How Goldman Sachs Has Maintained a Competitive Advantage in the Hypercompetitive Industry - Case Study Example

In this sector, Goldman Sachs offers client transactions in fixed incomes, currency, equity, commodity products, and these services are offered mainly to institutions such as banks and government corporations (Goldman Sachs 2016). In addition, Goldman Sachs also offers services in major stocks and future exchanges across the world and also provides securities lending and brokerage services.

Investing and lending

Goldman Sachs Group offers loans aimed at financing their clients. These kinds of loans and investments are long-term in nature, and this means that they are immense, same as the interest incomes earned. This means that the company’s long term security is enhanced, and this has earned the company confidence from shareholders (Goldman Sachs, 2016).Goldman Sachs makes consolidated investments which are offered either directly or indirectly through funds and separate accounts managed by the company. This also done through securities and loans, real estates, and private equity securities.

Investment management

The company offers investment management services and products across the major classes of assets to various institutions and clients. These services include mutual accounts and private investment funds. The firm also offers advisory services in matters of wealth, and this includes financial counseling and advice, portfolio management and brokerage and the main target here are the high-net-worth individuals and corporate world (Goldman Sachs 2016).

Goldman Sachs is an already strong brand that has built adamant reputation because of its sound financial position. For the period between 2011 and 2015, Goldman Sachs has maintained a gross margin of 77.34 percent, and an operating margin of 22.28 percent. It has managed a return on equity of 7.47 percent (Goldman Sachs 2016). This indicates that the financial viability of Goldman Sachs has been good and this has offered it the confidence required from the shareholders and the clients.

Goldman Sachs has more than 35,700 employees who are diverse and employed from various backgrounds. Due to its high reputation, the firm recruits top graduates from leading business schools across the globe, and this has created a culture that ensures that they employ the best talents and can maintain them, and this has increased the firm’s productivity (Craig, Susanne; Enrich, David; Sidel, Robin., 2010).A good example that shows that Goldman Sachs employs the best talent is that most of its ex-employees are holding various top management jobs in various governments across the world. The quality of employees at Goldman Sachs holds a high strength that has pioneered the company to greater heights especially in the sector of investment banking. According to Fortune (2011), a candidate has to undergo an unusual thorough recruitment process that includes up to ten interviews, and this means that they get the best talents out of a vast number of candidates. Goldman Sachs stresses on creativity and teamwork and thus has been strength on the part of the firm. Employees at Goldman Sachs have been rated as the ‘best brains’ in the field of business. In addition, the firm has 14 business principles, and one of these principles focuses on the diversity of its people. The firm emphasizes on recruiting individuals who are well diversified and reflect on the diversity of various cultures and communities in which they operate in (Leonidou and Leonidou 2009). The management also promotes activities aimed at engaging in minority outreach programs as well as providing scholarships for the best and needy students at universities and business college schools, and this ensures that they receive the right reputation (Michael E. Porter 1980).The firm also promotes training in diversity leadership for all its employees so as to improve their competitiveness in their respective fields. Even up to today Goldman Sachs continues to recruit effectively and train staff so as to maintain a competitive advantage in the financial services sector.

Goldman Sachs has an effective structure of segmenting its customers well and focusing much on those in dire need of their services especially the minority members of the society such as women and the youth. For example, the firm promotes the needs of women through developing investment programs and education products that best fit their needs. One major initiative at Goldman Sachs is a women initiative that finances more than 10,000 women and helps them start and operate small businesses, and this is done so as to ensure that there is an increased economic growth. The firm understands that investing in women is one of the most efficient ways of reducing inequality in the society and also helps in promoting economic growth (Michael E. Porter 1980).Moreover, investing in education especially for women has a significant multiplier effect, and this produces more productive and healthier workers who ultimately create a prosperous society. Goldman Sachs continuously works so as to ensure that they reach to the right people and this will successfully impact on the firm’s corporate social responsibility.

