DeBeers’s Diamond Dilemma Assignment Help

A case study analysis on DeBeers Diamond Dilemma

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Introduction

DeBeers is the world's largest diamond mining in trading company in the world having a control of selling over 80% of all diamonds (McKay, 2018). The company is active in diamond mining and diamond trading since its inception. DeBeers is well known for the monopolistic practices and the control it has over the diamond market. Apart from the monopoly in mining diamonds, DeBeers had control over diamond cutting and polishing industry as well leading to full control on the supply and price of diamond (Berger, Lamond, Gavish & Herstein, 2016). However, the introduction of synthetic diamonds in the market, DeBeers has been facing multiple threats. The following assignment will analyze the current market position of DeBeers and provide solutions by applying strategic methods in order to develop its market standing.

DeBeers’s current market position

DeBeers aims to remain a competitive seller in the diamond market and make diamonds available for everyone the use of enhanced strategies and maintaining high level of standard of its diamonds. Currently, DeBeers is trying to eliminate the synthetic diamonds in order to capture maximum market share. The company has been facing governmental consequences and disputes.  The diminishing costs of diamond gross sales can be destructive to DeBeers. The company has been facing issues from the communities involved in the mining (Newbury, 2016). The strategy of creating monopoly over diamond mining although has helped to create nice in the market, it also has attracted legal issues for DeBeers and the way it does its business.  The advent of synthetic diamonds has been a game changer in the diamond industry giving an opportunity for DeBeers to think about diamonds in a different way.  In the current scenario, DeBeers keeps the price of its Diamond as per the market pricing rather than creating a monopoly on the supply of diamonds (McAdams & Reavis, 2008).

Past and current strategies

DeBeers is the largest diamond producer as well as the diamond retailer and its strategies of purchasing the most branded jewelry chains around the globe has helped to create a loyal customer base. The company has logically separated the segments of its customers in order to cater to the need of each segment.  The company has come out with different branding campaigns such as "The Millennium diamond" branding strategy.  The specialty of this strategy was a limited edition diamond engraved with the year 2000 on it which was able to attract the wealthy customers.  As a part of their branding efforts, DeBeers out with "The Celebrate her Campaign" which encouraged the men to gift diamonds to their better halves unknown special on non-special and non-wedding occasions. DeBeers also encouraged unmarried women to wear rings on their right hand with an innovative strategy named as "Women of the world raise your right hand".  Surprisingly, these Strategies and branding efforts remained very successful and hit the right note by targeting women specifically (Esty, Gross & Pickle, 2017).

Previously, DeBeers use the strategy of controlling supply and demand but it could not be successful due to many government regulations and market competition. The company began selling from its own operations rather than buying diamonds from the open market. This encouraged DeBeers to make its supply conflict free.  The "Supplier of Choice Program" improved its relationship with suppliers. The Idea of developing demand driven and brand focus strategies helped DeBeers increase its profit along with market share.

Additional strategies

Diamond business nowadays not only focuses on the business but also creating good relation with mining sectors and consumers.  Since consumers are mostly dependent on the quality and price of diamonds, it can be challenging for Diamond companies to take new strategic decisions. DeBeers can give much more importance to give purchasing choice to customers and creating brands needs to be more specific in order to attract more customers. DeBeers can formulate strategies to invest in the retail sector that will create job opportunities and long-term values for the company. The use of technological advancements can help the supply chain of DeBeers to sell more diamonds and grow faster in the diamonds industry.

Need for diversification

Based on the case study, it can be analyzed that DeBeers can diversify its operations by investing in machineries that can differentiate between synthetic and natural diamonds.  The company can also venture into the synthetic diamond market in order to expand its market share.   The need for diversification will help DeBeers to look for better opportunities in the diamonds industry increase its market share by use of innovative strategies.  Since the company holds more than 40% of the diamond market control, it has an opportunity to venture into the synthetic Diamond market (Sharife & Bracking, 2016). This will allow them a good control on the inventory that may enter into the market.  Since the Diamond market is very volatile and subject to changes, DeBeers should keep its hold with selling of natural diamonds as the demand for such luxury products would never fade away from consumers mind.  According to the case study, synthetic Diamonds are way cheaper than natural diamonds which can open an opportunity for DeBeers to increase its profit through product diversification.

Consumer point of view

The consumer point would always be inclined towards the purchase of real diamonds. Since diamonds are a luxury item, consumers perceive it as rare and a symbol of prestige for them. Although there has been a demand for synthetic diamonds in the market among customers,   the demand for natural diamonds can never fade away from the minds of customers.  The biggest advantage with synthetic diamond is its cheaper price which may influence a consumer's purchase Decision.  But the best way for companies to remain loyal in the eyes of its customers is to develop the market rather than restricting the choice of customers. From the customer point of view, natural diamond is priceless whereas a synthetic diamond can suffice their needs.

Conclusion

It can be concluded that DeBeers is one of the most successful diamond companies in the history.  The company has used numerous tactics to successfully control the demand and supply of diamonds in the market with its monopoly could not remain constant with the entrance of new companies in the market.  Although the company, has created a niche in the diamond industry, it still has to go a long way in order to remain competitive in this changing business environment.

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