why do firms become multinational enterprises? Using examples, explain what motivates organisations to engage in international business and how they internationalise PDF

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Year after year Goldman Sachs remains one of the largest financial institutions in the world, and with an annual net revenue larger than the GDP of 100 countries, it’s not hard to see why With locations in 30 countries, Goldman Sachs divide their operations into four sectors. The largest of these sectors, in terms of revenue and profit, is institutional client services which contributes 44% of their annual revenue In line with Porter’s Five Forces, Goldman Sachs are in an extremely strong position within the industry proving that they have a strong hold on the market and are likely to remain one of the market leaders for a considerable amount of time Although there is little in the way of competitors for Goldman Sachs there is still a sense of high competition within the industry as switching costs for clients are low and the differentiation between services is minimal. Goldman Sachs must then rely on their image and pre-existing relationships in order to retain their client base Unlike other industries, investment banks don’t tend to have regular suppliers (those of which that can be applied to Porter’s model). It can however be argued that high net-worth clients are considered to be suppliers since investment services heavily rely upon huge amounts of invested capital. Along with this, the US government are also considered suppliers. This includes the Treasury Department, Congress and the Federal Reserve Bank Individual consumers do not hold a lot of bargaining power. Goldman Sachs are able to withstand the loss of almost any non-institutional client due to their size. This is because Goldman has implemented a strategy in order to minimise the risk of depositor flight by extending their usage of additional services and implementing account related bonuses. Within domestic markets, new entrants are unlikely to become much of a threat to the likes of Goldman. The implementation of legislation such as the Dodd-Frank Act of 2010 is an example of this; its main aim was to make it difficult for new entrants to enter into major investment banking services. Even when Goldman makes poor decisions the company is extremely unlikely to face too much of a financial implication; therefore, unless U.S regulation changes, the threat of new entrants is likely to arise from international markets and still not be too much of a hindrance for this superpower Due to the modernisation of the technology industry, traditional banks are beginning to see the rising of new substitute services. This wouldn’t create too much of a problem for Goldman as their portfolio is varied; however, there is the threat of online peer-to-peer lenders and crowdfunding tools Goldman Sachs has faced some serious financial instability in the past most shockingly was the depth of their involvement in the 2008 housing market crash Now this is where it gets interesting; in 2006 Goldman CEO, Henry Paulson became Secretary of the US Treasury this man controlled economic and financial policies and legislation. What may come as a surprise to you though is the fact that during the financial crisis of 2008, Paulson brought in a team of Goldman employees to strategize how best control the impact of the breakdown of Wall Street. This was one of the most controversial decisions made in the eyes of the public – for them it enforced the belief that banking is its own entity with its own set of rules - these actions provide a reason as to why some people believe that governments no longer rule the world; Goldman Sachs does I will now pass over to Kubi who will talk about the investment side of Goldman Sachs – Thank you...