since 1999.
 It's important to note that a single-quarter loss is not a
trend. One quarter does not warrant any type of panic.
Sachs should look at its next two or three quarter results
before evaluating their performance following the
shrinking of the securities business as a result of increasing
financial pressure in the U.S.
14
15
Growth
Throughout its storied history, Goldman Sachs has
always seen success. It has experienced overall growth
since its 1869 beginnings, and established itself as a
respected player in the banking industry. Only until
recently has its reputation and image been called into
question. It is now a turning point for the company as
financial regulation increases. It is now a matter of
"wait and see" to evaluate how the firm will fair in the
upcoming years.
16
Growth
 Concentric Diversification within its subsidiaries
 Investment Banking
 Institutional Client Services
 Investing and Lending
 Investment Management
17
18
Differentiation
Narrow Market:
 Provide unique features
highly valued by customers
 Such as: profits, wealth
accumulation, status, and
power
 How: attitude, government
allies, lots of work and little
manipulation.
 Recruiting brightest and
most talented.
19
Differentiation Focus
Broad Market:
 Consumer/Retail
 Municipal Finance
 Financial Institutions
 Natural Resources
 Financial Sponsors
 Real Estate
 Healthcare
 Technology/Media/Telecom
 Industrial
20
21
Nature of Market
Goldman Sachs provides a wide range of financial
services to a substantial and diversified client base that
includes:
 corporations
 financial institutions
 governments
 high-net-worth individuals
22
Geographic Coverage
 International
Goldman Sachs headquartered at 200 West Street in the
Lower Manhattan area of New York City.
 Total of 56 Offices around the world
 13 in the US (San Francisco, NY, Dallas, and more in East
of US)
 43 in foreign country. (Beijing China, Tokyo Japan, Sydney
Australia, London)
23
Breadth of Services
Investment Banking-Provides advice and services to help
organizations with mergers and acquisitions, financing and other
transactions.
 Securities
 sales and trading Giving our clients multiple ways to strategize,
track and execute securities transactions in exchanges around
the world.
 Prime Brokerage Providing services to help hedge funds
manage risk, monitor their portfolios, maintain liquidity and
build their businesses.
 Clearing Helping clients execute and settle transactions on over
97% of the world's equities and derivatives exchanges.
 Product and business Group Providing institutional clients
with a wide range of products and services, giving them access to
financial instruments and worldwide exchanges.

24
Breadth of Services (cont’d)



Investing and Lending
 Banking , Goldman Sachs Bank USA is a New York State-chartered bank and a member of the Federal Reserve
System.
 Direct Private Investing, Investing in equity and credit across corporate, real estate and infrastructure strategies.
 Urban Investing. Providing secured asset-based loan financing to financial services and specialty finance
companies based in the US and Canada. Lender Finance
 Providing secured asset-based loan financing to financial services and specialty finance companies based in the
US and Canada.
 Specialty Lending. Providing financing to mid-sized companies in the United States and Canada that are looking
to grow.
Investment Management
 Provide investment management services and offer investment products (primarily through separately managed
accounts and commingled vehicles, such as mutual funds and private investment funds) across all major asset
classes to a diverse set of institutional and individual clients. Also offer wealth advisory services, including
portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth
individuals and families.
 Asset Management. Goldman Sachs Asset Management applies insights and risk management expertise to help
institutional and individual investors with their financial goals, now and in the future.
 Private Wealth Management. Help high-net-worth individuals and families along with select foundations and
endowments pursue their wealth management goals
Research
 Global Investment Research division provides original, fundamental insights and analysis for clients in the equity,
fixed income, currency and commodities markets.
 Covering areas such as economics, portfolio strategy, derivatives and equity and credit securities in more than 25
stock markets and 50 economies and regions around the world, research reports help investors better understand
the issues and trends that affect companies, industries and markets.
Degree of Customization
 In compare with JPMorgan, Goldman Sachs provides a
unique customization base on their primary target
group.
 Financial Institutions
 Governments
 High-net-worth individuals
26
Pricing Level
 “Forbidden City” for Poor.
 Good pricing toward these players
 Financial Institutions
 Governments
 High-net-worth individuals
27
Credit
 Trading and Principal Investments,
 Investment Banking
 Asset Management
 GOLDMAN, SACHS & CO vs. ALMAH LLC
 GS was sued by a Manhattan landlord who alleged the bank violated the terms of its rental
agreement by failing to share profits from a sublease of the space to AIG Inc.
