You could call Goldman Sachs the greatest market manipulator and cry foul at every announcement that it makes. Yet, in an unrivalled environment, the best option is to learn from the Alpha male of Wall Street – the brat of the whole lot! by gyanendra kashyap
Despite widespread criticisms, Goldman Sachs'' share price has marked a 240% rise in just a year (touching $176.51 as on November 10, 2009). As a matter of fact, during Q3, 2009 alone, the firm made profits of more than $100 million on trading revenues in 36 days and profits of more than $50 million in 53 of the 65 trading days – all these, when financial institutions were still scrambling for schlock bankruptcy covers (the latest victim being CIT). So what gives at Goldman that makes it so different from its peers?
Peter Nerby, New York-based analyst at Moody’s Investors Service communicates to us that the superior performance of Goldman Sachs over its peers is based on the "firm''s risk management expertise and controls, as well as the strength and diversification of its franchises." Although that is simply put, the statement does contain the very foundation of the spectacular success of how Chairman Lloyd has managed his firm. But his success has been supported by three strategic focuses he used over the past few years.
Yes, to some extent, Blankfein has benefited from the miasmal state of affairs of his competitors, who were forced to wrestle with large trading losses and internal restructuring. A less competitive market and higher fees have indeed contributed to the staggering profit figures (revenues and profits, in this industry, are a function of volumes and margins). David Viniar, CFO of Goldman Sachs, while angrily denouncing several allegations levelled against Sachs (he termed the accusations an egregious distortion of facts), has gone on record saying, "We are very aware of what''s going on in the world, but we have to trade that off with being fair to our people who, we believe, have performed admirably throughout the crisis."
And this is precisely the first learning for other banks – treat criticism as hyperbole and reward your top performers, blasphemously (if that means obtaining a scurrilous reputation, so be it), for "people" surely are the topmost tangible asset. Competitors like Morgan Stanley, who have lost talent regularly since the mid 90s and have had to pay out billions of dollars to settle lawsuits/issues in the past years, have never managed to match the sparkle of Sachs to an extent (for records, Mika Watanbe, Executive Director, Morgan Stanley, communicated to B&E his refusal to comment on the issue).
Despite widespread criticisms, Goldman Sachs'' share price has marked a 240% rise in just a year (touching $176.51 as on November 10, 2009). As a matter of fact, during Q3, 2009 alone, the firm made profits of more than $100 million on trading revenues in 36 days and profits of more than $50 million in 53 of the 65 trading days – all these, when financial institutions were still scrambling for schlock bankruptcy covers (the latest victim being CIT). So what gives at Goldman that makes it so different from its peers?
Peter Nerby, New York-based analyst at Moody’s Investors Service communicates to us that the superior performance of Goldman Sachs over its peers is based on the "firm''s risk management expertise and controls, as well as the strength and diversification of its franchises." Although that is simply put, the statement does contain the very foundation of the spectacular success of how Chairman Lloyd has managed his firm. But his success has been supported by three strategic focuses he used over the past few years.
Yes, to some extent, Blankfein has benefited from the miasmal state of affairs of his competitors, who were forced to wrestle with large trading losses and internal restructuring. A less competitive market and higher fees have indeed contributed to the staggering profit figures (revenues and profits, in this industry, are a function of volumes and margins). David Viniar, CFO of Goldman Sachs, while angrily denouncing several allegations levelled against Sachs (he termed the accusations an egregious distortion of facts), has gone on record saying, "We are very aware of what''s going on in the world, but we have to trade that off with being fair to our people who, we believe, have performed admirably throughout the crisis."
And this is precisely the first learning for other banks – treat criticism as hyperbole and reward your top performers, blasphemously (if that means obtaining a scurrilous reputation, so be it), for "people" surely are the topmost tangible asset. Competitors like Morgan Stanley, who have lost talent regularly since the mid 90s and have had to pay out billions of dollars to settle lawsuits/issues in the past years, have never managed to match the sparkle of Sachs to an extent (for records, Mika Watanbe, Executive Director, Morgan Stanley, communicated to B&E his refusal to comment on the issue).
Source : IIPM Editorial, 2012. An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
