Diamond, it is a precious stone more value than gold and silver. Its first discovery was in the year 1859 in South Africa at Northern Cape. From then, Diamonds became very much famous by the enhancement in the supply as well as the advanced technology which enabled the Diamond cutting, shaping, polishing as well as finishing. Diamonds are the precious gems which are the sources of nature, Diamond can be harmed by diamond itself and a very few other stones. Diamond had become the precious luxury goods; De Beers was the company which could market this luxury goods. De Beers company is on one mission is that to make the diamond dreams into a reality one by marketing them into marketplaces. It is the organization whose objective is very big and always aims at high.
De Beers has two aims, they are to be the topmost company of diamond seller in the market and to make the diamonds available for everyone by enhancing the partnership in worldwide by recruiting the skilled workforce and to trust the worth of emotions of diamonds. In the organization, it is responsible for only five key values such as to be passion regarding the organization and the product, for getting the strengths together, maintaining the corporate rapport, to show that they care for the distribution and services to the economy as well as accepting the troubles by its capabilities and structuring the future accordingly. It maintains three policies like, vision, worth and purpose. They maintain high level standard and take the responsibilities for all the long run results. It makes the great standard of living to the domestic country by their goods. It is trying to eliminate the global troublesome diamonds and the shareholders are being informed on time about the performances of the company.
Cartel and conditions to it prosper
Cartel is a member group where separate bodies gather and cooperates for the controlling of manufacture, marketplace as well as to set the price of the products or goods. Based on the laws numerous areas of the worldwide, the cartels are illegal as they obstruct the fair market rivalry. Nevertheless, many global cartels are being sustained despite of many laws. There are cartels within the countries and the cartels which are owned privately might be controlling the marketplaces secretly for some of the goods or products.
Even-though, in history, diamonds are rare, by the discovery of mines of diamonds in South Africa in the late 1900 had bring a huge stone to the international marketplace. The main as the diamond is such high price is for the sake of scarcity of diamonds. However, if the supply is more than the demand then the prices would automatically decline. A tycoon Cecil Rhodes was the founder of De Beers mines in 1875 at South Africa, had tried to solve the problem of scarcity by concerning on two main aspects such as he came to know that the supply of diamonds is only from South Africa which is the single important manufacturer all over the world in that period had to be limited. Secondly, the producers were having humble control on the quantity as well as the quality of its finished products. However, they were only concerning the purchasers who buy the mediocre as well as spectacular stones. Nevertheless, most of the final products are mediocre stones; the manufacturers mostly prefer to take away all the uncertainties as well as to sell all most all the output. However, purchasers are needed to make sure of the security of perfect supply of the stones for generating the optimal volume for polishing as well as then retailing.
Rhodes was having a consequence which was for creating a deed among the individual manufacturer as well as individual purchaser where the supply is less, and the prices are to be high. His thought was kept into action, and he got all the huge South African mines in 1980s as well as he formed a diamond seller association within the nation which was known as Diamond Syndicate for which he used to sell his productions. It was a single channel for marketing. All the individuals used to buy the product from him in some quantities and sell them on specific prices. By such a good strategy for the price and quantity, the cartel for diamond was accomplished. In the year 1902 Rhode has died and his place was taken and strengthened by a German merchant for diamonds merchant who made his own business for diamonds in South Africa an Anglo-American, he is Ernest Oppenheimer. By the cross shareholdings the company is yet controlling both De Beers as well as Anglo-American till this date.
Factors of De Beers cartel to prosper
Most of the cartels have been collapsed because of organizational troubles and incentive troubles. The cartel of De Beers had run for more of 100years. There are three organizational attributes which encourages the long run of cartel. Initially, the organization must have huge concentration over the business. In the days of Rhodes, De Beers was not only controlling all the South African manufacture process as well as the sales by its wholly owned subsidiary company which is Central Selling Organization which is situated in London. Secondly, the De Beers Company is not the company of disputes, and it holds price leadership. The rough figure of diamonds sold are being managed by central selling organization. It is an exclusive team of the cherries picked retailers as of the cities of Antwerp, Mumbai, New York as well as Johannesburg. Sight holders must make the CSO know about their abilities and requirements for the quality as well as quantity.
The central selling organization has later matched them with the stock. In the meantime, of all the sights, the central selling organization had allowed a sight holder a parcel which is selected before. Customers were usually taking the parcel. Whatever might happen, if the customer takes the product or not, but there is no bargaining was allowed. Mostly customers were happy with the product, if the customers did not like the system, they are not called for again. At last, the friendly rapport with the contestants of cartel to the most will build the long run viability.
Source: https://www.ukessays.com/essays/economics/diamond-industry-case-study-de-beers- economics-essay.php?vref=1
Question One (30 Marks)
The mining industry is faced with many challenges. As a management student, formulate the PESTLE analysis of De Beers mines.
Question Two (30 Marks)
The Porter’s five forces model is a simple but powerful tool for understanding the competitiveness of the business environment. Discuss how De Beers can effectively implement the use of Porters Model.
Question Three (30 Marks)
Innovative companies even look outside their own internal ranks when they perform a SWOT analysis and get input from customers to add their unique voice to the mix. Design and develop a SWOT analysis for De Beers mines.
Answers to Above Questions on Mining Industry
Answer 1: An analysis of the Mining industry indicates that there are significant changes faced by it. An assessment of an industry can be carried out with the help of PESTEL analysis that stands for political, economical, social, technological, environmental and legal environmental performance. In the given case scenario of De Beers mines, the application of PESTEL analysis is performed as follows:
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