 Because it is undisputed that no "payment" was "received" as consideration for the assignment of the
lease, tenant GS was entitled to a dismissal of the counterclaim in its entirety
 Securities Services
 GS invested $450 million in Facebook before the bank began recruiting investors.
28
Advertising Media
Print:
-Wall St. Journal
-NY Times
Internet:
-Banner advertisements on
various websites
29
Promotion emphasis
 Pull Strategy to find their clients.
 “Good companies worry about their competition, great
companies worry about their clients.”
 Pull Strategy to Hiring
 GS exerts such a strong pull on university graduates.
 GS encourage many of the top people to try to get a job
with the firm. By 2002, the company employed over
20,000 employees in 20 offices around the world, with
the reputation of being the very best analysts, traders
and associates around.
30
Total Assets and Source of Funds 2010
2500000
2000000
1500000
Goldman Sachs
JPMorgan Chase
Bank of America
1000000
500000
0
Total Assets
Short Term
Liabilities
Long Term
Liabilities
Retained Earnings
Net Stocks
Goldman Sachs
911,332
72,371
188,247
57,163
56,774
JPMorgan Chase
2,117,605
471,358
247,669
73,998
109,320
Bank of America
2,264,909
69,524
448,431
60,849
167,46731
(in millions)
Source of Funds % of Total Assets (2010)
25
20
Goldman Sachs
15
JPMorgan Chase
Bank of America
10
5
0
Short Term Liabilities
Long Term
Liabilities
Retained Earnings
Net Stocks
Goldman Sachs
7.94
20.66
6.27
6.23
JPMorgan Chase
22.26
11.7
3.5
5.16
Bank of America
3.07
19.8
2.69
7.39
32
Earnings Per Share and Dividends Per Share
25
20
15
Goldman Sachs
JPMorgan Chase
10
Bank of America
5
0
2010
-5
Goldman
Sachs
JPMorgan
Chase
Bank of
America
2009
2008
EPS
DPS
EPS
DPS
EPS
DPS
13.18
1.4
22.13
1.05
4.47
1.4
3.96
0.2
2.26
0.2
1.35
1.52
-0.37
0.04
-0.29
0.04
0.54
2.24
33
Dividend Payout Ratio
450
400
350
Goldman Sachs
300
JPMorgan Chase
250
Bank of America
200
150
100
50
0
2010
2009
2008
Goldman Sachs
10.62
4.74
31.3
JPMorgan Chase
5.05
8.84
112.59
Bank of America
N/M
N/M
414.81
Dividend Payout Ratio = Dividends Per Share / EPS
34
Methods of Growth
 External
 Acquisition


By focusing on the long-term growth potential of companies
Buy a high-quality growth business

GS seeks to buy high-quality growth companies that are strong business franchises
with favorable long-term growth prospects and excellent management.

GS use several different methods, including discounted cash flow analysis,
assessment of private market value, and cash flow and earnings multiples, to
determine the intrinsic worth of the business. GS then attempt to purchase the
stock at a discount to this intrinsic value.
35
36
Past Stock Performance
 In 2006, GS stock rose from $127 to $199 per stock for a gain




of 56.7%
In 2007, GS stock encountered a huge drop in price from
July to September but finished the year with a gain of about
6%. (All time high)
In 2008, GS stock was priced at $205 per share and ended
the year at $76 a share for a loss of 63%
In 2009, GS started at $86 a share and by the end of the
year, GS stock price increased 95% to finish at $169,
During the 2010 year, the stock was mostly down, however
it recovered in the last quarter of the year for a gain of
about 2%
37
YTD Stock performance
 The stock has dropped 41% from $160 to $94.55 in the
6 months prior and a loss of 43.77% YTD.
 GS has a bearish trend for 2011, but the stock has
experienced a lift in the past month.
