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
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..
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