De Beers, the attacked giant: a leadership as eternal as diamond?
- Key Data Market
- Degree of market concentration
- Technological developments
- Changes in consumer behavior
The diamond industry can be divided into two segments relating to the end use of the same: industrial purpose and jewelry. These two reference markets function very differently. Starting with the base material, 90% of diamonds used for industrial purposes are synthetic.
The diamonds used in jewelry, however, are almost exclusively natural (apart from the exception of a few Indian jewelers who import synthetic ones).
De Beers has specialized in the production and sale of natural diamonds to the jewelry destinations. For the same reason, the focus here primarily is on the natural diamond jeweler, keeping in mind that 80% of the natural diamond sample does not meet the criteria necessary for use in jewelry. This includes the test of the 4 Cs in the industrial sector, where hardware designers are also customers of the firm.
De Beers is a South African company specializing in the extraction and distribution of natural diamonds.It distributes its rough diamonds is intended for firms of size forjewelry (main), or manufacturers of diamond tools for industry (secondary market). De Beers is also involved in R & D around the crystallization of synthetic diamond. The company therefore has the expertise but does not directly operate in trades. There is the new identity of De Beers projected due to developments in the diamond industry in recent years. Before the identity projected probably put the emphasis on the secular tradition of product quality.
As for the culture of the company De Beers, it is important to recall the context of the creation of this company. Indeed, as the conquest of the west for gold, De Beers has the pioneering spirit of its history, Cecil B. Rhodes went in to defend its own Kimberley mines in 1899 from the British troops.
The management system of De Beers is characterized by asignificant centralization: the Oppenheimer family holding company De Beers since 1933. The enormity of the conglomerate and its historical position of monopoly have tended to limit its capacity for initiative. It could therefore qualify as a beauracracy firm.
Following the evolution of competition in the last decade, De Beers saw its main competitive advantage challenged: the system of "Supplier of Choice" performed by the CSO. To maintain its leadership in the world diamond market, so it had to develop new competitive advantages.
Faced with the first scenario of changes in supply, which provides sustained demand in the coming years, the recommendations are to develop the main assets of De Beers: its mastery of the entire industry (with possible sharing of resources ultimately the ability to pass through the diamond sub-contractor to reuse the size diamonds De Beers, De Beers in the shops-LV) and capitalizing on the brand (sustainable competitive advantage) by operations and promotions highlighting the specificity of the De Beers diamonds: authenticity and quality.
To take advantage of the trend towards "democratization" of the diamond, tha last recommendation is to create a new brand, well differentiated from De Beers diamond marketing cheaper and lower quality just by playing on the economies of scale that De Beers brings its mastery to almost the entire value chain.
This last element would include anticipating the second scenario: the over production and falling prices . De Beers in these conditions might be able to maintain leadership as "eternal" as a diamond.
Tags: De Beers, competition, diamond industry, eternal leadership