De Beers term paper2

De Beers Diamond Company Student’s Name Instructor’s Name Course Title Date Specify the nature, structure, types of products or service of your chosen organization, and two (2) key factors in the organization’s external environment that can affect its success. Provide explanation to support the rationale. De Beers Diamond organization has been the industry, which presently generates $13b worth of rough diamonds every year, leading towards employment of 10 m people worldwide from mining towards retailing. Seventy percent of the rough diamonds have been sold for the industrial purposes having remaining thirty percent gem quality that has been being distributed to the experts for cutting, polishing as well as jewelry manufacturing (Danilov, 2013). World jewelry market has enhanced 3 fold in last twenty five years along with has presently been worth $72 b every year. Jewelry diamonds have unjustifiably expensive provided that they have not been really scarce. On discovery of rest of the diamond reserves worldwide, De Beers has set up the subsidiary named the Central Selling Organization (CSO), has been responsible to purchase production for all the mines globally afterwards selling produce to dealers in regard for the percentage fee (10 to 20 percent) from the producers. Central Selling Organization had been capable of maintaining illusion of scarcity through deciding quantity of diamonds that are to be supplied towards world market along with in turn, permitting individual producers for producing some percentage of such amount. Central Selling Organization afterwards sold the batches of rough diamonds towards the selected dealers at its exclusive sightings. Central Selling Organization had been capable of dictating the inflated prices towards dealers, like when dealers tried to negotiate on the price; they had not been invited subsequent sightings. From later 1800’s Central Selling Organization controlled sale of eighty percent of diamonds of the world (Reilly, 2004). Company’s external culture within industry has been exploration along with mining of the diamond fields within production stages. These have usually been carried out through governments, many times in the JV’s with organizations like De Beers. Once the reserve of any notable size has been discovered this has been worth exploiting due to higher market value of raw material thus leading towards the particular financial reward.  2. Examine three (3) salient stakeholders of the chosen organization based on their key roles and relationships with the company.  3 salient stakeholders for De Beers Diamond organizations have been The Kimberley Process, Business Action for Africa along with Diamond Development Initiative. The Kimberley Process has been joint government, industry as well as civil society initiative to stem the flow of conflict diamonds i.e. rough diamonds utilized through rebel movements for finance wars against the legal governments. Business Action for the Africa has been the International business along with companies from Africa. Like Business Action for Africa within the support of 3 main goals: thus positively influence the policies required for the growth along with the poverty reduction, promote more balanced perspective of Africa, development as well as showcases best business practice. De Beers motivates sustainable business for ensuring the long term positive development for the Africa; such commitment has been shown in the part by its considerable social investment activities within the South Africa, Botswana along with Namibia. De Beers has returned more than $2.0 billion to continent each year. Diamond Development Initiative has been the diamond industry program, which seeks for alleviating poverty within the more than 1m African informal or artisanal, small diamond diggers along with its families through formalizing economies surrounding the artisanal diamond mines. De Beers has founded DDI, along with one of the leading Non Governmental Organizations, World Bank as well as British Government, after being inspired through the cross sector cooperation of Kimberley Process. This introduces along Non Governmental Organizations governments and also private sector within the general effort for converting diamonds in the engine for the development (Lawrence, 2014). 3. Suggest five (5) ways in which the primary stakeholders can influence the organization’s financial performance. Provide support for the response. Diamonds are successfully marketed therefore that they have been perceived towards being ultimate method of demonstrating the heartfelt along with enduring the affection as well as commitment to others. This allied with a fact that they have been provided like gifts for celebrating several births, weddings along with anniversaries, means that they hold the uncommon place in hierarchy of the jewelry as well as like that there have been no substitutes for them. For some extent rest of the jewelry like gold, silver along with platinum have been substitutes; but they have all been complementary products like usually diamonds have been mounted on the gold along with silver in its last form like customer jewelry. Bigger volume of synthetic diamonds have been produced every year but most of those (3 billion carats) have been for the industrial use, having just some thousand carats of gem quality synthetic diamonds are being produced yearly, against the production of 120 m carats of the natural diamonds. Like there have been some non clear natural diamonds generated every year (0.1 percent), synthetic diamonds have been produced for jewelry industry have often been colored for meeting the excess customer demand for the colored gems. Like they have some if any substitutes, diamonds have been the elastic commodity. De Beers have managed to attach the emotional value towards the diamond jewelry, therefore ensuring that this has been compulsory for every marriage proposal and also the host of rest of the distinctive occasions like, anniversaries along with birthdays. Nowadays diamonds have been perceived towards being ultimate method of demonstrating the enduring love along with devotion as well as like customers have been willing and also expect of paying the higher premium for that gift. It has been shown that demand for the diamonds enhanced decade on decade at the time of 20th Century when prices enhanced precipitously at that period. As discovery of diamond fields within the South Africa in year 1870s, production has regularly been enhanced over a period of time along with at present the accumulated aggregate of 4.5 b carats are mined till that date. Enchantingly twenty percent of such amount is mined in past five years only. It enhances in the production levels has majorly because of enhanced worldwide demand for the diamonds, thus owing majorly to marketing activities of De Beers group. As mentioned earlier, De Beers set of enhancing customer demand through marketing diamonds like ultimate demonstration of love along with devotion, thus leading towards diamond ring being important for the marriage proposals from 1930 onwards. De Beers in addition came up with slogan ‘Diamonds are forever’ for endowing stones having the sentimental value, thus resulting in quite few diamonds that are being sold privately through individuals. Because of that there is no decrement in demand for the brand newer diamonds from the higher street jewelers. Worldwide recession has outcome in demand for the diamonds thus diminishing dramatically. In earlier economic downturns, De Beers was having exclusive control of market along with is capable of maintaining high price as well as because of that diamond’s have been perceived enduring the luxury along with exclusivity. 