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SM Debeers Case

De Beers is the world's largest diamond company, known for controlling the diamond market. It mines diamonds through joint ventures in Botswana and sells them to select customers at set prices. Recently, De Beers has had to cut prices for cheaper diamonds as sales have declined. To drive growth, De Beers plans to expand its retail presence in India through an omni-channel strategy and more boutique stores targeting young consumers.

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Jagadeesh Putturu
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66 views5 pages

SM Debeers Case

De Beers is the world's largest diamond company, known for controlling the diamond market. It mines diamonds through joint ventures in Botswana and sells them to select customers at set prices. Recently, De Beers has had to cut prices for cheaper diamonds as sales have declined. To drive growth, De Beers plans to expand its retail presence in India through an omni-channel strategy and more boutique stores targeting young consumers.

Uploaded by

Jagadeesh Putturu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Case analysis of DE-BEER’S Diamond

company :

Introduction :-

De Beers which is owned by Anglo American Public limited company is famous


for its tight control over the diamond market. Its sales in Botswana, where it mines
diamonds in a joint venture with the government, are to a select group of
customers. The buyers are expected to specify the number and type of diamonds
they want, and then carry out the purchases at a price set by De Beers. De Beers,
the world’s biggest diamond company, has in recent months been forced to cut
prices to sell its cheaper gems and its sales have been depressed.

De Beers growth strategy involves working with and strengthening relations with
its retail partners. But, it also plans to roll out an omni-channel strategy in India, to
drive growth. It will also open more of its boutique stores in shopping centres
targeting the young millennials.
PESTAL Analysis :-

Political:-

 The changes in diamond laws in South Africa are illustrated by the support
and the construction of several local diamonds industries such as cutting and
polishing.
 Moreover, the company has a good relationship with governments.
 Had a partnership of 50-50 between DeBeers and the Botswana government

Economical factor :-

 World production of diamond rough grew highlighted the upward trend of


diamond prices.
 Long term trend of increasing level of forward and backward integrations
change the way to grow a diamond business and build a Brand.

Social factor :-

 A number of non-wedding advertisement campaign changed the buying


behavior on diamond consumption, women wear diamond ring as an
expression of personal style and men show his love by buying his lovers a
diamond ring
 Debber advertised that best way to propose a girl is by giving a diamond
ring and it was very successful
 Diamonds are very costly and having them are also considered as high social
stature.
 There is a different view on synthetic diamonds and rough diamonds in the
customers

Technological Factor :-

 Using technology artificial diamonds are manufactured which are called as


synthetic diamonds and those were also sold in the market by Debeer’s and
had improved it’s condition in the market.
 Modern technology provides good products with the minimum cost

Environmental Factor :-

 Establishment of Diamond trading company upgrades the country’s diamond


industrial level from mining and sorting to sales and marketing.

 This movement not only improves the economical condition but also create
more job opportunities for the country.

 Due to war situations in mid 1990’s there is a huge supply and less customers
to buy diamonds so there is huge stock left over and trade of blood diamond
also was not very much accounted for at that period

 Reduce energy consumption and decrease cost of productivity

Legal Factor :-

 A permit is required to be able to direct an exploitation of diamonds.

 Many controls have places during transactions and Legal agreements with
governments.

 Governments impose taxes on farm. The method of manufacture of synthetic


diamonds was patented by General Electric.
Poter’s five forces :-
Threat of new entry:

 New entry for any county is hard as entering cost for such industry is very
high
 Debeers build a strong brand in the market and had a market share of 85%
and there was no close competitor in the market
 Join venture with government had given debeers manij advantage in the
market
 But in 1990 canada emerged as diamonds producer had become a threat to
debeers

Threat of Bargaining Power of customers:

 Customs have no bargaining power in this industry as price is decided by


debeers and supply is a monopoly
 In War situations there are rebals among diamond industry in 1990’s but had
a little turbulence in those period and later everything is back to normal and
had continued to do good in market .

Threat of Existing rivalry:

 Debeer’s hold market share of 85% in the market and there is no close rival
who can he trouble or threat to it so threat of existing rival is very low
Threat of Bargaining power of suppliers:
 Due to support from government on mines and there are huge supply of
diamonds and Debeers had total control on market and there is less threat
from supply
Threat of substitutes:

 There is no substitutes for diamonds


 Many believe that diamonds are indicators of social status and intend to buy
more

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