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Goldman Sachs Company’s Competitive Market Strategy Report


Coming up with a winning strategy in a market that is highly competitive may be very challenging. However, Goldman Sachs has come up with an effective strategy of doing exactly that. Being one of the leaders in the investment banking industry, it is always under pressure to protect its market share from the emerging competitors. Having an effective business strategy is critical in achieving success under such a harsh business environment. In this paper, the researcher seeks to determine the business model used by this firm and how its mission and vision are aligned with the business strategy.

Business Model Used by Goldman Sachs Group

According to Scherf (2014), Goldman Sachs uses Multi-stakeholder Business Model in its operations. The stakeholders defined in this strategy are the customers, the shareholders, and the employees. In the strategy, this film tries to ensure that the interests of all its customers are met at all times. It offers a wide variety of products targeting customers in different social groups. The firm understands that its clientele base is highly diversified and as such it has to offer a wide range of products that will meet various market segments. Research by Ellis (2008) indicates that this firm is often devoted to offering high value for its clients as a way of gaining a competitive edge over its market rivals.

The firm has also been keen on meeting the needs of its shareholders. The firm appreciates that its shareholders play a critical role in ensuring that it is successful. As such, the company is determined to ensure that they get value for their investment. It has been paying dividends to the shareholders regularly (Hoskisson & Hitt, 2008). The massive expansion projects of this company are also meant to increase the value of an investment for the shareholders. To the employees, the company has been treating them as important partners who play a significant role in its success. A study by Syrett (2007) shows that this organization is one of the best paying firms in the country. Employees are also given the freedom to make decisions within their areas of jurisdiction, often making consultation with their superiors whenever it is necessary.

Mission and Vision Statements

Goldman Sachs has not developed a clear mission and vision statement as evident in its website. However, it has a set of values that guide its operations in the market. As stated below, these values are primarily focused on ensuring that the stakeholders’ interests are properly taken care of at all stages of this firm’s operations.

Objective Evidence that Supports the Strategy

According to Rumelt (2011), developing a business model is one thing, and making it work is another completely different thing. To ensure that this firm successfully uses the model discussed above, it must pass the following tests.

Competitive Advantage Test

Competitive advantage test can only be passed if the model is enabling the firm to have better strategic performance (Mandis, 2013). A study by Scherf (2014) shows that since the end of the 2008 economic recession, this firm has experienced improved performance, a sign that the model is appropriate for it in this industry. The company has expanded its operations beyond the borders of the United States. Its successful entry into the Middle East, Asia, and Africa is a clear indication that this firm is making impressive progress in its effort to capture new markets. This approach makes it easy to deal with stiff competition in the market.

The goodness of Fit Test

The goodness of fit is another test that helps in determining the appropriateness of the model. This strategy fits perfectly well in Goldman Sachs’ situation as a global company. The investment and finance industry is not only competitive but also delicate. Investors want to put their money in firms that promise them the highest return and the best security. Customers want to engage with financial institutions that they believe offer them the best deal in the market. The best employees also want to be hired by firms that will effectively protect their interests. Choosing a multi-stakeholder model fits so well for this firm because it meets the needs of these three stakeholders. It ensures that as the firm seeks to expand its operations in the global market, all its stakeholders remain contented at all times.

Performance Test

The final test is the performance of the firm based on the model that it is using in the market. There must be indicators that show that the firm is registering impressive performance following the adoption of a given strategy. In many instances, this test is often based on the financial performance of the firm. A study of this firm’s performance shows that after the 2008 global economic recession, the firm has registered impressive performance till 2014. In 2015, the revenues dropped, but the value of its assets increased (Williams, 2016). It shows that this firm has passed this test.

References

Ellis, C. D. (2008). The partnership: The making of Goldman Sachs. Hoboken: Wiley & Sons Publishers.

Hoskisson, R. E., & Hitt, M. A. (2008). Understanding business strategy: Concepts and cases. Mason: South-Western Cengage Learning.

Mandis, S. G. (2013). What happened to Goldman Sachs? An insider’s story of organizational drift and its unintended consequences. New York: Cengage.

Rumelt, R. (2011). Good strategy, bad strategy: The difference and why it matters. London: Profile.

Scherf, G. (2014). Financial stability policy in the Euro zone: The political economy of national banking regulation in an integrating monetary union. Wiesbaden: Springer Gabler.

Syrett, M. (2007). Successful strategy execution: How to keep your business goals on target. London: Economist in association with Profile Books, Inc.

Williams, E. F. (2016). Green giants: How smart companies turn sustainability into billion-dollar businesses. New York: Cengage.

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IvyPanda. (2020, July 25). Goldman Sachs Company's Competitive Market Strategy. Retrieved from https://ivypanda.com/essays/goldman-sachs-companys-competitive-market-strategy/

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"Goldman Sachs Company's Competitive Market Strategy." IvyPanda, 25 July 2020, ivypanda.com/essays/goldman-sachs-companys-competitive-market-strategy/.

1. IvyPanda. "Goldman Sachs Company's Competitive Market Strategy." July 25, 2020. https://ivypanda.com/essays/goldman-sachs-companys-competitive-market-strategy/.


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IvyPanda. "Goldman Sachs Company's Competitive Market Strategy." July 25, 2020. https://ivypanda.com/essays/goldman-sachs-companys-competitive-market-strategy/.

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IvyPanda. 2020. "Goldman Sachs Company's Competitive Market Strategy." July 25, 2020. https://ivypanda.com/essays/goldman-sachs-companys-competitive-market-strategy/.

References

IvyPanda. (2020) 'Goldman Sachs Company's Competitive Market Strategy'. 25 July.

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