38
GS Stock Vs. S&P 500
39
Goldman Sachs vs. Bank of America
40
Goldman Sachs vs. JP Morgan
41
Goldman Sachs vs. Peer
42
Net Revenue
Net Revenue (in thousands)
140,000,000
120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
2010
2009
2008
2007
2006
Goldman Sachs
39,161,000
45,173,000
49,802,000
45,987,000
37,665,000
Bank of America
110,220,000
119,643,000
72,782,000
66,319,000
73,023,000
JP Morgan
102,694,000
100,434,000
67,252,000
71,372,000
61,437,000
43
Net Income
Net Income (in thousands)
25,000,000
20,000,000
15,000,000
Goldman Sachs
10,000,000
Bank of America
JP Morgan
5,000,000
0
2010
2009
2008
2007
2006
-5,000,000
44
Number of Employees
350,000
300,000
Employees
250,000
200,000
150,000
100,000
50,000
-
GS
2006
26,467
2007
30,522
2008
30,067
2009
32,500
2010
35,700
BAC
203000
210000
243075
284000
288000
JPM
174,360
180,667
200,000
222,316
239,831
45
Dollar-Profit per Employee
Net Income/Number of Employees
2010
2009
2008
2007
2006
$(50,000)
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
JPM
2006
$82,840
2007
$85,046
2008
$28,025
2009
$52,754
2010
$72,426
BAC
$104,103
$71,343
$16,489
$22,099
$(7,771)
GS
$360,336
$380,021
$77,228
$411,015
$234,006
46
Return On Asset
Net Income/Total Assets
1.8
1.6
1.4
Percentage
1.2
1
0.8
0.6
0.4
0.2
0
-0.2
2006
2007
2008
2009
2010
GS
1.24
1.17
0.23
1.35
0.95
BAC
1.54
0.94
0.23
0.31
-0.1
JPM
1.13
1.05
0.3
0.56
0.84
47
Return On Equity
Net Income/Shareholders Equity
35
30
Percentage
25
20
15
10
5
0
-5
2006
2007
2008
2009
2010
GS
29.98
29.04
4.35
19.74
11.28
BAC
17.85
10.62
2.47
3.07
-0.97
JPM
12.95
12.86
3.85
7.06
10.17
48
Average ROE
Average ROE Trends
35
 U.S. Peers:
 JPM, BAC, MS, C
30
32.8
32.7
Average Percentage
25
22.5
20
15
17.5
10
11.5
8.4
5
5.9
4.9
0
-5
-5
-10
-1.8
2006
2007
2008
2009
2010
GS
32.8
32.7
4.9
22.5
11.5
PEERS
17.5
8.4
-5
-1.8
5.9
49
Common sized Income Statement
Goldman Sachs Group, Inc. JPMorgan Chase & Co.
Report Date
12/31/2010 12/31/2009 12/26/2008 11/28/2008 11/30/2007 11/24/2006
Currency
USD
USD
USD
USD
USD
USD
Scale
Millions Millions Millions Millions Millions Millions
Total Revenue (100% TR)
100
100
100
100
100
100
Interest Income %TR
26.8
26.9
142.4
66.5
52.3
50.7
Interest Expense %TR
14.8
12.6
84.6
58.5
47.7
45.7
Net Interest Before Provs %TR
12.0
14.3
57.8
8.0
4.5
5.0
Non-Interest Income %TR
73.2
73.1 (42.363)
33.5
47.7
49.3
Employee Costs %TR
33.5
31.3
62.8
20.4
23.0
23.7
Occupancy Costs %TR
2.4
1.8
6.9
1.8
1.1
1.2
Depreciation & Amortization %TR
4.1
3.4
9.4
2.4
0.9
1.0
Other Non-Interest Expense %TR
17.2
12.5
42.5
12.6
7.3
7.4
Non-Interest Expense %TR
57.1
49.0
121.6
37.1
32.3
33.3
Earnings Before Tax %TR
28.0
38.4 (106.160)
4.4
20.0
21.0
Taxation %TR
9.9
12.5 (40.338)
0.0
6.8
7.2
Extraordinary Items %TR
0.0
0.0
0.0
0.0
0.0
0.0
Accounting Changes %TR
0.0
0.0
0.0
0.0
0.0
0.0
Net Income %TR
18.2
25.9 (65.823)
4.3
13.2
13.8
Preference Dividends & Similar %TR (1.394) (2.309) (20.928) (0.524) (0.218) (0.200)
Net Income to Common %TR
16.8
23.6 (86.751)
3.8
13.0
13.6
Report Date
12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006
Currency
USD
USD
USD
USD
USD
Scale
Millions Millions Millions Millions Millions
Total Revenue (100% TR)
100
100
100
100
100
Interest Income %TR
55.2
57.4
71.9
61.4
59.5
Interest Expense %TR
11.1
13.1
33.7
38.7
38.1
Net Interest Before Provs %TR
