Ahere are certain tools that helps in developing an insight view of the company such as PESTLE/STEP analysis, SWOT, resourced based view and value chain, which helps in giving the information that reveals the current position of the firm in the market. Further, these tools have been used to analyse Goldman Sachs. “A company which is a leading global financial services firm providing investment banking, securities and investment management services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals.
Founded in 1869, the firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centres around the world” (www2. goldmansachs. com, 2010). Further, this report it will give recommendations that may help Goldman Sachs to gain competitive edge amongst its rivals in the market. STEP analysis STEP analysis is one of the important tools which can be used to scan the external macro environment in which a company is operating.
It provides a framework to monitor and evaluate the forces which affect the organization (Morrison, 2006). Further, it helps us to identify risks, which is not under control of an organization. Further, the external influences are categorised under 6 headings; political, economic, social, technological, legal and environmental; abbreviated as STEP (Johnson and Scholes, 2005). Based on the above discussion, STEP analysis has been chosen to analyse the macro-environment to diagnose the external influences that are affecting Goldman Sachs.
Social factors: Social factors which affected a firm involve the attitudes, beliefs, opinions of a person in the external environment of the firm, as developed from cultural, demographic, educational and ethnics conditioning (Pierce and Robinson, 2005). Further growing consumer assertiveness is also affecting external environment of the firm. Technological factors: Technology, which is widely recognised by various literatures, is on strategic management (John, L.
Thompson and Frank Martin, 2005). However, as part of the organization and the industry part of the model, it has been used for the creation of competitive advantage, and therefore the technology, external to the industry, could also be captured and used. On the other hand, it can be influenced again by government support and encouragement. However, technological breakthroughs may create new industries, and therefore it might have a threat for existing organizations.
As a result, their products or services might be rendered redundant. However, new technology may provide a useful input for both manufacturing and service industries, but in turn its purchase will require funding and possibly employee training before it can be used. Economical: There include factors affecting Goldman Sachs from competition, global recession, increase in taxes etc. Consumer spending power is very critical for the prosperity of any industry. Economic downturns cause problems for industries.
Factors such as rates of economic growth, unemployment and interest rates, which affected the spending power of consumers and businesses, also have a major impact on the nature of competition in an industry, for example, federal funds measure monetary policy, but Goldman Sachs Financial Conditions Index has differences of monetary policy whatever came from another popular measurement. The real economy has been impacted indirectly by the federal funds rate even if it impacts on financial variable.
Not only does Goldman Sachs Financial Conditions Index focus the action of feds, but also financial markets that may transmit these actions to reshape the real economy in the United States of America (www2. goldmansachs. com, 2009). Political: This is political factors which affect a business can be the new rules and regulations imposed by the government toward that particular business environment. Also, it can be affected by international bodies such as European commission, the United Nations and the world trade organization (Haberber and Reiple, 2008).
For example, the political condition is stable for Goldman Sachs in one of the growing economies i. e. the Indian economy, but there are fears of hung parliament due to lack of clear majority in parliament creating fears of wrong investing in the minds of investors thereby reducing capital. Such kind of factors can influence Goldman Sachs depending upon the context in which it is operational. SWOT analysis Organizational capabilities are formed when a firm utilizes its resources efficiently and effectively.
For example Goldman Sachs would be able to deliver outstanding customer services by helping the firms to reduce its debt load. This and other factors help to determine the core competence of Goldman Sachs. Furthermore, there are tools in strategic management that helps in analysing the core competencies of a firm. For example one of the tools that help in analysing the current economic position of firm is SWOT analysis. Further, it consists of specifying the project and helps to spot the internal and external factors that are favourable and unfavourable to achieving that objective. The strengths and weaknesses usually can be arisen from within an organisation, and the opportunities and threats from external sources could be seen (Pettinger, 2004). Based on the above discussion SWOT analysis model has been used to determine the core competencies of Goldman Sachs.