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Pest analysis on Debeers

Pauline Wu
Pauline Wu

This document provides a case study analysis of DeBeers Diamond, including a PEST analysis and application of Michael Porter's 5 Forces model. The PEST analysis examines political, economic, social and technical factors affecting DeBeers. It outlines amendments to diamond laws in Africa, DeBeers' antitrust issues in the US, and instability in diamond-producing countries. The 5 Forces analysis ranks potential entrants as low, suppliers as high power, sightholders as medium power, buyers as medium power, and substitutes (synthetic diamonds) as a high threat to DeBeers' business model.

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Case Study on Debeers Diamond 1.PEST analysis Political factors Amendment on diamond laws by southern African countries focus on supporting and building local diamond-related industries such as cutting and polishing. De Beers involation with USs Sherman antitrust law leads to its business being prohibited from the US market. Turnmoil in the diamond countries such as Sierra Leone, Angola and Liberia as well as Congo resulted in the rebel force using the illicit diamond trade to finance their armed conflicts. Economic factors World productin of diamond rough grew highligted the upward trend of diamond prices. Long term trend of increasing level of foreward and backward integrations change the way to grow a diamond business and build a brand. Social factors A number of non-wedding advertisement campaign changed the buying behavior on diamond consumption, women wear diamond ring as an expression of personal style and men show his love by buying his lovers a diamond ring. Technical factors The technology used to make industrial diamonds began making lab-grown diamonds. Modern technology and process such as CVD can produce flawless synthetic diamonds and provides variety selection of colors . Envrionmental factors Establishment of Diamond Trading Company Botswana upgrade the countrys diamond industrial level from mining and sorting to sales and marketing. This movement not only improve the economical condition but also create more job opportunities for the country. 2. Michael Porters 5 Forces Model. Potential entrants Low DeBeers takes the dominant position in the diamond market making it competitive to defend against entry of new competitors. Diamonds were not a commondity, it required huge capital investment. The power of suppliers- High Many buyers exit but dependences on only few supliers. Demand driven and focus on the end consumers required good relationship with the suppliers due to the suppliers is in lieu of the buyer of last resort. The power of sightholder - Medium Sight holders has power on requesting a specific package of stones. Those of them who build strong brands were partially reimbursed for the money they spent on advertising and marketing efforts. The power of buyersMedium Most of the diamond product is standardized and always viewed as very expensive for mass market consumers. Numbers of final consumers care about the orgin of diamond are increasing. The threat of substitutues High Synthetic diamond is a substitute for natural diamond because of its flawless structure and eco-friendly produced in
laboratory. On the customer side, the price of synthetic diamond is relativley cheaper than the natural one so it is affordable to go to mass market and wide customer base.

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Pest analysis on Debeers

  • 1. Case Study on Debeers Diamond 1.PEST analysis Political factors Amendment on diamond laws by southern African countries focus on supporting and building local diamond-related industries such as cutting and polishing. De Beers involation with USs Sherman antitrust law leads to its business being prohibited from the US market. Turnmoil in the diamond countries such as Sierra Leone, Angola and Liberia as well as Congo resulted in the rebel force using the illicit diamond trade to finance their armed conflicts. Economic factors World productin of diamond rough grew highligted the upward trend of diamond prices. Long term trend of increasing level of foreward and backward integrations change the way to grow a diamond business and build a brand. Social factors A number of non-wedding advertisement campaign changed the buying behavior on diamond consumption, women wear diamond ring as an expression of personal style and men show his love by buying his lovers a diamond ring. Technical factors The technology used to make industrial diamonds began making lab-grown diamonds. Modern technology and process such as CVD can produce flawless synthetic diamonds and provides variety selection of colors . Envrionmental factors Establishment of Diamond Trading Company Botswana upgrade the countrys diamond industrial level from mining and sorting to sales and marketing. This movement not only improve the economical condition but also create more job opportunities for the country. 2. Michael Porters 5 Forces Model. Potential entrants Low DeBeers takes the dominant position in the diamond market making it competitive to defend against entry of new competitors. Diamonds were not a commondity, it required huge capital investment. The power of suppliers- High Many buyers exit but dependences on only few supliers. Demand driven and focus on the end consumers required good relationship with the suppliers due to the suppliers is in lieu of the buyer of last resort. The power of sightholder - Medium Sight holders has power on requesting a specific package of stones. Those of them who build strong brands were partially reimbursed for the money they spent on advertising and marketing efforts. The power of buyersMedium Most of the diamond product is standardized and always viewed as very expensive for mass market consumers. Numbers of final consumers care about the orgin of diamond are increasing. The threat of substitutues High Synthetic diamond is a substitute for natural diamond because of its flawless structure and eco-friendly produced in
  • 2. laboratory. On the customer side, the price of synthetic diamond is relativley cheaper than the natural one so it is affordable to go to mass market and wide customer base.