44.2
44.2
38.2
22.7
21.4
Loan Loss Provisions %TR
14.4
27.7
20.7
5.9
3.3
Net Interest After Provs %TR
29.8
16.6
17.5
16.8
18.1
Non-Interest Income %TR
44.8
42.6
28.1
38.6
40.5
Employee Costs %TR
24.4
23.3
22.4
19.5
21.3
Occupancy Costs %TR
3.2
3.2
3.0
2.2
2.4
Marketing & Advertising %TR
2.1
1.5
1.9
1.8
2.2
Depreciation & Amortization %TR
0.8
0.9
1.2
1.2
1.4
Other Non-Interest Expense %TR
22.5
16.4
14.3
11.1
11.2
Non-Interest Expense %TR
53.0
45.3
42.9
35.8
38.6
Earnings Before Tax %TR
21.5
13.9
2.7
19.6
20.0
Taxation %TR
6.5
3.8
(0.912)
6.4
6.3
Discontinued Operations %TR
0.8
Extraordinary Items %TR
0.0
0.1
1.9
0.0
0.0
Accounting Changes %TR
0.0
0.0
0.0
0.0
0.0
Net Income %TR
15.0
10.1
5.5
13.2
14.5
Preference Dividends & Similar %TR
(1.391)
(2.555)
(0.664)
0.050 (0.004)
Net Income to Common %TR
13.7
7.6
4.9
13.2
14.5
Common size Income Statement
Goldman Sachs Group, Inc. Bank of America Corp.
Report Date
12/31/2010 12/31/2009 12/26/2008 11/28/2008 11/30/2007 11/24/2006
Currency
USD
USD
USD
USD
USD
USD
Scale
Millions Millions Millions Millions Millions Millions
Total Revenue (100% TR)
100
100
100
100
100
100
Interest Income %TR
26.8
26.9
142.4
66.5
52.3
50.7
Interest Expense %TR
14.8
12.6
84.6
58.5
47.7
45.7
Net Interest Before Provs %TR
12.0
14.3
57.8
8.0
4.5
5.0
Non-Interest Income %TR
73.2
73.1 (42.363)
33.5
47.7
49.3
Employee Costs %TR
33.5
31.3
62.8
20.4
23.0
23.7
Occupancy Costs %TR
2.4
1.8
6.9
1.8
1.1
1.2
Depreciation & Amortization %TR
4.1
3.4
9.4
2.4
0.9
1.0
Other Non-Interest Expense %TR
17.2
12.5
42.5
12.6
7.3
7.4
Non-Interest Expense %TR
57.1
49.0
121.6
37.1
32.3
33.3
Earnings Before Tax %TR
28.0
38.4 (106.160)
4.4
20.0
21.0
Taxation %TR
9.9
12.5 (40.338)
0.0
6.8
7.2
Extraordinary Items %TR
0.0
0.0
0.0
0.0
0.0
0.0
Accounting Changes %TR
0.0
0.0
0.0
0.0
0.0
0.0
Net Income %TR
18.2
25.9 (65.823)
4.3
13.2
13.8
Preference Dividends & Similar %TR (1.394) (2.309) (20.928) (0.524) (0.218) (0.200)
Net Income to Common %TR
16.8
23.6 (86.751)
3.8
13.0
13.6
Report Date
12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006
Currency
USD
USD
USD
USD
USD
Scale
Millions Millions Millions Millions Millions
Total Revenue (100% TR)
100
100
100
100
100
Interest Income %TR
56.3
51.8
75.8
73.2
67.4
Interest Expense %TR
17.9
20.5
35.7
44.4
37.7
Net Interest Before Provs %TR
38.4
31.3
40.1
28.9
29.7
Loan Loss Provisions %TR
21.2
32.3
23.7
7.0
4.3
Net Interest After Provs %TR
17.2
(0.971)
16.4
21.9
25.4
Non-Interest Income %TR
43.7
48.2
24.2
26.8
32.6
Employee Costs %TR
26.2
21.0
16.2
15.7
15.6
Occupancy Costs %TR
3.5
3.3
3.2
2.5
2.4
Furniture & Equipment %TR
1.8
1.6
1.5
1.2
1.1
Marketing & Advertising %TR
1.5
1.3
2.1
2.0
2.0
Depreciation & Amortization %TR
1.3
1.3
1.6
1.4
1.5
Restructuring & Impairment %TR
9.2
Other Non-Interest Expense %TR
18.4
15.9
12.1
8.2
7.8
Non-Interest Expense %TR
61.9
44.3
36.7
31.1
30.5
Earnings Before Tax %TR
(0.986)
2.9
3.9
17.6
27.4
Taxation %TR
0.7
(1.274)
0.4
5.0
9.3
Extraordinary Items %TR
0.0
0.0
0.0
0.0
0.0
Accounting Changes %TR
0.0
0.0
0.0
0.0
0.0
Net Income %TR
(1.668)
4.2
3.5
12.6
18.1
Preference Dividends & Similar %TR
(1.011)
(5.636)
(1.284)
(0.153) 51 (0.019)
Net Income to Common %TR
(2.679)
(1.465)
2.3
12.4
18.1
52
Board of Directors
Name
Title
Education
Lloyd C. Blankfein
Chairman and CEO
B.A., J.D.
