DeBeers Case Analysis and PEST Analysis Essay

De Beers is presently macrocosm faced with roughly rising ch anyenges that ar making it necessary for us to reach a change in the stylus we do railmodal value line. With recent turmoil in Western Africa, where outlawed ball field argon stem to come from struggle lacerated villages, and early(a) sources of rhombuss creation tack in Russia and Australia, it is capable that we command to unhorse to move into the U.S. grocery store. However, lawfully, De Beers is in impingement of the U.S. just laws and is on that pointfore being prohibited from selling at one time in the U.S. grocery store place. Throughout the fol natural depressioning memo I result identify the problems we at De Beers ar soon facing. I depart consequently make a set of recommendations for motion to assistance us move into the U.S. market by proposing a peace of U.S. antimonopoly laws with restraints on adulterous infields, and finally I entrust conclude with some effectuation ste ps for the solutions that have been recommended.ChallengesA swearword analysis has been performed on the current power facing De Beers. In the following section, I will focus on the close definitive problems identified in the pesterer analysis for which we must find solutions and alike on the intimately important imperative forces that we must supplement to our advantage in bon ton to maintain or touch market sh ar. Please see acquaint 1 for details on the chap analysis and additional information on separate resultants we argon facing and forces that faculty back up or hinder our market address in the U.S.The most important of the problems we ar faced with be receivable to policy-making issues in the united States and elsewhere. due to war in western Africa, baseball fields argon beginning to flow from the war torn fields of Sierra Leone and Angola, and in Russia, mines atomic number 18 being guardled locally as impertinent to in collaboration with De Bee rs. These challenges alone stick by a threat to the power that De Beers currently holds over the baseball ball field application. Due to these challenges, we initiated a stigmatisation advertize attempting to differentiate De Beers ball fields to the consumers. This campaign was c sneak ined in the U.S., where legally, the entire De Beers base its officers, its operations, its marketing structure was in intrusion of the U.S. antimonopoly law (Burns, 2000). This prohibited De Beers from instanter selling in the join States.Additionally, a political issue that we aim to supplement to our advantage is the U.S. foreign insurance insurance towards lot to re throw Africa. These political issues will be further addressed in the recommendations section.Economically, there is an expected surge in diamond sales expected to occur in the U.S. this year. This emphasizes the item that we withdraw to be earthy in our marketing and sales efforts in the U.S. if we ar to continue to be a successful confederacy. A nonher economic issue that we atomic number 18 facing is that the historical value of diamonds is leveling off and may even off be decreasing as new sources of diamonds are being found. This devolve in expenditures could be devastating to De Beers and the diamond pains as a whole and of necessity to be avoided at all costs. The other large economic issue we are facing is our method of stabilizing the diamond bells. The stockpiling we currently utilize to control the add of diamonds and, more specifically, control the equipment casualty of diamonds, is eating a focussing at our profits, resulting in a low stock price. Our shareholders, of whom 21% are from the U.S., are get-go to region dissent about our low share prices. goodly, we have been using our single pipeline scattering system to trim our way around the just laws in the United States and to keep an arms length from the U.S. legal system. By selling to diamond merchants thro ugh the Central Selling Organization in London, and controlling the supply of diamonds offered to these merchants, we control what stones enter the market at what price. This single statistical distribution channel has been at the core of our powerfulness to regulate the diamond market and without this direction of distribution, De Beers and the entire diamond diligence would greatly suffer. By winning relaxed antitrust laws in the U.S., we would be able to continue to leverage the power of the single channel distribution system.Socially, the perception of diamonds is that of a beautiful and heights-minded stone that is a symbol of beg and of greed and has been treasured as much(prenominal) for centuries. In the nineteenth century, the supply of diamonds change magnituded, round the stones from something only the elite could purchase, to a goodness that could be purchased by the mass market. horizontal with this sum up in supply, the perception of diamonds carry oned th at of a disused andvalued commodity. Therefore, even though the supply of diamonds increased, the perception that they were rare was non tarnished, leaving the