4. Specify one (1) controversial corporate social responsibility concern associated with your selected organization. De Beers Diamond organization had been, at one point is called conflict diamonds worth $1.2 b, which floated towards world market like the outcome of civil war within the Angola as well as Sierra Leone in year 1990, De Beers has felt compelled for purchasing the newer supply of diamonds in the fear, which it could lose their competitive benefit (Boţa-Avram, 2013). It has outcome in the public relations disaster like De Beers had blood on their hands, UN imposed sanctions on the conflict diamonds along with under pressure of customer boycotts and also activist campaigns. 5. Assuming you are the leader of the most influential stakeholder group, outline a plan to form a stakeholder coalition to force the organization to address your chosen controversial issue. The plan should include the key steps that you would take to identify members for your coalition group, the major reasons why you believe that the particular target group can help you to accomplish your goal, and the method you would utilize to foster collaboration among the various groups you target. Options for alleviating bad PR image along with re building the brand equity: De Beers In the year 2000 has started the Kimberly Process that with around seventy along with all big industry players has committed industry towards the strict certification process for legitimate origin of the diamonds. This however from the year 2003 along with has diminished several of conflict diamonds to 0.2 percent of the global production. De Beers became 1st mining organization to increase health insurance towards the HIV positive workers along with their families within South Africa, Botswana as well as Narribia. De Beers should pay attention towards its environmental footprint in all its operations. All their main operations are certified. Options for the differentiated product: De Beers had been forming the De Beersbrand about diamonds along with luxury goods. In the year 2000, they have formed the JV having their leading luxury goods company LVMH along with have opened the De Beers LV store within Tokyo. But, desires for opening stores in United States had been frustrated through United States government ban on business because of their alleged antitrust violations. The set reputation within the market having more than one century of experience having capability of adapting to their changing culture however in-spite its strength, their market share has been diminishing because of more players within market along with non government companies intervening with demands for much more expenditure for the Customer Service Relation initiatives. DeBeers was having the price leadership for several decades, as loss of their monopolistic position within market is seen as it becomes lesser of threat towards rest of the companies. DeBeers has launched the luxury diamond stores within NY being the strategy for adapting to the diverse market, allowing it to develop the newer brand; it has been the strength for DeBeers in present years like stores sell direct to public.  6. Assume the role as the leader of the most influential stakeholder group, indicate three (3) potential challenges that you may face in encouraging stakeholders to form a coalition to help you achieve your goals. Suggest the significant steps that you would take in order to overcome these challenges that you have identified. Justify the response. DeBeers cartel has been singularly responsible for price being very higher because of that restricting supply along with focusing to enhance the demand. Mentioning the evolution of DeBeers association in evolution of diamond industry, diamonds had been very scarce, found just in river beds of India along with jungles of Brazil as well as like that had been highly prized through nobility in the entire world. In the year 1870, bigger reserves had been found within the South Africa along with that concept about them has been more widely present had been borne. Production levels of the individual miners had been restricted through its lesser equipment therefore domestic business men aided them through renting them expansive mining equipment. One that businessman, Cecil Rhodes, started buying claims to production of diamond mines. By the year 1887 the organization he set up, DeBeers has owned rights towards all mines within South Africa. DeBeers had earlier being capable of developing its total control within the South Africa as: government supported color bar, which permitted the discrimination among white as well as non white workers thus providing labor employment benefits along with virtual free market for capturing along with registering claims. DeBeers in addition took control about all the distribution channels thus permitting them for regulating the supply levels as well as dictate price of rough diamonds generated in the year South Africa. This may actually be seen that DeBeers had been central towards outstanding success of diamond industry along with profits enjoyed through several stakeholders in between that. For years DeBeers has guaranteed producers the stable flow about foreign currency along with dealer’s stable prices, which had been easily transferable to consumers. In decade since breakup of cartel, there are lesser however particular changes within structure of diamond industry i.e. Production along with distribution had now been more evenly spread in the entire market but this have been static along with not in particular competitive pressures. From the retailers and also customer perspective, lesser has been changed in that supply of diamonds remains limited for that this has been in line with the demand that however has led towards price of diamond jewelry remained unjustifiably higher.  References Boţa-Avram, C. (2013). Is ethical behavior of companies influenced by governance? International Advances in Economic Research, 19(3) , 325-326. Danilov, Y. (2013). De Beers: New Realities of the Global Diamond Business. Retrieved from: http://www.rough-polished.com/en/expertise/72622.html . Lawrence, A. T. (2014). Business & society: Stakeholders, ethics, public policy (14th ed.). New York, NY: McGraw-Hill Irwin. Reilly, S. (2004). De Beers SA . Retrieved from: http://pages.stern.nyu.edu/~rwiner/De%20Beers%20case.pdf . DE BEERS DIAMOND COMPANY 10 Running Head: DE BEERS DIAMOND COMPANY 1