John H. Bryan
Presiding Director
B.A., M.B.A.
Gary D. Cohn
President and COO
Claes Dahlback
Stephen Friedman
B.A., Law Degree
William W. George
B.S., M.B.A.
James A. Johnson
B.A., M.B.A.
Lois D. Juliber
B.A., M.B.A.
Lakshmi N. Mittal
Bachelor of Commerce
James J. Schiro
B.S.
Debora L. Spar
B.A., Ph.D.
M. Michelle Burns
53
Key Officers
Name
Title
Salary
Total Comp.
Lloyd C. Blankfein
Chairman and CEO
$600,000
$14,116,423
Gary D. Cohn
President and COO
$600,000
$13,863,427
John S. Weinberg
Vice Chairman
$600,000
$13,810,735
J. Michael Evans
Vice Chairman & Global Head
of Growth Markets
$600,000
$13,927,508
Michael S. Sherwood
Vice Chairman
David A. Viniar
Executive Vice President &
CFO
$600,00
$13,863,427
Gregory K. Palm
Executive V.P. & General
Counsel
Alan M. Cohen
Executive V.P. & Global Head
of Compliance
John F. W. Rogers
Executive V.P. & Chief of Staff
Edith W. Cooper
Executive V.P. & Global Head
of Human Capital
Management
54
Committees
Name
Audit, Compensation, Nomination, and Corporate
Governance
John H. Bryan
Claes Dahlback
Stephen Friedman
William W. George
James A. Johnson
Lois D. Juliber
Lakshmi N. Mittal
James J. Schiro
Debora L. Spar
55
Goldman Sachs
56
Lloyd C. Blankfein (Age 56)
 Chairman of the Board
 CEO (Chief Executive




Officer) since 2006
President & COO since
January 2004
Sector:
Financial/Diversified
Investments
Previous salary: $600,000
Salary : increased to more
than 2 million as of Jan 1,
2011.
57
Gary Cohn (Age 50)
 President & Chief
Operating Officer
 Co-head of global
Securities, Fixed Income,
Currency & Commodities
 Salary: $1.85 million
 Effective: Jan 1, 2011
58
David Viniar (Age 55)
 Executive VP & Chief
Financial Officer since
1999
 Salary: $1.85 Million
 Effective: Jan 1, 2011
 Head of Operations,
Technology, Finance and
Services since 2002
59
Michael Evans (Age 53)
 Vice Chairman & Global
Head of Growth Markets
 Salary: $1.85 million
 Effective: Jan 1, 2011
 Trustee of the Bendheim
Center for Finance at
Princeton University
60
John Weinberg (Age 52)




Vice Chairman
Salary: $1.85 million
Effective: Jan. 1 2011
Co-headed Investment
Banking Division since
2002
 Investment Division of the
Americas
 Salaries increases don’t
include all other forms
of compensation such as
stock options an
bonuses.
61
Total Asset Turnover
Revenue/Total Asset
0.1
0.09
0.08
0.07
0.06
0.05
0.04
0.03
0.02
0.01
0
2006
2007
2008
2009
2010
GS
0.09
0.09
0.05
0.05
0.05
BAC
0.08
0.08
0.06
0.07
0.06
JPM
0.08
0.08
0.05
0.05
0.06
62
Cash & Equivalents Turnover
Cash & Equivalents/ Current Liabilities
3.5
3
2.5
2
1.5
1
0.5
0
GS
2006
0.93
2007
0.79
2008
0.42
2009
0.51
2010
0.55
BAC
3.18
3.02
2.99
1.95
1.17
JPM
1.77
2.2
0.93
0.91
1.67
63
64
Corporate Culture
 Goldman Sachs is a Meritocracy.