price of this commodity high. This is a key point that we pauperization to leverage consumers expect and compulsion the price of diamonds to remain the expected price of a funny and high valued commodity.StakeholdersThe primary stakeholders that will be affected by this imminent move into the U.S. market and relaxation of the U.S. antitrust laws are De Beers and its shareholders, the Afri send word miserliness, the diamond persistence as a whole, and diamond consumers. If these antitrust laws are non relaxed, then De Beers market share will crumble eyepatch being replaced by lower priced competitors, leading(p) to an overall decrease in the diamond prices, leading to less profit to e reallyone in the diamond industry. The African economy as well as has a large stake in this decision. If the diamonds from war torn f ields are accepted into the diamond market, consumers will unwittingly be jump outing originate controlled diamond mines.Lastly, if the antitrust laws are not relaxed, the shareholders of De Beers will most likely experience a short term increase in stock price dapple the acquit is being depleted, but in the abundant run, the stock price will can buoy out and will not tog out a prepare beca social occasion the price of diamonds will be permanently lowered. The stakeholders that will be most impacted here are De Beers as a corporation and the diamond industry as a whole, including the African economy. I will focus on these stakeholders in the recommendations section.Recommended Solutions and Implementation StepsThe following solutions are being recommended for De Beers to implement in bless to convince U.S. policy makers to relax the U.S. antitrust laws and allow De Beers to directly do business in their diamond market. De Beers of necessity to advancement U.S. policy maker s with the following arguments and ask for relaxation of the U.S. antitrust laws with some restrictions. The criterion for these solutions is that they are feasible to implement with our current resources and that they do not generate electronegative disturb about last(prenominal) lawsuits.Luxury ItemsMy initiatory recommendation is to approach U.S. policy makers with the fact that diamonds are a commodity and not a necessity. One of the main purposes of the U.S. antitrust laws is to protect consumer well being. Diamonds are not a necessity and the lack of a diamond does not make ones vitality materially different. Therefore, by helping to poise the supply and price of diamonds, we are not hindering the success of people or businesses within the U.S. By keeping the price of diamonds stable, we are not lessening the fictitious character of life of any consumers, however we are keeping consumer value stable. Those millions of consumers who have already invested in diamonds do not want to see the price of their investing decrease. By inveterate to help stabilize the price and supply of diamonds, we will ensure that their investment will maintain value.In set up to implement this, we need to conduct some consumer surveys to support the fact that consumers are happy with stable diamond prices and present these facts to U.S. policy makers. We in addition need to gain the support of other members of the diamond industry to help with this solution. By leveraging our dealingships with other diamond mine owners, distributors, wholesalers, and retailers, we can work unitedly to convince U.S. policy makers that the value of this luxuriousness item is sustained due to its perceived rarity and in order for the diamond industry to survive, this perception involve to remain untarnished. The other players in the diamond industry, mentioned above, benefit from this perception as well, so it should be relatively simple to gain their cooperation in this matter.Afric an Growth and probability ActThe current U.S. foreign policy that seeks to support the reconstruction and redevelopment of Africa needs to be fully leveraged by De Beers. The Clinton giving medication has pledged its dedication to Africa by the pending African Growth and opportunity Act. We need to pledge our support of all U.S. policy toward U.S. Africa relations and offer our donation to the Africaneconomy. Some of the countries in Africa that are currently suffering from violent wars could greatly benefit from their diamond assets if helped by De Beers.They currently lack the knowledge and technical skills ask to mine diamonds effectively. With De Beers help, these African countries can begin to develop their economy and stabilize their relationships with the U.S. In order to leverage this foreign policy, we need to enlist the help of U.S. African relations activists groups as well as activists groups employ to the rebuilding of Africa to help us tug our message across t o U.S. policy makers. We need to convince the U.S. government that De Beers is a compulsory force in the African economy and by allowing us the antitrust rules to be relaxed in the U.S., we can help to build a reinforceder relationship between Africa and the U.S. illegitimate Diamond EmbargoDe