1.

a) The main business areas as of 2016 are following-

Investment Banking Division,
Institutional Client Services
Investing & Lending
Investment & Management

b) Brief description about each of the four divisions.

i) Investment Banking Division-

 It serves public and private sector clients across the globe
 It provides financial advisory services and assists companies in raising capital to
expand their existing businesses
 Primarily financial advisory includes strategic advisory assignments with respect
to mergers and acquisitions, divestitures, corporate defense activities,
restructurings, spin-offs and risk management
 Investment Banking division also underwrites public offerings and private
placements, including local and cross-border transactions and acquisition
financing, of a wide range of securities and other financial instruments

ii) Institutional Client Services

 This segment serves clients by buying and selling financial products, also helps
them in raising fund and manage risk
 GS maintains inventory, typically for a short period of time, in response to, or in
anticipation of, client demand
 This segment Includes client execution activities related to making markets in both
cash and derivative instruments for interest rate products, credit products,
mortgages, currencies and commodities.
 It generates commissions and fees from executing and clearing institutional client
transactions on major stock, options and futures exchanges worldwide, as well as
OTC transactions
iii) Investing & Lending
 This segment includes investing and relationship lending activities across various
asset classes, primarily debt securities and loans, public and private equity
securities, infrastructure and real estate.
iv) Investment & Management
 This unit provides investment and wealth advisory services to help clients
preserve and grow their financial assets
 The majority of revenues in this segment comes from management and other fees
 along with asset-based fees on client assets
c)
% Of Total Revenue % Of Total Pre Tax
Earnings
Investment Banking 21% 27%

Institutional Client 47% 46%

Services

Investing & Lending 13% 16%

Investment & 19% 11%

Management

d)

Segment Profit Margin (Pre-Tax Earnings/

Revenue)
Investment Banking 45%

Institutional Client Services 33%

Investing & Lending 42%

Investment & Management 20%

Source- Company report,2016, page no 1

2.
a) The main business areas as of 2016 are following-
Investment Banking Division,
Trading and Principal Investment
Asset Management and Securities Services

b) Brief description about each of the four divisions.

i) Investment Banking Division-

 It serves public and private sector clients across the globe
 It provides financial advisory services and assists companies in raising capital to
expand their existing businesses
 Primarily financial advisory includes strategic advisory assignments with respect
to mergers and acquisitions, divestitures, corporate defense activities,
restructurings, spin-offs and risk management
 Investment Banking division also underwrites public offerings and private
placements, including local and cross-border transactions and acquisition
financing, of a wide range of securities and other financial instruments

ii) Trading and Principal Investment

 This segment includes investing and relationship lending activities across various
asset classes, primarily debt securities and loans, public and private equity
securities, infrastructure and real estate.
 This unit makes principal investments directly and through funds that company
raises and manages

iii) Investment & Management
 This unit provides investment and wealth advisory services to help clients
preserve and grow their financial assets
 The majority of revenues in this segment comes from management and other fees
along with asset-based fees on client assets

c)
% Of Total Revenue % Of Total Pre Tax
Earnings
Investment Banking 11% 16%

Trading and Principal 73% 73%

Investment

Asset Management and 17% 12%

Securities Services
d)

Segment Profit Margin (Pre-Tax Earnings/

Revenue)
Investment Banking 28%

Trading and Principal Investment 41%

Asset Management and Securities Services 60%

Source- Company report, 2006 Page no 44

3) Basic Difference:-
 Segments have changed over the years, initially GS had three segments and now
they have four segments
 The change is partly to diversify the business and partly to reduce the over
dependency on the trading segment

The main reason behind the change is the 2008 subprime crisis, which forced most
of the capital market related companies to change their way of doing business, also
a lot new regulations came into place to safeguard the investors and economy.

4) Change in cost structure

As % of Total Opex
2016 2006
Compensation and benefit 57% 71%
Brokerage Fees 13% 9%
Market Development 2% 2%
Communication & Technology 4% 2%
Depreciation & Amortization 5% 3%
Occupancy 4% 4%
Professional Fees 4% 2%
Other expenses 11% 7%
Operating Expenses 100% 100%
Source- Company report,2016 page no 56, 2006 page no 42

The major change happened in Compensation and benefit component of the expense.
Previously, a major part of the compensation was linked to the sales as a variable
component, post-subprime crisis due to some regulatory laws GS had to reduce the
variable part, which in terms substantially reduced the compensation part of the
operating expense.

Source- Company reports(2016,2006)