 Believe in teamwork, collaboration and integrity.
 Team’s with different specializations in different
regions.
 Flat organizational structure (everyone is equal).
 Every individual’s ideas are welcome.
 No cubicles or offices
65
Corporate Structure
 Board of Directors contain only a few internal
members, including Chairman, President and
Presiding Director.
 Mostly external members who are CEO’s, Presidents,
and member of Board for other companies.
 Many held government positions in the past and many
have left GS to take up a high government position.
66
Corporate Resources
 Financial Resources
 Research and Development
 Marketing resources
 Human Resources
 Information Technology
67
Common Size Balance Sheet
68
Common Size Balance Sheet
69
Debt to Asset
Total Debt/Total Assets
0.930
0.925
0.920
0.915
0.910
0.905
0.900
0.895
0.890
0.885
0.880
2010
2009
2008
2007
2006
GS
0.899
0.896
0.903
0.914
0.907
JPM
0.917
0.919
0.923
0.921
0.914
BAC
0.899
0.896
0.903
0.914
0.907
70
Debt To Equity
Total Debt/Total Equity
40
35
30
25
20
15
10
5
0
2010
2009
2008
2007
2006
GS
26.32
28.16
26.02
36.65
37.01
JPM
11.02
11.28
12.03
11.67
10.67
BAC
8.92
8.6
9.26
10.68
9.79
71
Current Ratio
Current Asset/Current Liabilities
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2010
2009
2008
2007
2006
GS
0.397
0.346
0.599
0.691
0.663
JPM
0.232
0.241
0.311
0.259
0.272
BAC
0.526
0.504
0.09
72
Research and Development
Resources
 Global Investment Research (GIR)
 Client focused research in equity, fixed income, currency
and commodities markets
 GIR is organized into five groups





Equity Research analysts
Credit Research analysts
Economics Research analysts
Portfolio and Strategy Research analysts
Commodities Research analysts
73
Global Investment Research
Equity Research
Credit Research
 Equity Research analysts
 Credit Research analysts
analyze macro, sector and
company fundamentals to
identify investment
opportunities for the stocks
Goldman Sachs cover globally
make investment
recommendations for the
corporate debt and credit
derivatives of issuers in
various industry sectors
74
Global Investment Research
Economic Research
Portfolio & Strategy Research
 Economics Research analysts
 Portfolio and Strategy
formulate macroeconomic
forecasts for economic
activity, foreign exchange
rates and interest rates
Research analysts formulate
equity market views, forecasts
and recommendations on
both asset and industry
sector allocations for every
major market
75
Global Investment Research
Commodities Research
Markets Institute
 Commodities Research
 Markets Institute is the
analysts analyze macro
fundamentals to formulate
forecasts for commodities in
six main areas: Oil, Gas, Base
Metals, Precious Metals, and
Agriculture
public policy arm of Goldman
Sachs, providing research and
high-level advisory services to
policymakers, regulators and
investors around the world
76
Marketing Resources
 Niche Marketing
http://youtu.be/I-E0zWznXY0
77
Marketing Resources
 Marketing resources are not a significant part of Goldman
Sachs. They do not market to the masses as other banks do.
Their sole focus has been on the high end business savvy
customers, large firms, and government institutions.
 In late 2009, the Investing and lending division has
committed $500 million over five years to help small
businesses in distressed urban and rural communities
across America; Called “10,000 Small Businesses”
 Some said, PR stunt? Just as they were slammed for giving
billions in bonuses to employees after receiving a massive
federal bailout.
78
Human Resources
 Diversity
 Goldman Sachs and their human resources are quite diverse,
as they operate around the globe. They have been ranked as
one of the top ten most diverse companies in the country
over the years and atop of the banking industry. Their
ongoing diversity efforts include a commitment to recruiting
women, students from historically under-represented
backgrounds, the lesbian, gay, bisexual and transgender
population and those with disabilities. They also seek
candidates from a broad array of academic disciplines and
concentrations, such as liberal arts, applied math, sciences,
and engineering.