Another aspect that has placed Goldman Sachs at the top is the fact the financial services firm focuses on engaging clients face to face (Epstein, Neil, arld Bruce R. Brewington,., 001). The firm has representatives in the Environmental Market campaign, and the main role is to ensure that they visit any business that they intend to invest in or to offer services. In addition, Goldman Sachs has various initiatives aimed at giving seminars and participating in various programs aimed at encouraging women and the youth so as to ensure that they participate in academics and other initiatives. Goldman Sachs also participates in activities that actively seek for women and ensure that they fund them and encourage them to small business environments (Spotts and Weinberger 2010).This has continued to earn the firm an advantage over others. In addition, the company states on its website that it prefers dealing with clients one on one rather than talking and selling products to clients via phone calls or emails. The firm believes that engaging consumers on one on one basis helps to improve its corporate brand image, and this has been an important step in ensuring that the company attracts as many new clients as possible. Goldman Sachs has a very efficient advertising and marketing strategy plans aimed at creating awareness of the company to new groups of people as well as help in correcting any misconception or wrong image about the firm.

At the company, the subject matter is the customer, and they believe that the only product that they offer is the people. Thus, the basic thing here is that Goldman Sachs has maintained a culture aimed at meeting customers face to face either through client visits or mass seminars. In the financial services sector, the clients and the service provider, in this case Goldman Sachs, must always interact for an individual service to happen and the idea is that for the customer to be satisfied by the service, it will depend on what the service provider is offering. Thus the use the right staff and people provides an essential ingredient in such a relationship between the customer and the service provider. Goldman Sachs understands that recruiting the right staff and offering the best training for them in an appropriate manner helps in the process of delivering the service to the customer and this has enabled the firm to maintain its competitive advantage for long ion an already competitive market (Spotts and Weinberger 2010). For the service industries, understanding that the people are the only products is the first step towards providing excellent customer service. Consumers always want and wish to be treated well, and this has been the trend at Goldman Sachs. It is imperative for firms not only in the service sector but also in other industries to have it in mind and their operations that customers make general judgments about a company based on the employees they interact.

The employee is always the first ambassador to a firm. Thus, it is of the highest order for enterprises to ensure that they treat their staff members well even before they consider serving the customer. This is a factor that Goldman Sachs understood since its inception and has thus been focusing on offering the best customer experience and has the best staff in delivering on customer experience. The aspect of promotion has also given Goldman Sachs the limelight to be at the top in the financial services sector especially in investment banking (Michael E. Porter 1980). Going by the fact that Goldman Sachs has been engaging in new products means that new methods of promotion are being used so as to help in advertising the products to the people and making them well known. Goldman Sachs has changed the way they approach the aspect of promotion and advertising. Despite applying the traditional promotional mix of advertising, interactive marketing, public relations, sales promotions, the use of the word of mouth as a means of promotion and personal selling, Goldman Sachs also has other newly integrated marketing approaches that align themselves well with the company’s corporate goals.

Most of these new promotional strategies are aligned with the current technological advancements, and this has pioneered Goldman Sachs to greater heights especially in promotion and advertising. Since 2010, Goldman Sachs has been relying much on word of mouth for promotion as well as personal selling, and this has been made possible because of the nature of the firm’s products. On the same years (2010), Goldman Sachs launched a new promotional campaign that ensured that they applied more of the traditional media such as the use of the television, magazines and newspapers. In fact, Goldman Sachs launched their first television, newspaper and online advertisements which had been ignored for long. According to the then Goldman Sachs’s spokesman, David Wells, the new promotional campaign was aimed at expanding communication and interaction with a wider audience in an effort that was aimed at ensuring that the public knew who Goldman Sachs was, what they dealt in, what they do and also clarifying any misconception that was in existence. From this, it has been clear that the firm’s advertising objectives are creating awareness for the firm and its products and services and also ensuring that any form of misconceptions are corrected (Leonidou and Leonidou 2009).

