History and Background of the Goldman Sachs Group Inc.

This report provides an overview of the Goldman Sachs Group Inc., including its history, services, and worldwide presence. It also includes a SWOT and PESTEL analysis of the company's environment, as well as a discussion of its CSR, ethics, and sustainability policies and achievements.

June 9th, 2018
The Goldman Sachs Group Inc.

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Contents
History and Background of the Goldman Sachs Group Inc...................................................................2
SWOT...............................................................................................................................................2
External analysis through PESTEL ..................................................................................................3
CSR, Ethics and Sustainability..............................................................................................................5
References.............................................................................................................................................7

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History and Background of the Goldman Sachs Group Inc.
The Goldman Sachs Group Inc. is a leading American corporation based at Lower Manhattan
in New York, whose services range from Investment Banking, Institutional Client Services
such as broking, underwriting and professional recommendations on mergers and
acquisitions; Investment and Lending services, and Investment Management services
(Goldman Sachs, 2018a). The company was found in 1869, by Marcus Goldman and Samuel
Sachs, and currently has a worldwide presence which includes regions of America, Asia
Pacific, Europe, Africa and Middle Eastern regions (Goldman Sachs, 2018b). The company
has started its operations as a general partnership firm in 1885, but later on went public on the
New York stock exchange in 1999 (Los Angeles Times, 2018). The company transformed
into a bank holding company in the year 2008, after the financial downturn. As of now, it is
operating as a bank holding company as well as a financial holding company in United
States. And it is being regulated by the Board of Governors of the Federal Reserve System
(Koch and MacDonald, 2014). The closing stock price of the company on June 11th, 2018 was
$ 234.45, while the market capitalization as on that day was $ 86.56 billion. The critical
evaluation of Goldman Sachs’s environment based on the framework within which it works
is as follows. The two techniques to be used for the analysis of Goldman Sachs are SWOT
analysis and PESTEL analysis.
SWOT stands for: “Strength, Weakness, Opportunity and Threat”. The strategic tool is used
to identify organisation’s internal capabilities and weaknesses. Accordingly other such
policies in relation to marketing, financial structure etc. can be formulated and implemented.
SWOT analysis of Goldman Sachs is as follows:-
STRENGTHS

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 Strong brand name, house of talented and shrewd minds and highly paid employees.
 The company has a wide range of clientele including individuals, corporations and
government agencies, resulting in a stable consumer base.
 Government support (Lucas, 2017).
WEAKNESSES
 Over the years, there have been a number of instances which has led to a tainted and unethical
image for the company (Barak, 2015).
 Since the nature of business is such, the company faces competition not only globally, but
also at regional level and product level. The competition is based on factors like products and
services, transaction execution, innovation, price and reputation.
 The company’s businesses are continuously affected by various conditions in the global
scenarios in relation to financial markets and the economic conditions.
OPPORTUNITIES
 The company can easily tap the new markets of the emerging economies outside U.S.,
U.K, and set bases of Asia and Europe, i.e. at the developing countries, with the aid of
brand name earned over the years.
 The company relies more on trading activities, and therefore there is a scope for
portfolio diversification (Doyran, 2017)
THREATS
 Goldman Sachs faces strong competition from big players such as Morgan Stanley,
Thomson Reuters Group, Charles Schwab and Standard & Poor Global; as well as
small players in class of brokers, traders, banking firms, commercial firms, mutual
funds, hedge funds, consumer finance companies, financial technology and any more.
 In investment banking industry, there is a low switching cost which is another major
threat. And hence, consumer retention is a big challenge.

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External analysis through PESTEL The analysis is a strategic tool useful in analysing the
external environment of an organisation. The abbreviation PESTEL stands for “Political,
Economic, Social, Technological, Environmental and Legal”
 Political Factors: The company is always in news through the appointment of some of
its leading managerial persons at the important government roles. As a result, the
company was one of the few to receive the financial assistance from the Troubled
Asset Relief Program of the US government, during the 2008 financial crisis (Eavis,
2014). And thus, the fact that the company is in position to influence the Government
is quite evident.
 Economic Factors: Major economic factors that affect the business of Goldman Sachs
are fiscal policies, tax regulations and inflation rates, liquidity conditions of the
markets, exchange rates, cyber security threats, information leaks, geopolitical
instabilities and global communication problems.
 Social Factors: With exposure to technology and increased financial awareness among
every age group and different classes of people; the market for trading, banking,
insurance and other such financial services is flourishing at a fast pace. As a result,
there is a wide scope for the company to expand in new sectors as well. Also the
company follows the policy of gender pay equity at workplace so as to ensure that
gender bias is avoided in performance and pay.
 Technological Factors: The company’s businesses are highly technology and
communication driven. According to the annual report 2017, the company had spent a
total of $897 millions on communication and technology (Goldman Sachs, 2018c).
 Environmental Factors: The company is affected by the risk of terrorism, nuclear
proliferation, disturbing weather conditions and other natural disasters, that result in

