De Beers Jewellery

Case Introduction De Beers, the so-called cartel in the jewelry industry, is a company that dominates diamond industry. The core operational of De Beers includes diamond mining, diamond shops, diamond trading and industrial diamond manufacturing sectors. De Beers is active in every category of industrial diamond mining: open-pit, underground, large-scale alluvial, coastal and deep sea. The company's headquarter located in Johannesburg, South Africa. As the vertically integrated diamonds producer, De Beers also controls the power f supply to its ‘sight holders'.The group owns and operates mines in Canada has gained 26% Interest In South African mines through Its partners, operates In more than 20 countries across six continents. Areas of focus are In Botswana, Angola, India, Canada and RASA (South Africa). As the year 2000, the company remained the world's leading diamond producer and distributor with extensive activities in the value chain of exploration, mining and distributio n of rough stones as well as significant influence in processing, manufacturing and marketing. History of De Beers: Cecil Rhodes EraFounder of De Bees, Cecil Rhodes started the company by renting water pumps to diggers with flooded claims during the diamond rush In 1871. He seized opportunities to purchase and consolidate claims and later enter mines. Among the rights he purchased was the right to mine the De Beers brothers farm, whose name became the name if his company. Rhodes used his market position and access to credit to engineer a merger with Barney Barton (who managed to obtain a large stake in Kimberley biggest mine), in 1888 to form De Beers Consolidated Mines.De beers controlled close to 100% of South African diamond output and 90% of oral diamond output. Its position was so formidable that when the company reduced production in 1888, rough-stone process quickly rose by 50%. By 1893, Rhodes had established a single buyer, the Diamond Syndicate. It was also Rhodes, who nev er married, who conceived of the Idea of diamonds as a symbol of committed romance. Rhodes became the prime minister of Cape Colony In 1890, ad enacted laws benefiting mine owners. The Glen Grey Act effectively relocated native Africans from their lands to make way for industrial development.Rhodes was responsible for laws During his reign, he named the country as ‘Rhodesia' (Zombie since 1980), and by the ruling time, commissioned railways, bridges, schools and public buildings has emerged efficiently. Rhodes died in 1902. De Beers' share of rough diamonds had fallen to due to a large discovery at Premier, a competing local mine, though De Beers owned a stake in its production. De Beers stepped up its focus on buying and consolidating mines as opposite arose. While the company would remain without a forceful new leader until the sass, the system put in place by Rhodes endured.Ernest Oppenheim Era Ernest Oppenheim, came to South Africa as a diamond buyer. He would become mayor of Kimberly in 1908 and a member of the South African Parliament in 1924. Oppenheim builds up diamond interest and founded the Anglo-American Corporation in 1924. He then set out to link gold and diamonds, and began purchasing every known diamond mine in the early sass including new fields in Iambi. Oppenheim not only purchased mines, but also established a distribution system independent of dominant De Beers syndicate.Oppenheim began raising the issue of racial problems in Johannesburg, where e lived, and lobbied for creation of modern native villages and social progress for black Africans. As a member of the United Party and a member of parliament, Ernest opposed the Afrikaner nationalist. Unfortunately, the Nationalist Party came into power in 1942. And the era of apartheid, or institutionalized racial discrimination began. Harry Oppenheim Era Harry, son of late Ernest became the CEO of De Beers in 1957 until 1984.Harry was born to an assimilated Jewish family of German origins in Kimberly, the original center for diamond mining in South Africa, and lived most of his life in Johannesburg. Harry Oppenheim was also known for his philanthropy. From 1967, the social investment activities of De Beers were merged with those of Anglo American in the Group Chairman's Fund. The fund initiated and finances numerous projects that contributed to community development on a large scale in South Africa, particularly in the arenas if education and heals.De Beers was instrumental in establishing a number of schools and technical colleges for black students. Following the Sweet riots in 1976, Harry established the Urban Foundation to improve, directly and wrought legislative reform, the social and industrial environment of urban native Africans. The slogan on ‘Diamond is forever' was created during his time with De Beers. Nicholas Oppenheim Era In 1985, Harry son Nicholas succeeded him as a Chairman. In addition to diamond trading business and other related profit mak ing activities.Through the sass and sass, De Beers geologist explored in Angola, Australia, Brazil, Bolivia, Canada, China, DRY, Lesotho, Iambi, Russia, Venezuela and Zombie. Through this period, De Beers also expanded its advertising program worldwide; n 1972 in Spain and Brazil; in 1977 in Holland, Belgium, Austria, and Switzerland; in 1979 in Mexico; in 1982 in Singapore, the Philippines, Thailand, Malaysia and Taiwan; and 1984 in India and Korea. In the mid-sass, De Beers has implemented plans to ensure that its mines in Africa met 3rd party certified environmental management standards.De Beers also set aside nature reserves around mining areas in South Africa, Botswana and Iambi and commenced programs to protect rare biodiversity. Problem Statements The end of apartheid era in 1994, has written down several changes in the policies dad in South Africa. The situation become different for the native people where high priority then given to them instead of the Afrikaners. While rec ognizing that diamond mining had made economic contributions, a growing proportion of policymakers in Africa believed that the diamond industry had not generated sufficient contribution by way of value-added processing activities.Therefore the Minerals Development Bill was drafted by the South African Department of Minds and Energy (DEEM) which would become the county's new mining law by year 2000 and gibe the state exclusive custodianship of all mineral rights. Then a new policy called ‘Black Economic Empowerment' (BEE) came into the scene in 2000 with a goal of creating opportunities for previously disadvantaged communities and individuals, including black Africans, women and people with disabilities.In addition to the changes in policies as one of the biggest challenges, a potential threat came into the gem market by the advancing technologies, for synthetic production. Thus, De Beers needed a new strategy to override with both rapidly changing industry environment and new expectations of society. SOOT Analysts Strengths Weaknesses Its reputation of monopoly Strong investment in marketing and advertisement. Good – strong reputation with the ruling government.High operating cost (exploration, mining, sorting and distribution) Issue with mines that are offset with civilization areas. Strong competitors from other brands Opportunities Threat Technology advancement. Backed by government policies to support the health of the industry. Apartheid issue Strong competitors from other brands. Racial issue could cause angry mobs to destroy the mining equipment (loss) De Beers' 4-legged Strategy First Legged: To improve efficiency and margins from De Beers own operations Second Legged: To stimulate demand of diamond by at least 5% per year.Third Legged: To establish De Beer's own brand that directly meets the end customer. Forth Legged: Suppliers of Choice (SOC) – to improve efficiency and productivity sight holders. Recommendation Despite having sh ares in the major mining area since late sass, De Beers should expand/ to make effort to penetrate to new ventures of exploration areas. This is due to demand of synthetic industrial diamonds which is largely used in lots of fields: deiced, drilling tools for oil & gas, entertainment industry especially in acoustic devices and others.As a analyses, I couldn't see any issues of expansion, since De Beers has been the market leader for almost half of the century. In order to manage the societal crisis, De Beers can improve its labor policies by giving more benefits such as insurance, incentives, and other related compensation. Apart from that, the company should determine a minimum wage for its labor, and the company should keep on protecting the rights against child labor which happens to be a serious problem is African continents. To maintain a good CARS, De Beers should implements ways to give back to the community.Prevention campaign such as Hips, poverty and starving which are qui te popular in the African countries should be carried out efficiently to ensure that De Beers is the organization that cares, for what it's worth to public images. It is also important to sustain the efficiently of providing good diamonds to the world, Just for the company to stay relevant in the industry. In order to achieve that, De Beers must focus its core business as the producer of pure diamonds, not only focusing much on synthetic quality.