Case Study on Debeers Diamond

1.PEST analysis

Political factors

Amendment on diamond laws by southern African countries focus on supporting and building local diamond-related

industries such as cutting and polishing. De Beer’s involation with US’s Sherman antitrust law leads to its business

being prohibited from the US market. Turnmoil in the diamond countries such as Sierra Leone, Angola and Liberia as

well as Congo resulted in the rebel force using the illicit diamond trade to finance their armed conflicts.

Economic factors

World productin of diamond rough grew highligted the upward trend of diamond prices. Long term trend of increasing

level of foreward and backward integrations change the way to grow a diamond business and build a brand.

Social factors

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.

Technical factors

The technology used to make industrial diamonds began making lab-grown diamonds. Modern technology and process

such as CVD can produce flawless synthetic diamonds and provides variety selection of colors .

Envrionmental factors

Establishment of Diamond Trading Company Botswana upgrade the country’s diamond industrial level from mining

and sorting to sales and marketing. This movement not only improve the economical condition but also create more job

opportunities for the country.

2. Michael Porter’s 5 Forces Model.

Potential entrants – Low

DeBeers takes the dominant position in the diamond market making it competitive to defend against entry of new

competitors. Diamonds were not a commondity, it required huge capital investment.

The power of suppliers- High

Many buyers exit but dependences on only few supliers. Demand driven and focus on the end consumers required good

relationship with the suppliers due to the suppliers is in lieu of the buyer of last resort.

The power of sightholder - Medium

Sight holders has power on requesting a specific package of stones. Those of them who build strong brands were

partially reimbursed for the money they spent on advertising and marketing efforts.

The power of buyers–Medium

Most of the diamond product is standardized and always viewed as very expensive for mass market consumers.

Numbers of final consumers care about the orgin of diamond are increasing.

The threat of substitutues –High

Synthetic diamond is a substitute for natural diamond because of its flawless structure and eco-friendly produced in

laboratory. On the customer side, the price of synthetic diamond is relativley cheaper than the natural one so it is

affordable to go to mass market and wide customer base.