79
Human Resources
 Quality of work life
 Goldman Sachs quality of work life is very good but not
the best in the industry (according to the Vault Banking
Rankings). They are currently ranked 11th out of Vault’s
banking 50 while JP Morgan Investment Bank is
currently 2nd.
80
Information Technology Resources
 The Information technology resources at Goldman
Sachs are abundant and a great asset.
 Technology is a core part of Goldman Sachs’ product
offering and client experience.
 Their ability to respond quickly and effectively to
address their clients’ needs with customized systems,
products and services helps differentiate the firm.
81
Information Technology Resources
 Goldman Sachs Technology teams are aligned to:
 Asset Management
 Equity Trading
 Fixed Income
 Currency and Commodities
 Global Derivatives
 Firmwide Systems
 Global Sales
 Global Securities
 Investment and Merchant Banking
 Investment Research
 Operations
 Private Wealth Management
 Technology Infrastructure
82
Global Investment Banking and Brokerage Sector
83
Global Investment Banking & Brokerage Sector
% Share, by value (2010)
JP Morgan, 6.3%
Goldman
Sachs, 5.8%
Morgan
Stanley, 5.3%
Bank of America
Merrill Lynch, 4.9%
Other, 77.7%
84
Competition (Medium)
 Goldman Sachs, JP Morgan
Chase, Bank of America
and Morgan Stanley
combined share of 22.3%
of sector value.
 All operate on global level
and with similar
operations.
 Some seeking increase on
margins by service
diversification but
potential sector growth
reduces rivalry.
85
Potential Entrants (medium)
 High brand loyalty.
 Large amount of capital
needed to enter the
sector.
 Costly IT applications.
 Economic downturn.
 Moderate sector growth,
tempting for new
entrants.
86
Customers (Medium)
 Investment banking fees
average throughout the
sector.
 Banks rely on reputation
to attract customers.
 Large scale institutions
buyers (government)
bargain and apply
favorable terms.
87
Suppliers (High)
 Banks require advanced
software programs.
 Very few suppliers,
banks usually rely on one
supplier.
 Costly to switch
suppliers.
 Employees required
training.
88
Substitute Service (Low)
 Very few substitutes in
the sector.
89
Goldman Sachs
90
Socio-cultural Forces
Domestic Market:
 Career expectation
 Age distribution of




population
Pension Plans
Health care
Level of Education
Unionization
91
Political-Legal Forces
Domestic Market:
 Environmental Protection





Laws
Global warning legislation
Tax laws
Special incentives
Laws on hiring and
promotion
Stability of government
92
Deregulation
 Martin Feldstein
Professor of Economics,
Harvard
 President’s Reagan Chief
Economic advisor,
architect of
deregulation.
 1988-2009 Board of
directors of AIG and AIG
financial products.
93
Deregulation cont.
 Larry Summers Treasury Secretary
played a critical role in the deregulation
of derivatives.
 May millions by consulting for hedge
funds mainly for investment banks.
 In 1999 Summers and Rubin repeal the
Glass-Steagall Act of 1933, which
protected bank depositors from the
additional risk associated with security
transactions. The act was dismantled by
Gramm-Leach-Bliley Act.
 GLBA removed the separation that
previously existed between investment
banking which issued securities and
commercial banks which accepted
deposits.
 GS paid Summers 135 k for a single
speech in 2008
 Summers net worth ~ 16.5 and 39.5
million.
 Harvard President in 2001
94
The Fantastic 4
 Barack Obama argue regulation





was needed, after taking office
nothing happened.
Rating agencies, lobbying and
compensation, nothing
significant was proposed.
Wall Street government, very
little room for.
Appointed Timothy Geithner as
Treasury Secretary.
Timothy was President of
Federal Reserve during the
crisis.
Closely worked with Paulson on
TARP.
 Henry M. Paulson former U.S.
Treasury Secretary (2006-2009)
and chief executive of Goldman
Sachs has been appointed as a
distinguished senior fellow a the
University of Chicago Harris
School of Public Policy Studies.
 Spent 32 years at Goldman
Sachs.
 Key player on the decision to pay
Goldman Sachs 100 cents on the
dollar for it’s bets against
mortgages.
 Geithner Chief of Staff was Mark
Patterson former lobbyist for GS.
