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The Goldman Sachs Group, Inc.
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=== Goldman Sachs Porter Five Forces Analysis - Competitor Analysis === Porter Five Forces is used as a strategic management tool to carry out industry analysis. It helps leaders and investors look at the various competitive forces that are in each Financial Industry in both local and international markets. A stronger force means lower profitability, while a weaker force means higher profitability. {| class="wikitable" |+ !Forces Analysis !Strength of force !Reasons |- |Threat of New Entrants |Weak Force | * Economies of scale is fairly difficult to achieve. Those producing at a large scale has a cost advantage * Strong product differentiation, strong emphasis on brand reputation as well as advertising and customer service * High capital expenditures due to high research and development costs * Strict government policies within the industry. Legal requirements have to be fulfilled before a company can start selling |- |Bargaining Power of Suppliers |Weak Force | * The number of suppliers in this industry is a lot compared to the buyers. Therefore, suppliers have less control over prices * Products supplied are fairly standardised and have low switching costs, making it easier for buyers to switch * Industry's profits are closely tied to that of suppliers. Therefore suppliers have to provide reasonable pricings |- |Bargaining Power of Buyers |Weak Force | * The quality of the products is important to the buyers, and these buyers make frequent purchases. Buyers in the industry are less price sensitive * The product differentiation within the industry is high, buyers are not able to find alternative firms producing the same product |- |Threat of Substitute Products of Services |Weak Force | * There are very few substitutes available for the products that are produced in the industry in which Goldman Sachs operates, produced as well by low profit earning industries. There is no ceiling on the maximum profit that firms can earn * The substitutes are of high quality but more expensive, making Goldman operate at lover prices with adequate quality |- |Rivalry Among Existing Firms |Stronger Force | * Goldman's competitors tend to be very large in size, meaning that most of these firms won't be able to make moves without being noticed/ * Competitors have a large market share, therefore competitors will engage in competitive actions to gain position and become market leaders * Industry is growing every year and is forecasted to carry on growing. A positive industry growth means that companies are less likely to engage in market capturing strategies * High fixed costs, making the companies within the industry to push to full capacities. Making these companies reduce their prices when demand slackens, increasing rivalry * Products in the industry are highly differentiated, each firms products and specialisation is unique * Exit barriers are particularly high due to high investment required in capital and assets to operate. The exit barriers are also high due to government regulations and restrictions, making firms reluctant to leave the business |}
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