PESTEL analysis
Political aspect: In 1994 the DeBeers operation was prohibited in the United States territory because of antitrust legislation. These facts complicate the DeBeers operation and shake the
whole company.
Economic aspect: Although in 1990s DeBeers ruled the whole industry, after several events such as Soviet Union collapse and Alrosa’s appearing, DeBeers lost its control over the market.
In addition, Canada’s appearing in the diamond market forced DeBeers to hold back a large
portion of its diamonds from the market and purchase much of the excess supply from these
producing countries often at inflated prices (McAdams, Reavis, 2008, p.7).
Social aspect: In the mid-1990, Angola, Sierra Leone, Liberia and Democratic Republic Congo were outflanked by rebel forces opposed to the government. DeBeers sponsored this military
conflict by “blood diamonds” purchasing.
Technological aspect: The main threat is the synthetic diamonds grown is the lab-conditions. This technology is far eco-friendlier, and what is more important, far cheaper. You do not need
to maintain the whole mine with its costs of machines, inventory, labor costs, etc. There were
two types of processes for producing synthetic diamonds. “The first process, called high-pressure
high temperature (HPHT), the second one is was known as chemical vapor deposition (CVD)”
(McAdams, Reavis, 2008, p.7).
Environment: Diamond mining is a planet-harmful process. You have to extract several tons of earth to get the diamonds. It damages flora and fauna’s environment, like in Canada’s Ekati,
where the harm around the diamond mine area is awful. “Scientists had observed that caribou
and grizzly bears were spending far less time feeding in areas around the mines” (McAdams,
Reavis, 2008, p.7). In addition, diamond mines use diesel fuel, which using lead to increase the
production of greenhouse gases.
Legal aspect: DeBeer's in the past controlled the entire diamond market. They could have control over the mines and the distribution of almost all the diamonds in the world if they had
held their positions. Seeing this the European Commission enforced some restrictions over how
DeBeer's would purchase diamonds from other suppliers. This had forced DeBeer's to cut down
on their purchases from Alrosa and they also faced a penalty of 10% of net revenue if they
crossed that limit. Moreover, they are now legally required to follow the Kimberley Process
Certification Scheme (Kimberley Process) for the mining and supply of diamonds (The New
York Times, 2006).
The five forces analysis
Rivalry: a lot of strong players are in the diamond market. All of the competitors communicate through European commission, which makes their communication strictly regulated, to prevent a
monopoly appearing. On the one hand, it is easy to operate if you know the rules, on the other
hand, it is hard to operate because you are limited in actions.
New entrants: This is super expensive field. In addition, the main competition shaped over the years. In general, I think it is possible to enter that market, however, I think that the new player
will not consider as a serious threat.
Substitute: there is just one type of substitute – synthetic diamonds. Maybe it seems like a different commodity, but customers are getting accustomed to every day. I think it is also a
powerful production that can replace diamond mining one day because of its eco-friendly
approach and low costs.
Suppliers: the point is the diamonds are a raw material itself, so this industry is a supplier’s competition. However, I think the machinery suppliers play a significant role in the diamond
mining and polishing process.
Buyers: as I mentioned above all the bargains in this market under the special regulations control. In general, the buyers are not final customers but the manufacturing industry because
diamonds with no diamond cut is not relevant for the jewellery field.
If I were the DeBeer’s CEO, I would stop to struggle against the tendency, and I would start to
produce the synthetic diamonds but not for cutting and polishing in order to place it in jewellery,
but for science and technology industry. I believe it is in demand because the synthetic diamonds
are used in different industries. “We see diamonds as a new material to trigger a new industrial
revolution. For example, aluminium helped the creation of the aviation industry. Silicon was the
basis of the computing industry. Diamonds will be the basis for the next technological leap”
(Palmer, 2019, para 5). And one more thing that I would have done is overall conception. I
would state the conception and make every employee follow it. I believe that conception not
only helps to create an image, but it also helps to overcome some issues.
References McAdams, D.; Reavis, C. (Jan 7, 2008). DeBeers’s Diamond Dilemma. Retrieved from
https://my.uopeople.edu/pluginfile.php/515756/mod_workshop/instructauthors/U3%20DeBeers
%20Diamond%20Dilemma%20McAdams.pdf
The New York Times. (Feb 22, 2006). De Beers loosens grip on diamond market. Retrieved
from https://www.nytimes.com/2006/02/22/business/worldbusiness/de-beers-loosens-grip-on
diamond-market.html
Palmer, M. (Mar 22, 2019). Are diamonds the next silicon? Retrieved from
https://sifted.eu/articles/diamonds-the-next-silicon/
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