Goldman Sachs Group: International Market Expansion Management Report

This report delves into Goldman Sachs' strategic international market expansion, focusing on potential entry into Thailand and the UAE. It begins with an introduction to the company and its global presence, followed by an analysis of the economic and political climates of Thailand and the UAE, hig...Read More

Running head: MANAGEMENT
Management

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Contents
Introduction.................................................................................................................................................3
Analysis of Resources through VRIO framework.........................................................................................3
Discussion of Targeted Countries................................................................................................................5
Analysis of Thailand.....................................................................................................................................5
Analysis of UAE............................................................................................................................................6
Mode of Market Entry.................................................................................................................................7
Porter Value Chain.......................................................................................................................................8
Formal Institution......................................................................................................................................10
Informal Institution....................................................................................................................................10
Conclusion.................................................................................................................................................11
References.................................................................................................................................................12

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Introduction
Expansion of business in the international market provide an opportunity to the company to
target maximum number of consumers in an effective manner it create great source for the
growth and success that can be achieved by the company in more efficient manner. Goldman
Sachs Group is one of the global investment bank that as founded by the Marcus Goldman in the
year 1869. Headquarter of Goldman Sachs Group is in Lower Manhattan, New York as well as
the company has expanded their business in more than 30 countries as of the end of 2016.
Goldman Sachs deals in providing asset management, mergers and acquisitions, and brokerage
services among others. The company also offers banking services via its banks such as the GS
Bank that is located in the US. The company provided their services through investment banking,
leading and investment, corporate clients as well as investment management. The company is
planning to expand their business in other countries as well as to spread their business at greater
level. They can expand their business in Thailand and UAE that can provide new market to the
company.
In the following art there will be detailed analysis of countries where the company can expand
their business and the manner the company can enter in such market while analysing their
capabilities to compete in the market.
Discussion of Targeted Countries
Analysis of Thailand
Thailand was ranked as the 27th according to the 2017 report, and this portrayed a higher
ranking compared to 2016. The country has robust growth of economic as well as stable political
climate that provided an attractive financial environment. The total assets that are held by the
financial institution in the country stood at THB 23.54 tn till July 2016, up 3.5%. The growth
mostly stemmed from the financial business, service with the construction while consumer’s
loans growth continues to decline in the line with the slow recovery of economy (Ayadi, et.al,
2016).Thailand was characterized by an excellent infrastructure and availability of labour that
could be relied upon and this mapped Thailand as a global destination right for investment. The

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government of Thailand also instituted some vital laws in the past few years, for instance, there
are laws involving securities, antitrust and others touching on anti-corruption and this drew
Thailand closer to global standards creating more confidence on the part of foreign investors., the
Thai economy was anticipated to grow roughly by 3.8% in 2018, and this was considered
satisfactory based on the sluggish growth that Thailand has experienced in the past five years.
Thai’s stock market attained new highs as revealed by the past two quarters of 2017 and was
anticipated to do the same in 2018. Therefore, it creased opportunities for the international
companies to entre in such market efficiently (Shaikh, Mirza, Shaikh, Shaikh, and Ubupoto,
2017).

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(Source: IMF,2019)
Analysis of UAE
United Arab of Emirates is one of the developed countries that are located in the southeast end of
the Arabian Peninsula on the Persian Gulf. With about $900 billion of the projects or underway,
the country is the second biggest project management. The country has diverse economic model
that is built around Abu Dhabi’s substantial oil production. It is considered as producing nations
continue amassing capital from petrodollar activities, which is probably to advance the increase

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of liquidity to markets through the Sovereign Wealth Funds (SWFs) for instance the Investment
Corporation of Dubai (ICD), Qatar Investment Authority (QIA) and Abu Dhabi Investment
Authority (ADIA). It is approximated that SWFs manage more than US$ 1.5 trillion in assets
that are under management. With the recent upwelling in stashes of central banks, this has led to
an increase in the levels of liquidity in the emerging markets. It is one of the health markets that
can create opportunity to the company to expand their business in the market (Hussainey, Ismail,
and Ahmed, 2017).
(Source: Mughal, 2017)
Mode of Market Entry
There are different modes of entry for the company to entre in the new market in an effective
manner. The different mode of entry include direct exporting, direct, investment, joint ventures,
Licensing, franchising, partnering, buying a company, greenfield investments, turnkey projects
and so on. Such entry mode gives an opportunity to the company to enter in such new market in
more efficient manner (Mirzaei, 2019).
Therefore, Goldman Sachs Group will adopt Greenfield investment strategy to entre in the
market of Thailand and UAE. It is one of the method in which the company can target new

