Industry Analysis Goldman Sachs is also in the investment banking & brokerage industry.

This industry is in the maturity phase of its lifecycle. It is highly competitive and is heavily concentrated. With the fall of Lehman Brothers and mergers of Bear Sterns with J.P. Morgan Chase and Merrill Lynch with Bank of America, Goldman Sachs and Morgan Stanley are the only remaining standalone investment banks.

Company Background The Goldman Sachs Group, Inc. (NYSE: GS) is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients. Goldman Sachs was founded in 1869 and is headquartered at 200 West Street in the Lower Manhattan area of New York City, with additional offices in major international financial centres. The firm provides mergers and acquisitions advice, underwriting services, asset management, and prime brokerage to its clients, which include corporations, governments and individuals. The firm also engages in proprietary trading and private equity deals, and is a primary dealer in the United States Treasury security market. The companys activities are divided into 3 segments which include: Investment Banking, Trading and Principal Investments, and Asset Management and Securities Services. The investment Banking segment of the companies business includes 2 divisions, Financial Advisory and Underwriting. The Financial Advisory segment is responsible for mergers and acquisitions and company restructurings. In 2007, the Investment Banking segment provided $7,555 million in net revenues. Another is its Trading and Principal Investments segment which accounted for $31,226 million of the companys net revenue for 2007. This segment is divided into 3 divisions which include: 1) Fixed Income, Currency, and Commodities 2) Equities 3) Principal Investments

The last segment of Goldman Sachs is its Asset Management and Securities Services. It provides investment advisory and financial planning services to institutions, hedge funds and high-net-worth individuals worldwide.

Competition Goldman Sachss main competitors in its sector include JP Morgan, Merrill Lynch, Lehman Brothers, Morgan Stanley, Citigroup, and many others. However because of the financial crisis many of the financial institutions performed very poorly. Some of Goldman Sachs competitors have disappeared only in the last year because of this crisis which includes Bear Stearns and Lehman Brothers. Others are being bought out such as Merrill Lynch which is now owned by Bank of America, and Washington Mutual who is now owned by JP Morgan.

Strategy Historically Goldman Sachs has continued to stay above its competition through the genius that it requires of its employees. Back in the early 1900s, Goldman was one of the first companies to actively recruit graduates from top MBA programs around the country. By doing this, Goldman has ensured that it employs the top minds in mathematics and finance in the world in order to do everything from managing risk effectively to underwriting IPOs to engineering complex debt instruments for its customers. One example of the genius in Goldman Sachs employees includes two traders who made a very profitable bet in 2007, $4 billion to be exact. Josh Birnbaum and Michael Swenson were two traders that realized what was going on in the subprime market and therefore pushed senior management to approve of their trading strategy to short the subprime mortgage market. It is because of these two that Goldman Sachs escaped the subprime mortgage crisis and was also able to avoid most of the subprime mortgage meltdown crisis by selling subprime bonds short which helps make it a safer long term investment without the fear of the company going under.

Culture and Policies Other things which made Goldman Sachs different from other firms: exceptional recruiting, risk management, teamwork, intensity of commitment, and distributed, driven leadership. All these are energized by the entrepreneurial imperative to create, discover, and develop

profitable businessesand make them grow by capitalizing on the organizations many strong corporate relationships, its power in many markets, advanced technology, and an extraordinary communications network that links thousands of professionals into one interconnected team that is flexible, adaptable, and, to any and all competitors, dangerous. Because of the financial crisis, many banks went through a large transformation using mergers, acquisitions, or just changing their structure to adjust to the new regulations that will be placed upon financial institutions once we are out of this crisis. On September 22, 2008, Morgan Stanley and Goldman Sachs received federal approval to become bank holding companies. The two decided to switch to be supervised under the Federal Reserve in order to have access to Federal Bank Reserve Discount window and therefore more opportunities for funding. With this transformation and its planned acquisitions to grow its assets from $20 to $150 billion, Goldman Sachs became the fourth largest bank holding company in the United Sates, following Bank of America, JP Morgan, and Citigroup.

References 1. www2.goldmansachs.com 2. The Goldman Sachs Group Inc. (2008). Retrieved December 18, 2011 from The Goldman Sachs Group Inc.: 3. http://www.telegraph.co.uk/finance/markets/2821324/Goldman%27s-traders%2Cnot-bosses%2C-deserve-credit.html