Corporate finance Presentation

Youssef RECHO

Company Brief
Founded

1869 Worldwide offices Investment Services Industry

External Analysis
The Investment Services Industry

Five Forces Analysis

Industry

Attractiveness
Favorable Moderately Favorable Favorable Moderately Unfavorable Attractive 1st 2nd 3rd 4th 5th

Rivalry Threat of Substitutes Suppliers Buyer Power Overall

Barriers to Entry Favorable

Macro Environmental Forces

Global

Sustainable energy Infrastructure Emerging markets (BRIC)

Social

Protect environment Improved systems Less specialized IT Process time decreased. Internet Communication Online trading

Technological

Macro Environmental Forces

Governmental/Political

Securities Exchange Commission (SEC)

Sarbanes-Oxley Act 2002 (SOX) Financial Industry Regulatory Authority (FINRA)

Ethical

Inadequately disclosed payments Use of market timing Abuse late trading Untruthful reporting Economys slowdown Sub-prime crisis Housing crisis

Economic

Competitors Analysis
Strategy/Position

Merrill Lynch

Global Markets & Investment Banking Global Wealth Management Institutional Securities Global Wealth Management Group Asset Management

Morgan Stanley

Goldman Sachs

Internal Analysis
Inside Wall Streets Black Box

Business Definition/Mission
Definition

Global Investment banking, securities, and investment management firm.

Mission

As far as our group could discern, Goldman does not have a mission statement.

Firms Management Style

Style

- Management by objective

Employees are given control over goal setting. Management only intervenes when something is not going right.

Organizational Structure
Flat

Minimum chain of command Efficiency is key

Decentralized

Authority is delegated to divisions, functions and employees at lower levels.

Organizational Controls
Output

Controls

Flat and decentralized = focus on divisional and individual goals

Culture

Company values (fourteen principles)

Behavior

Controls

Incentives such as pay raises and bonuses

Organizational Values

Clients come first

Fiduciary responsibility

Creativity and Imagination

Ability to avoid pitfalls others could not because employees are challenged to think out side of the box.

Integrity and Honesty

Trust is key in financial industry

Competitive Advantage
Quality Focuses on having the greatest product lines and managing affairs in all aspects of business Leader in new products and processes Focuses on streamlining processes, large investments in technology innovations

Innovation Efficiency

Customer Small number of clientele allows for Responsiveness more focused customer service

Popular Ratios
3-year est. Net Profit growth(sales) Margin Goldman Sachs 43.2% Return on Equity 18.75% 14.62% 16.50% 15.32%

13.58% 10.74% 10.32% 10.08%

Merrill Lynch 34.9% Morgan Stanley Industry 30.1% 20.7%

Critical Issues
Current events & concerns

S.W.O.T. Analysis
Strengths
High profitability and margins Investment banking leader High brand equity Recruitment & retention of talent

Weaknesses
Negative cash flow from operations Interest income instability

Opportunities
Focus on investment banking in the US & Southeast Asia Private equity account generation

Threats
Financial Market Volatility Consolidations Conflicts of interest

Critical Issues
Volatility

of Financial Markets

Drastic stock changes Harmonizing

Client requirements Profitable market returns

Balancing

Secrecy and Transparency

Black box SEC reporting

Links

http://www.youtube.com/watch?v=wZYotxLwvXM

http://finance.yahoo.com/echarts?

s=GS+Interactive#symbol=gs;range=1y;com pare=;indicator=volume;charttype=area;cross hair=on;ohlcvalues=0;logscale=off;source=un defined;