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direct or indirect reduction of the confidence of investors in the capital markets
(Goldman Sachs, 2018c).
 Legal Factors: The Company has to operate under the framework of the provisions of
a number of acts and regulations pertaining to
o Financial Conduct
o Banking, broker, dealer, commodities regulations
o Compensation practices
o Anti money laundering and anti bribery rules
o Privacy and cyber security regulations
o Others wherever applicable i.e. mainly the U.S, U.K, E.U principals and
directives.
CSR, Ethics and Sustainability
The concepts of corporate social responsibility (CSR), ethics and sustainability play an
important part in the overall functioning, growth and success of the businesses of 21st century.
Corporate social responsibility and ethics deal with much more than healthy environmental
practices, such as aligning overall values of an organization with the aspirations of the
stakeholders’ vis-à-vis customers, employees, investors, suppliers, regulators and society
(Zientara, 2017).
Few of the CSR, ethics and sustainability policies and achievements of Goldman Sachs are
described in the following segment.

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(Source: Goldman Sachs, 2018)
 Goldman Sachs has developed environmental, governance and social framework, also
known as the ESG framework, to evaluate the company’s performance in light of the
environment and social issues (Fogel, 2016). The growth of the investment in
framework has been depicted in the picture above.
 The company is supportive of the UN’s 2030 Sustainable development goals
Goldman Sachs, 2018d).
 The net carbon emissions have reduced to zero in 2015 and have been continuing to
remain on the same level since then (Goldman Sachs, 2018d).
 In the year 2017, around 95 percent of the electricity needs were met through the
renewable energy sources for the company, globally (Goldman Sachs, 2018d).
 The company’s target of clean energy investments and financing is of $ 150 billion by
the year 2025, out of which the company has managed to achieve $ 71 billion by the
year 2012 (Goldman Sachs, 2018d).
 Few of the awards received by the company recently, on account of its CSR initiatives
are Green power partnership award, Climate leadership award, Bank of the year for
Financial Sponsors, The Times: Top 50 Employers for Women 2017, Ranked 89th on

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the Fortune 100 Best Companies to Work For, and many more (Goldman Sachs,
2018d).

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References
Barak, G. (2015) The Routledge International Handbook of the Crimes of the Powerful.
Oxon: Routledge.
Eavis, P. (2014) For Goldman, Government Gift From 2008 Crisis Keeps Giving. [online]
Available from: https://dealbook.nytimes.com/2014/11/19/for-goldman-government-gift-
from-2008-crisis-keeps-giving/ [Accessed 10/06/18].
Fogel, D. S. (2016) Strategic Sustainability: A Natural Environmental Lens on Organizations
and Management. Oxon: Routledge. p. 181.
Goldman Sachs. (2018) Who we are. At a glance. [online] Available from:
http://www.goldmansachs.com/who-we-are/at-a-glance/index.html [Accessed 10/06/18].
Goldman Sachs. (2018) Office Locations. [online] Available from:
http://www.goldmansachs.com/who-we-are/locations/ [Accessed 10/06/18].
Goldman Sachs. (2018) Annual Report 2017 [online] Available from:
http://www.goldmansachs.com/investor-relations/financials/current/annual-reports/2017-
annual-report/annual-report-2017.pdf [Accessed 10/06/18].
Goldman Sachs. (2018) Purpose & Progress. [online] Available from:
http://www.goldmansachs.com/s/esg-report/index.html [Accessed 10/06/18].
Doyran, M. A, (2017) How Goldman Sachs Turned the Great Recession into Competitive
Advantage Using Strategic Management. Rutgers Business Review, 2(3).
Koch, T. W., and MacDonald, S. S. (2014) Bank Management. 8th ed. Boston MA: Cengage
Learning, p. 191.

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Los Angeles Times (2010) Goldman Sachs: Timeline [online] Available from:
http://articles.latimes.com/2010/apr/17/business/la-fi-goldman-factbox17-2010apr17
[Accessed 10/06/18].
Lucas, F. (2017) The United States of Goldman Sachs. [online] Available from:
https://capitalresearch.org/article/the-united-states-of-goldman-sachs-2/ [Accessed 10/06/18].
Zientara, P. (2017) Socioemotional Wealth and Corporate Social Responsibility: A Critical
Analysis. Journal of Business Ethics, 144(1).