Goldman Sachs (B): Building Capabilities to Enter Consumer Finance

Case A explores Goldman’s corporate strategy and growth, charting its history from when Marcus Goldman moved to the US and launched a commercial paper business in 1869. It follows the firm’s expansion in terms of its products/services, and its growth via acquisitions and alliances. Throughout the 20th century it built a reputation for innovation as a leader in M&A advisory, but remained firmly focused on investment and wholesale banking (the B2B side). Subsequently, in the aftermath of the 2008 financial crisis and a period of underperforming on the stock market, Goldman pivoted to retail banking in search of new growth and more stable sources of income. How effective its strategy would be remained to be seen. Case B explores how Goldman Sachs built the capabilities to enter consumer finance – a whole new market. Whereas others entered the market through acquisitions, alliances, or internal development, Goldman began by recruiting talent and gradually building a consumer business internally, then adding a combination of bolt-on acquisitions, partnerships, and further internal initiatives. The case ends in 2022 with the question: Did Goldman Sachs choose the right strategy?

This versatile case can be used to explore the following corporate strategy questions/issues: - What is the basis of corporate strategy and what makes it effective? How can a firm formulate a more effective corporate strategy? - What determines a firm’s corporate scope? Should it be diversified or focused? - Which new markets should a firm enter? Which businesses should it divest? How can it leverage its core competencies most effectively and optimize its portfolio of businesses? - How can a firm create value through the deliberate planning and management of its corporate portfolio? How can it create synergies between its business units? - How should a firm enter a new market? How should it balance its portfolio of corporate development activities? - How should a firm manage various internal and external stakeholders when making corporate portfolio choices?