PowerPoint Presentation

Corporate Reputation and Competitiveness

MSc in Business Administration

Goldman Sachs CASE STUDY Goldman Sachs StructureBusiness Overview

Issue identification

Recovery measures

Recommended strategy

Implementation

Business Overview

Founded1869Headquarters200 West Street,New York, U.S.Key peopleLloyd C. Blankfein(Chairman&CEO)Revenue[1]US$ 41.664billionOp. income[1]US$ 11.207billionNet income[1]US$ 7.475billionTotal assets[1]US$ 938.55billionTotal equity[1]US$ 75.716billionEmployees[1]32,600

Goldman Sachss Business Overview Goldman Sachss dimension of culture

Source: Goffee & Jones (1996), Harvard Business School Publishing5

The Financial crisis of 2008

The financial crisis of 2008 Defining Mortgage-backed securities

Defining Credit Defaults Swaps (CDS)

The Collapse and bailout of AIG

Abacus AC1

Timberwolf

Facebook

Explanations Mortgage-backed securities

Credit Default Swaps (CDS)

The Collapse and bailout of AIG

The Collapse and bailout of AIG

Each party faces the riskthat the other might fail

Concerns about

Goldman starts to demand additional collateral to cover counterparty risk

Other banks followed

In 2007

Mortgage-backed securities

TARP funds

The Collapse and bailout of AIG Abacus AC11st decade of the twenty-first centuryABACUSABACUSABACUS

askSynthetic CDO

It would fall in value SEC and Abacus AC1

SEC and Abacus AC1

SEC and Abacus AC1 Timberwolf I The Shi**y deal

Needed to raise fundsOnly wanted to do IPO in 2012Means >500 shareholders$450 million$1,5 billionPrivate investment500 shareholdersNo Special Rules FacebookSpecial Rules for >500 Shareholders

Issue Identification

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22Goldman SachsIssue identificationSuccess Increase in reputation

Source: Based on Fombrun & van Riel (200423

Recovery measures by G.S.

Conducts interviews with clients and issue report with recommendationsThe report of 2011:Focus on long term interestput client interests at the center of the decision-making processrecommended reorganizing the firms business segments into four classes in order to provide greater transparency.

Recovery measuresBusiness Standards CommitteeWas established to review incidents and to manage reputation risks Recovery measuresEvent Review Group

Goldman faced the criticism that the compensation of their bankers was very high and the salary of employees was very low. So the bankers may focus on short term profits.Solution: Give shareholders a nonbinding vote on executive compensation.

Recovery measuresSay-to-payCorporate Reputation and Competitiveness - Professor Rui Vinhas da Silva

SWOT Analysis

Strengths

Strong investment banking operations

Strong brand

Overcame financial crisis

Innovative Work Culture

Geographically present across various countries

Government Support

SWOT ANALYSIS

WeaknessesLegal issues

Negative publicity

High Attrition Rates

Blotted Public Image (Subprime Mortgage Fraud)

Low perception of Social Responsibility

SWOT ANALYSISOpportunitiesEmerging markets in need of fundingOpportunities for cross sellingConsolidating markets acquisition targets

Bailout money

Reduced competition due to economic slowdown and competitors bankruptcy

Fix Capital requirementsAcquire small companiesSWOT ANALYSISThreatsCredit market crisis

Mortgage issues

Sharp rise in interest rates

Cyclical industry

Government intervention

Conflicts of interest

SWOT ANALYSIS

Recommended Strategy

Keyword: Communication Reputation Repair StrategyA crisis is defined here as a significant threat to operations that can have negative consequences if not handled properly34Source: Adapted from van Woerkum & Aarts (2008).

Four tasks of corporate communication

Four tasks of corporate communication35

Rescue: Crises management strategy Stabilise the environment First 24 hours of a crises plan

How to show leadershipActions for recoveryHow to respondHow to monitor mediaHow to communicate widely and consistently Create crises communication plan

Quickly and accurately addressing existing issuesPreventing an issue from escalating to a crisesMinimize the long-term impact of a crisesDetermine response1236

Meeting Stakeholders ExpectationsRestore: Stakeholders perceptionREPUTATIONRecover: Take action!work with legislators and regulators on eliminating risky and unsafe investment ventures.

limit any further connections between Goldman and AIG

help Us government creates a new structure which allows open and flexible markets but also safeguards the American public so it never suffers through another crisis.

How to restore a positive image ? Use Goldman Sachss enormous financial might to create jobs.

Involve in investment ventures to create employment opportunities, redouble its efforts and create massive investment funds that would launch small business, seed start-ups, get more involved in the green movement, increase philanthropic giving to education and showcase its positive work.

Implementation planAs soon as possibleCrises management team , CEO

StepsWhoWhen

Questions ?

Thank you..