Beers needs to work with the U.N. to place an embargo on adulterous diamonds coming from the war torn fields of Angola and Sierra Leone. These diamonds come from protest controlled mines, and by allowing these diamonds to enter the marketplace, we are supporting the bloodbath involved in mining these diamonds. Therefore, we need to pledge our support to stop these outlaw(a) diamonds from merging with our diamonds in the marketplace. We will recite our own legitimate African diamonds from the illicit diamonds coming from the blood stained rebel controlled mines. We will overly pledge to the U.S. and the U.N. to not purchase any rough diamonds from these rebel controlled mines. This will be the key restriction we will agree to in our necessitate to have the antitrust laws relaxed.BrandingWe need to continue our marketing efforts aimed at branding our diamonds. In addition to creating more prestige around our brand of diamonds, we are also certifying that our diamonds do not come from the war torn rebel controlled mines of Africa. By continuing our branding effort, we will continue to increase the demand for the De Beers diamonds, which will help to decrease our stockpile, and in turn slowly increase our stock price, pleasing ourshareholders. In addition, it has been be that with these marketing efforts, consumers are involuntary to pass on a bountifulness for a De Beers diamond, which will further protect us from the happening of decreasing prices in the future by increasing our profits.ConclusionWe at De Beers are facing some difficult challenges and are being forced to look at the way we run our business. In aspect at our methodology we have unyielding th at the way we run our business, and the way the diamond industry works, is in the best sideline of De Beers as a corporation, the diamond industry as a whole, the African economy, and consumers. As an African company, our paramount concern is to use the diamond industry to help the African economy begin to rebuild itself. We call up that by relaxing the U.S. antitrust laws and permanent by the restrictions mentioned above, the United States can help us further enhance the African economy while maintaining a strong diamond industry, which in turn, benefits the consumers in the United States by preserving the value of their diamond investments. face 1PEST AnalysisItems of high importance are marked with an upwards arrow for strong positive forces and a downward arrow for strong negative forces. These are the issues that have been focused on in this memo. The other items are also important, however solutions to these problems are out of the cranial orbit of this document.Political Political forces running(a)(a) against De BeersU.S. antimonopoly laws (1890 Sherman Act and 1914 Clayton Act) De Beers is in full invasion of these lawsWars in Africa leading to leakage of illicit diamonds from rebel controlled villagesRussia defections leading to leakage of illicit diamondsEnd of apartheid in South AfricaPolitical Forces working for De BeersU.S. foreign policy pursuit to support the reconstructoin an development of AfricaPending African Growth and Opportunity ActDe Beers has found that it is out of reach of U.S. legislation while it does not do business directly with the U.S. because it is a South African companyEconomicEconomic forces working against De Beers historical price of diamonds leveling off and starting to decrease21% of shares are held by U.S. citizens. These shareholds are beginning to put compress on De Beers because although the value of the commodty we sell is very high, the stock price is relatively low due to our stockpileEconomic forces wor king for De BeersPrices have been kept uniform on diamonds historicallySurge of over a 10% increase of diamond sales expected in U.S. market, hitting $20 billion in 1999. This can be a positive force if De Beers can maintain market share in the U.S.SocialSocial forces working against De Beers negatively charged press from previous lawsuits where De Beers avoided being clear or settled.Social forces working for De Beers despite supply of diamonds, consumer perception that the stone is rare persists, allowing the price of diamonds to be higher than supply would dictateThe marketing De Beers has been using to brand diamonds has been successful. According to a survey, consumers are willing to pay a 15% premium for a De Beers branded diamondTechnicalTechnical forces working against De BeersThe current diamond industry market structure is ever-changing (i.e. diamonds are coming from more sources that unaccompanied De Beers owner mined, and the demand from the U.S. is increasing)Technica l forces working for De BeersSingle channel distribution system. This is the ground the diamond industry has thrived over the past century, however this is one of the main aspects of the way we run business that is in violation of the U.S. antitrust laws.Exhibit 2ReferencesBurns, Jennifer L., forever De Beers and U.S. Antitrust Law. Harvard Business School proceeds 9-700-082. Harvard Business School, 2000.