95
 Current President of
New York Fed is William
C. Dudley former Chief
Economist of Goldman
Sachs
 Worked with Glen
Hubbard to promote
derivatives.
To head the Commodity Futures Trading
Commission Obama chose Gary Gensler
former GS executive who helped banned
regulation of derivatives.
96
97
Technological Forces
O-Continue improve on Information Technology should be the core
strategic force in banking strategies.
O-The ability to syndicate(a combination of bankers or capitalists formed
for the purpose of carrying out some project requiring large resources
of capital, as the underwriting of an issue of stock or bonds.) large
loans swiftly is now the norm and has already changed the basic
business model of banking.
O-Managing lending risks by hedging with sophisticated analytical
models (Currently high risk, highly variable returns” mode)
T-Lack of expertise when compare with JP Morgan and BOA.
98
Economic Forces
O-Balance sheets and loan syndications are still important, but access to
the world’s enormous capital markets is becoming more important.
T-Gas Price surge toward $4, threaten economic recovery(high demand
and lower supplies, equal higher price)
T-Foreign country government regulation.
O-Raising capital standards for banks will put a serious crimp in growth
in the United States-Knocking 1.5 to 2 percent off GDP in the next few
years.
(Real GDP was around $12.9 trillion in the first quarter of 2006 and
$13.2 trillion in the second quarter of 2010) Raising capital requirements
makes bank equity less risky and banks less prone to collapse. (means
bank executives do not need to seek risk so aggressively.)
99
Goldman & Carnival
 Goldman upgraded shares
of Carnival from sell to
neutral as domestic travel
trends begin to improve.
 Less ships diminishing
concerns of oversupply.
 Upgraded target price $37
per share.
 Target increased to $55 per
share on November 4, 2011
100
Goldman & Apple
 Goldman Sachs analyst
Bill Shope raised twelve
month period target
from U.S.$480 to $520.
 Apple’s target price
comes with a “Buy”
rating.
 September 21, 2011 price
$417.36.
 Plus, units sold continue
to increase.
101
Goldman & Limited Brands
 GS says Limited Brands
is “Too Sexy”
 Goldman upgraded
Limited Brands to
neutral.
 After it had given the
firm a Sell rating last fall.
 Closing price on May
2011 about $39.66
102
103
SWOT ANALYSIS
STRENGTHS:
WEAKNESSES:
1.
1.
2.
3.
4.
Global leaders in mergers & acquisitions
advice as well as securities underwriting for
firms, governments and high net worth
individuals.
Ability to adapt in any economic, political or
financial environment.
Well diversified revenue stream.
Highly efficient professional employees mainly
from prestigious Universities of which the
brightest and talented are recruited.
2.
Lack of expertise in the conventional banking
industry.
A high portion of revenues are highly
correlated to the state of the economy.
THREATS:
OPPORTUNITIES:
1.
1.
2.
3.
4.
Negative publicity affects firm’s reputation in
terms of the masses affecting Goldman Sachs
Banking when increasing on mass deposits.
Increasing government and regulatory
legislation
Litigation issues from misrepresentation that
can directly affect Goldman Sachs financial
position.
Future administration that opposes the firm’s
objectives
2.
3.
4.
Expand operations globally since emerging
markets likely to drive future growth.
Developed internet banking operations to
diversify their funding base.
Further develop their asset management
operations.
Develop sophisticated analytical models to
managed lending risks.
104
RECOMENDATION:
Image
Industry
Expertise
• Fixing the image of the company.
• Building a positive perception of the firm
• Analyze industry and increase deposits
• Finance small business owners operations
• Expand operations globally
• Fund major projects around the globe
International
• Establish two-tier banking industry. 1. domestic 2. internationally
Grounds
105
IMPLEMENTATION:
Image
Industry
Expertise
• No longer have revolving door for employment between Goldman
Sachs and the government.
• Fire CEO, assign someone that understands the American people.
• Hire bright, talented individuals specialized in the conventional
Banking industry.
• As of 2009, small businesses (10,000) have been helped. This
number must increase.
• Acquire and create partnerships with firms in international emerging markets.
• Transfer their expertise from Banking in the U.S., create partnerships with other firms
around the globe to finance sustainable projects globally.
International • Separate domestic and international business management in trying to cope with
Grounds
differentials in international rules and regulations.
106
Goldman Sachs
The Quantitative Easing
107