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market in an efficient manner. It is one of the direct investments in the activity that control as
well as manage the value creation in the other country. The company will expand their business
in such new market by setting up their outlet in the approachable area to make it recognize in the
market in an effective manner. It is one of the costly as well as risky strategies due to the reason
it require huge amount in setting the business. The company is required to invest huge amount in
purchasing land, building, and other set up expenses. However, such method will give an
opportunity to the company to directly interact with their consumers and can able to maintain
their quality services in more effective manner rather than relying on others to provide their
services (Sbia, and Alrousan, 2016).
The risks associated with integration may originate from variations in corporate culture,
technology, interests of the shareholders and enterprise practices, for instance, those that are
related to the practice of Islamic banking. The banks in a country such as UAE have experienced
tremendous growth with regards to the assets and profits in the past few years. However, such
growth opportunities differ across the varying different business sectors mainly due to high
incomes from oil and also due to the level of liquidity in the region. Therefore, it will give an
opportunity for Goldman Sachs Group to setup their business in such market in more effective
and efficient manner (Nee, Seng, and PermaisuriBainun, 2017).
Porter Value Chain

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Goldman Sachs Group is required to prepare value chain to expand their business in the market.
Porter’s value chain is one of the powerful strategic management tools that Goldman Sachs
Group can use to disaggregate their strategic activities as well as organize them in a manner that
can deliver the competitive advantage of the company in their industry.
Infrastructure: The infrastructure of Goldman Sachs Group represents a range of activities such
as legal matters, handling, accounting, financing as well as strategic management that is required
to be set up while entering into the new market. The effective management of infrastructure can
allow the company to optimize the value of the whole value chain in an effective manner.
Therefore, while entering in the new market Goldman Sachs Group will manage such things to
setup their business (Kaffash, and Marra, 2017).
Human Resource Management: In the new market, Goldman Sachs Group can analyze the
management of human resources by evaluating the aspect of human in the new market which
includes recruiting, selecting, and rewarding as well as performance management.
Technology Development: The technological integration in the distribution, production, human
resources as well as marketing activities requires Goldman Sachs Group to realize the
importance of the development of technology. It include automation software, technology
supported customer service etc. therefore, they will focus on technology development in such
countries to compete their competitors
Procurement: it denotes the process that involved in purchasing the inputs that may control the
cost of the company in an effective manner. Goldman Sachs Group will directly link with their
consumers to provide their services in the new market in an effective manner (Goldberg, and
Meehl, 2019).
Operations: the company will invest huge amount in research and development to provide their
services in more innovative manner. They will introduce new policies to attract their consumers
effectively.
Logistics: the logistic at Goldman Sachs Group aims to provide fast services to their end users.
The services and products are distributed through wide network of distributors in Thailand and
UAE

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Sales and Marketing: Goldman Sachs Group will adopt various marketing and sales strategies
to target their consumers. They can use the social media platform to target their consumers more
efficiently.
Customer Services: Goldman Sachs Group should focus on the experience of the consumer. The
main objective of the company is to meet the requirement of the new consumers efficiently (Al
Rahahleh, Ishaq Bhatti, and Najuna Misman, 2019).
Analysis of Resources through VRIO framework
The core competence and capability of the company can be analyzed through the VRIO
framework. It is developed by Jay B Barnet to evaluate the relative importance of the resources
to the firm. VRIO stands for Value of the resources, Rareness of the resource, Limitation Risk as
well as Organizational Competence. It is one of the resource focused strategic analysis tool that
examine the link between internal characteristics as well as performance of the company in an
effective manner (Al-Tamimi, Lafi, and Uddin, 2016).
Valuable
 Goldman Sachs Group considered employees as the valuable
resources to the firm. A significant portion of the workforce will
be highly trained that will lead to more productive output for the
company
 The distribution network of the Goldman Sachs Group is a

