Strategic Analysis And Recommendations For DeBeers In The Changing Competitive Global Environment Essay.

In a changing competitive global environment develop a new mission and a vision statement for DeBeers. Discuss how these statements support maintaining sustainable competitive advantage.Identify DeBeerskey stakeholders and map these stakeholders in terms of the power/interest grid.Provide a critical discussion with regards to the importance of stakeholder management.

Describe and analyse some of the key trends and uncertainties facing the Diamondindustry over the following 10 years. Build on this analysis to generate two possible scenarios for DeBeers, what implications are there for Ikeas strategy By employing relevant data from the case, conduct a five forces analysis of the.Diamond Industry. What do you conclude about that industry’s attractiveness

Evaluate the bases of DeBeersstrategic capabilities by utilizing the VRIO/VRIN criteria (value, rarity, inimitability, organisation and/or non-substitutability). Which are the key strategic capabilities that provide, or could provide DeBeerswith a sustainable competitive advantage Why Evaluate DeBeersresources and capabilities by utilizing the value chain framework.How is the company creating value Discuss how could the company develop and improve further in respect to this

By applying relevant academic models, what suggestions could you make to DeBeersSenior Management team to support their position in achieving sustainable competitive advantage in the global competitive environment.

Developing Mission and Vision Statements for DeBeers

The mission and vision statement holds a very significant role in the strategic planning of the entire organization. In this context, it has been noticed that every observer enquiries about the vision and mission statement in order to evaluate the reputation and commitment of the organization (Campbell and Tawadey 2016). Hence, it can be easily concluded that mission and vision statement immensely defines the reliability of any given organization. In this competitive corporate world, every organization is aimed to initiate a sustainable business approach so that they can attain distinctive competitive advantage over rival companies (Rothaermel 2015).

“We at DeBeers endeavour for fineness by emphasizing on adjacent capabilities of our core competences, considered as the innate itinerary of new diamond facets of business development, future diamond trends anticipation as well as expansion, in comparison with residual market entities attaining an apparent competitive advantage.”

“We aim to operate our business through an effective framework attained by explicit focus on sustainable development approach. This is capable of providing the opportunity of maintaining high credit rating within the market, which guarantees an uncomplicated and dynamic access to resources, people as well as finance. The vision helps us to seek out development scopes through effective risk management, high calibre personnel attraction and retention, operating cost reduction as well as enhanced product and service provision. The organization also thrives to achieve their goals through strategic alignment of the functional areas.”

The vision as well as mission statement is greatly effective in the context of providing the accord of purpose to the organizations. Moreover, the employees also attain a crucial sense of identity as well as belonging. The above vision has effectively differentiated themselves from the other companies. In addition, it has been also supportive to select the areas of priority for the organization. In this context, the prioritized business areas are new diamond facets of business development, future diamond trends anticipation as well as expansion. At the same time, the vision statement has been able to provide a distinctive identity for the organization. The mission statement can be considered as the mantra of the entire organization as well as associated stakeholders (Baumgartner 2014).

At the same time, the vision statement is highly focused on providing the future pathway for the organization so that the company can develop necessary strategic objective to attain success. The above-described vision has effectively directed the organization towards sustainable development, which is one of the most crucial aspects of accomplishing successful business venture in this competitive world (Epstein and Buhovac 2014). The vision statement has been also able to include relevant and practical information, which have helped DeBeers to develop necessary corporate goals and action plan. The vision statement has also emphasized on certain areas, which would ensure the sustainable competitive advantage. These areas are effective risk management, high calibre personnel attraction and retention, operating cost reduction as well as enhanced product and service provision.

Mapping DeBeers Key Stakeholders in the Power/Interest Grid

The vision and mission statement helps the strategic management in a hierarchical order (Figure 1). In this context, mission statement has been able to define the identity of DeBeers. The distinctive identity would effectively help the employees to relate with the organization goal and work on meeting the end users’ expectation. Moreover, the mission statement has been able to differentiate from the other companies within the diamond industry. It has effectively shaped their focus and brand image in the diamond industry (Taiwo et al. 2016).

