Unit A, Chapter 3, Management at Work Case
July 10, 2013
Introduction to Management and Organizational Behavior
Abstract Goldman Sachs is an investment bank that went public in 1999. It is still often considered “The Partnership” because many of the executives in the company, 470 to be exact, own a large percentage of the stocks in the company. Goldman Sachs is considered a coveted place to work for. They take only the top five percent of individuals. They like people that grew up working class because they believe that they strive harder. The employees consider themselves perfectionist and they always work hard, doing the best they can. It is a very difficult climb to get to the top at Goldman Sachs. Employees need to find a happy medium between striving to be better than the others around them, and working as a team player. Goldman Sachs has been affected by the economic downturn in 2008. They have said that they are still strong, and continuously tried to reassure stakeholders. Unfortunately, the stocks began to sell off quickly, and the prices fell to half of what they were at their peak. Recently they have had to lay off over 3,000 people. They have chosen to transform themselves from an investment bank to a holding-company bank, a change to better fit their new environment. Due to their aggressive work environment Goldman Sachs is a perfect environment for unethical decisions by employees. They have been fined by the SEC for some of the decisions that were made to make money. They are striving to make as much money as possible, and in doing so have made some unethical choices.
1.) Which forces in the Goldman Sach’s external environment have accounted most for “the fortunes of fate” that the company-indeed, the investment banking industry, has experiences since 2008?
The external environment is comprised of two parts: general environment and the task environment. The general environment is made of its surroundings that effect the organization. The general environment consists on the economic dimension, technological dimension, sociocultural dimension, political-legal dimension and international dimension. Task environment is outside organizations or groups that effect the organization. Task environment consists of Competitors, Customers, Suppliers, Strategic Partners, and Regulators (Griffin, 61).
Goldman Sach’s most influential factor of the external environment leading to the need to lay off employees was primarily due to the economic dimension of their general environment. The economic dimension is the “the overall health and vitality of the economic system in which the organization operates (Griffin, 61).” The United States had many consecutive years of strong economic growth until 2008. Years 2008 through 2010 the United States experienced a recession. The costs of operation rose and unemployment grew. The growth of companies started to quickly slow down (Griffin, 61). Many companies were hit during this recession, and a considerable amount of companies went bankrupt because of it.
A business such as an investment bank is always hit hard. People do not have the disposable income they are used to during a recession. Many people even lose their jobs, leaving them with nothing to invest. People become tighter with their money, and less likely to put it into a high risk, high return companies like Goldman Sach’s. The hardest year most investment banks had ever seen world-wide was 2008 (Platt, 34). The company could only stay strong for so long. Eventually the hit they took when they economy dropped was going to force them to be financially impacted by this. They had to lay off workers and transform into a holding-company bank because of the economic hit that they and the majority of other companies in the United States took post-2007.
2.) Explain the roles of Goldman’s partners, both as owners and as employees in