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valuable resource that will help in reaching maximum number of
consumers in an effective manner while entering in the market of
Thailand and UAE.
Rare
 The financial resources of the company are founded to be rare. The
strong financial resources are possessed by few companies in the
industry that will give ease to the company to invest huge amount
while entering in the new market
 The employees of the company are rare resources. Such employees
will be highly skilled and trainees that is not the case with the
employees of the other companies to enter in the new market
effectively.
 The distribution network of the company is rare in the new market
due to the reason it require lot of investment as well as time to
come up with a better distribution network (Buch, and Goldberg,
2015).
Imitable
 The financial resources of the company will be costly to imitate.
Such resources will be acquired by the organization through
earning profit in an effective manner..
 The employees of the company are also not costly to imitate. Other
companies an also train their employees to enhance their skills.
 The patent of the company is difficult to imitate due to the reason
it is not legally allowed to imitate a patented product.
Organization
 The financial resources of the company are organized to capture
the value. Such resources are used strategically to invest in the
right place, making the used of opportunities as well as combatting
the threats.
 The company is not using its patent to their full potential therefore;
they can use it by investing in new market.
 The distribution network of the company is identifies. They will
use their network to reach out to maximum consumers by ensuring
that the products are available on all of their outlets (Civilize, and

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Ananchotikul, 2018).
Formal Institution
Formal institutions refer to laws, regulations, and rules. The institution-based perspective asserts
that the behaviour of a company is the result of the dynamic intersection between organizations
and companies. In UAE the central bank of the United Arab Emirates had been responsible for
undertaking and managing the foreign banks in the country. There are various Articles provided
by the Central bank of UAE. It is given under Article 47 that it maintains the accounts of the
foreign banks. The exemption has been provided under Article 79 that they are not require to be
joint stock companies such as other banks operating in the UAE, however this article states that
within three years they will fulfil the requirements that will enforceable by law. Goldman Sachs
Group has to provide the evidence before the bank of the allocated capital funds that cannot be
below than 40 million dollars. All the branches of the bank have to maintain their separate
accounts in the UAE that includes profit and loss accounts and balance sheets (Apaydin, 2018).
In Thailand there are various rules before entering into the market of Thailand the banks has to
follows the laws and open the bank according to the Ministry of Finance states. To open a bank,
the bank must have a strong financial background and the parent bank must be licenced in their
country. The Goldman Sachs Group in Thailand has been governed with the Bank of Thailand
Act. It is given the control of foreign banks under section 3 of the Bank of Thailand Act
(Scheela, Isidro, Jittrapanun, and Trang, 2015).
However in US, the Goldman Sachs Group run their business freely, as the government allow
labor, capital as well as goods to more freely that gave them opportunity to expand their business
in more effective manner. In contrast with the law and regulation of Thailand and UAE are strict
that may create biggest challenge for Goldman Sachs Group to survive in such market. They
need to spend huge amount in such formalities and need to manage their business accordingly.
Informal Institution
There are various ways of informal where the bank can operate its business in UAE and
Thailand. In Islamic country like UAE there are Islamic rules and regulations. There are various

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informal institutions such as Islamic culture, frameworks, tradition as these all holds the specific
elements. In UAE the religion and value based on teachings of prophet and Quran. In this
country both formal and informal institutions get valued and they both hold maximum agreement
and so they have a less chance of conflict. Thus the banks have to operate in the informal
technique through this way and they can operate in the UAE (Ali and Krammer, 2016).
In Thailand there are various informal institutions through which the banks can take entry and do
the business in Thailand. There are various opportunities has been open for the banks after the
liberalization and the competition in the Thailand market has been increased. In 1993 the country
facilitated the international borrowing and encouraged the fund inflows, the Bangkok
International Banking Facility (BIBF) were established. These are the institution that helps
inflows of funds for the foreign institutions. The Thailand economy has been smoothened
through this informal institution that helps the banks to establish in the market of Thailand
(Çakmak, and McCabe, 2018).
Conclusion
From the above analysis it can be concluded that international market involve with great
opportunities therefore, it is required for the company to entre in such market and grab it. Most
of the companies expanded their business in the global market to maximize their sales and to
target maximum number of consumers in an effective manner. One of the US based company
Goldman Sachs Group is also planning to expand their business in two countries which is
Thailand and UAE. Such countries are developed countries that will give an opportunity to the
Goldman Sachs Group to expand their business effectively. Goldman Sachs Group is one of the
banks that provide variety of service and products to their consumers. The companies can entre
in such market through Greenfield investment method in which the company is required to set up
their outlet in both countries. At the end it is required for the companies to keep in the mind of
formal and non-formal institution while analyzing the market.

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References
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Management in Islamic Finance: A Review. Journal of Risk and Financial Management, 12(1),
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technologi-cal flows, there still are tremendous disparities in terms of income per capita and
growth rates across countries (Hall and Jones, 1999). Among the plethora of explanations
proposed in the economic litera-ture on this phenomenon, institutions have become a common
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