At the same time, vision statement has been able to state the objective, scope and competitive strategies for the organization. DeBeers has announced their objective of sustainable development approach through the vision statement. It will help the organization to evaluate associated scope in the diamond market and adopt necessary competitive strategy to attain competitive advantage. The vision statement has also assisted to concentrate several necessary areas such as risk management, high calibre personnel attraction and retention, operating cost reduction as well as enhanced product and service provision as the means of attaining sustainable competitive advantage over rival companies (I. Williams Jr et al. 2014)

The five forces has immensely helped to properly analysis the diamond industry and provided a greater understanding with regard to the market scenario. It has helped to conclude the attractiveness of the Diamond industry. The major forces within the Diamond industry are discussed below:

It has been observed that the diamond market is highly difficult for the other firms to make a proper entry. The incumbents have noted to make greater profit in this market. The major reason of difficulties in the diamond market is high cost of entry. It has been observed that new entrants have to invest a larger capital than the existing companies do (Bieri 2016). Therefore, the existing customers can gain profit by producing or distributing greater numbers of rough diamonds. In addition, the existing diamond merchants are also able to enjoy the incumbency advantages such as access to the most enhanced technology and best raw materials along with achieving supply side economies of scale.

With the seize of bargaining power by suppliers the customers have not bell able to enjoy the bargaining power as well as associated benefits. The major problem for the customers is that there are no significant products, which can substitute diamond. Furthermore, the room for bargaining has been further reduced, as diamond is associated to the existing customs, traditions as well as sense of luxury goods.

The Importance of Stakeholder Management

The suppliers have gained a huge bargaining power, as they have been able to control the rough diamonds. The ownership of the distribution channel has immensely helped the suppliers to gain enhanced control over supply (E. Dobbs 2014. In addition to that, the suppliers have also maintained a significant relationships as well as alliances with the foreign governments. Currently, the major demand of the suppliers is cash on delivery system.

The threat of substitutes is referred to the scope, where the customers are able to switch to same thing, which has the same function. The extensive study of the diamond industry it has been noted that there is no product is present that can substitute the diamonds. For a long time the diamonds have become the part of traditions as well culture of the humankind. In addition to that, the diamonds are largely associated with the social status quo of any individual (Dälken 2014). The diamond is symbolized as the symbol of relationship due to its unbreakable attribute. The threat of substitutes is highly insignificant due to the emotional attachment of customers.

The existing firms experience great difficulty in generating the high profits due to the higher level of rivalry. The presence of similar size of firms immensely increases the chances of rivalry. The existing firms only can control the level of rivalry through its command of market share (Magretta 2013). The lack of product perish ability, product differentiation as well as stockpiling of diamonds are effective factor for reducing the degree of rivalry.

The above analysis has been able to indicate successfully that the fundamental of the diamond industry is positive despite of aggressive supply scenario as well as pessimistic demand scenario. The demand of the diamond is likely to outpace the growth of the supply. It has been also observed that the diamond industry is set for rapid change due to various trends. These trends include further increase in the mining costs, shifting demand in the emerging markets as well as midstream to professionalise (Anton 2015). Despite of these developments, diamond industry is still one of the most attractive and profitable industry.

The value chain analysis is referred to the strategic tool that evaluated the internal activities of any given firm. The major purpose of the value chain analysis is recognizing the valuable activities, which will be necessary for providing cost advantage or the differentiation advantage for the organization. In the current context, the following image has been explicitly concentrated on the value chain depiction of De Beers. De Beers operates its business in the upstream as well as downstream of diamond supply chain. The mining activities as well as trading of the rough diamonds to the traders are included in upstream (De Waal et al. 2014). At the same time the direct sales of finished jewellery is known by downstream activities.

Key Trends and Uncertainties Facing the Diamond Industry over the Next 10 Years

The major activities that have been observed through the study of the diamond industry are mining, grading, stockpiling, sale process, cutting and polishing as well as jewellery making and retailing. The mining sector is operated through the partnership with Namibia as well as Botswana. In this context, it has been identified that DeBeers is strongly tied with the mines of India, Congo, Canada as well as Russia (Hofmann et al. 2014). In addition to that, the organization is also focused on grading with Central Selling Organization (CSO). Moreover, the grading was crucial according to the clarity shape, colour as well as carats. The quality guaranty provided by DeBeers has been accepted throughout the world. The effective quality grading has been immensely effective to reduce the risks for the participants.

In addition to that, DeBeers also immensely control the supply as well as market price of the diamonds through extensive stockpiling. The sales activities of DeBeers provide immense opportunity for the organization to attain a profitable business venture. The organization operates all kind of sale processes such as wholesales, sell to the stakeholders, etc. The organization does not leave any room for the customers to get upper hand in bargaining (Hollensen 2015). The price is explicitly set by DeBeers. The customers are only left with the answering options of Yes or No. DeBeers deal with the organizations, which are specialised, in the cutting and polishing of diamonds. Majority of these firms are situated in China, Israel as well as India. After the cutting and polishing of the diamonds, they are sold in the jewellery market. In this context, it has been identified that major retailers of the DeBeers diamonds are Lev Leviev, DeBeers (LMVH), Tiffany’s as well as Harry Winston.