Goldman Sachs has been applying newspaper, magazine and online advertisement on new service products in the market. Goldman Sachs used a field of wind turbines in which a man putting on a hard hat juxtaposed. For this slogan, the headlines were “Progress is Everyone’s Business” and this has been creating a feeling of rationality in the minds of the consumers. The television advertisement appeals to the customer through feelings and emotions (Spotts and Weinberger 2010). It comes with concepts like security, focus, heart and through all these, the viewers conclude this with a visit to Goldman Sachs, and this initiates a sale which has led to increased sales at the firm

The firm’s website also functions as a part of the promotional mix for that services as a means of advertisement for the products of Goldman Sachs. The advantage of advertising products across the firm’s website is that further details about the products and services offered by Goldman Sachs are provided (Michael E. Porter, 1980). Once a person logs in into the Goldman Sachs website, he or she sees this message immediately the website has opened “Progress is Everyone’s Business”. Once this message appears, other links commonly known as ‘stories of progress appear on the website. These ‘stories of progress’ include all kinds of investments that the company has been involved in and all those outside projects that Goldman Sachs has funded since it was incepted. These investments have been able to build urban areas as well as helping women start and run small businesses. In addition, a customer can also view various videos describing these major investments such as the ’10,000 small businesses’ and how they have aided in economic growth. ’10,000 small businesses’ is an initiative that had been created by Goldman Sachs and was aimed at funding small businesses owned by women in the society. Marketing and promotion are a very crucial for any company or organization that operates in competitive business environments (Spotts and Weinberger 2010). The concept of marketing helps in differentiating a firm from the others in the same industry depending on the effectiveness and competitiveness of the respective marketing strategies. Goldman Sachs also applies the concept of social media marketing, a marketing strategy that almost each brand uses so as to reach to a wide range of customers irrespective of their geographical locations.

Social networking has been the basis of the firm’s Adidas also applies the marketing strategies of the user and benefit based positioning which mean that it focuses on creating a distinctive image in the minds of the consumer. Competitive advantage is achieved through putting emphasis on the quality of products and through this; Goldman Sachs has been able to maintain its brand essence across the world (Leonidou and Leonidou2009).In the current world, Goldman Sachs make us of the social media as a marketing platform and has registered Facebook, Instagram and Twitter accounts where they share with their customers and other stakeholders. Its Facebook presence can be described as immense. Goldman Sachs employs various approaches aimed at increasing the number of the supporters who follow them on the social media sites such as Twitter, Facebook, and Instagram (Spotts and Weinberger 2010). However, all these approaches can be considered to have made Goldman Sachs successful on social media marketing.

Another aspect that Goldman Sachs considers is the quality of supplier, vendors and other partners who integrate together in ensuring that they offer the best services to the public. Goldman Sachs believes that widening its supplier and partner base can help in increasing access to ideas, improve competition and also help in creating value for money. Goldman Sachs has set very strict criteria applied in selecting prospective suppliers such that the final candidate is perceived as the best of all (Leonidou and Leonidou2009).Goldman Sachs looks at the quality of products and services offered by the potential partner, customer service must be excellent, the partner must be offering competitive pricing, and must have the ability to assist Goldman Sachs in various meetings as well as in other business goals and finally, the prospective partner must ensure that in whatever they do has a positive environmental and social impact

Conclusion

In conclusion, Goldman Sachs has been applying various tactics and techniques that have ensured that the firm has maintained a competitive edge in the financial services sector not only in the U.S but also across the globe. Some of these aspects include maintaining a culture that recruits the best candidates to fill any available positions in the firm, focusing on televisions and the print media as promotional strategies, ensuring that all partners and suppliers are vetted according to the criteria highlighted in the paper among other strategies including maintaining its profitability at a given level. Many firms in the financial services sector have ventured into investment banking, and this has increased competition in a field that Goldman Sachs specializes in and for this reason, the firm has been on its toes to ensure that it maintains its competitive advantage.