DeBeers recently made several changes in its internal operation activities. The organization has ratified the ‘Kimberly Process Certification Scheme’. The organization ensured by this decision that the working condition as well as legal funding would be guaranteed in the diamond mining. This particular crucial dimension effectively brought a greater change in the all over the rough diamond production line in 75 countries. It eventually immensely enhanced the brand equity of DeBeers. Secondly, the most effective decision of DeBeers was to adapting the upstream supply chain through splitting with the governments of local mining countries (Mudambi and Puck 2016). In addition to that, the organization also has been focused on reducing the reliance on stockpiling.

Two Possible Scenarios for DeBeers and Their Implications for Sustainable Competitive Advantage

The organization adapted a greater focus on the operational cost efficiency with the rising pressure of competitive price. The organization took another crucial decision has been taken by DeBeers in the form of developing joint venture with LVMH. The joint venture effectively decreased its brand reliance as well as stimulated the gemstone demands. These particular decisions effectively helped the organization to compensate the upstream margin level with the help of margin downstream complementation. In other words the changes made by DeBeers in its value chain, successfully enhanced the brand name through significantly positive awareness provision.

Currently the operating model of DeBeers evolved to vertical integration from the past supply chain control. In result, the organization experienced tremendous strength in its financial performance. The growing sales turnover rate of DeBeers is the most critical evidence of the previous claim. It can be concluded the organization has successfully made itself a major influence in the global diamond stage.

The senior management team of DeBeers play a significant role in the success of the entire organization. Entire strategic decision making as well as organizational operations are conducted by the senior management team. In this context, the senior management team need to study the market in an appropriate manner so that they can undertake essential decision, which would be beneficial for the business venture. The report has been effectively able to assess the diamond market through various strategic management analysis tools. The understanding has been able to provide most detailed suggestion, which would be critical for senior management team in guiding the business operation towards successful accomplishment. These crucial suggestions are discussed below:

It has been observed that the diamond market is highly difficult for the other firms to make a proper entry. The incumbents have noted to make greater profit in this market. The major reason of difficulties in the diamond market is high cost of entry. It has been observed that new entrants have to invest a larger capital than the existing companies. Therefore, the existing customers can gain profit by producing or distributing greater numbers of rough diamonds. In addition, the existing diamond merchants are also able to enjoy the incumbency advantages such as access to the most enhanced technology and best raw materials along with achieving supply side economies of scale.

With the seize of bargaining power by suppliers the customers have not bell able to enjoy the bargaining power as well as associated benefits. The major problem for the customers is that there are no significant products, which can substitute diamond. Furthermore, the room for bargaining has been further reduced, as diamond is associated to the existing customs, traditions as well as sense of luxury goods.

Five Forces Analysis of the Diamond Industry and Its Attractiveness

The suppliers have gained a huge bargaining power, as they have been able to control the rough diamonds. The ownership of the distribution channel has immensely helped the suppliers to gain enhanced control over supply. In addition to that, the suppliers have also maintained a significant relationships as well as alliances with the foreign governments. Currently, the major demand of the suppliers is cash on delivery system.

The threat of substitutes is referred to the scope, where the customers are able to switch to same thing, which has the same function. The extensive study of the diamond industry it has been noted that there is no product is present that can substitute the diamonds. For a long time the diamonds have become the part of traditions as well culture of the humankind. In addition to that, the diamonds are largely associated with the social status quo of any individual. The diamond is symbolized as the symbol of relationship due to its unbreakable attribute. The threat of substitutes is highly insignificant due to the emotional attachment of customers.

The existing firms experience great difficulty in generating the high profits due to the higher level of rivalry. The presence of similar size of firms immensely increases the chances of rivalry. The existing firms only can control the level of rivalry through its command of market share. The lack of product perish ability, product differentiation as well as stockpiling of diamonds are effective factor for reducing the degree of rivalry.

The above analysis has been able to indicate successfully that the fundamental of the diamond industry is positive despite of aggressive supply scenario as well as pessimistic demand scenario. The demand of the diamond is likely to outpace the growth of the supply. It has been also observed that the diamond industry is set for rapid change due to various trends. These trends include further increase in the mining costs, shifting demand in the emerging markets as well as midstream to professionalise. Despite of these developments, diamond industry is still one of the most attractive and profitable industry.

References 

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