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De Beers at the Millennium Case Solution

Solution Id Length Case Author Case Publisher
647 726 Words (3 Pages) Pankaj Ghemawat, Sonia Marciano Harvard Business School : 706518
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For over a century, De Beers managed to sustain its key position in the diamond trade because of its focus upon supply-oriented marketing, building international partnerships and having good repute with its customers worldwide. Moreover, De Beers was facilitated due to the market dynamics which were more dictated by a supply-driven approach rather than a demand one. Firstly, the company was able to stand firm in times of Depression and other down periods because of its century old operations and a name of the trust. The slogan of ‘a diamond is forever’ continued to, and still continues to serve the company well.

Following questions are answered in this case study solution:

  1. The De Beers organization was successful at monopolizing the trade of gem quality rough stones for over a century. Please explain the mechanisms by which the firm managed to sustain its central position in the diamond trade for as long as it did.

  2. Why has De Beers given up monopolizing rough stones? That is, De Beers had a strategy that served it well for decades. What caused this strategy to lose consonance (with the conditions in its environment)?

  3. Evaluate De Beers’ branding strategy (not just for itself but for the majority of rough it distributes).

De Beers at the Millennium Case Analysis

Furthermore, with the passage of time, rising consumer incomes and a desire for luxuries ensured that the supply of diamonds was able to cater to all the demand that existed in the market. Hence, the excess supply and stockpiling performed wonders for the company. It was not possible for the company to sail smoothly alone in a globally competitive market. Hence, De Beers owners developed international partnerships and built good relations with various subsidiaries to grow their business. This strategy proved successful for the company as market dynamics remained quite similar for several years. Hence, the supply model worked for the company for well over a decade.

2. Why has De Beers given up monopolizing rough stones? That is, De Beers had a strategy that served it well for decades. What caused this strategy to lose consonance (with the conditions in its environment)?

The De Beers strategy no more bore fruit for the company due to changing market dynamics and consumer lifestyles. More competition had come in internationally with the opening up of economies. Moreover, important regions such as Russia, Canada, and European countries came to be served by single powerful entities in their specific regions. This reduced the company’s effectiveness for a global reach. Moreover, De Beers did not stay in good books of US government as legal and fiduciary duties were not complied with.

Since the company’s strength was its supply driven corporate strategy, the changing market dynamics to a demand driven market for diamonds took some time for the company to re-adjust its corporate strategy. Moreover, the company’s large dependence on Japan’s economy for its supply driven strategy was hit hard by the recession that Japanese economy went through. The company’s next target was China; hence, De Beers’ owners were slow to react to changing market conditions. The existing strategy of De Beers lost consonance as consumers throughout the world became increasingly aware of competitors and discovered an interest in specific diamond products than just diamonds, such as watches and wedding jewelry. Hence, De Beers had to mend its ways towards a focus on retail and finishing products which proved to be a time-consuming process.

3. Evaluate De Beers’ branding strategy (not just for itself but for the majority of rough it distributes).

For several years, De Beer’s branding strategy focused not on its own diamonds, but on the diamond product as a whole. As the company did not focus on its own brand initially, it first made the customers realize the worth of diamonds with the slogan ‘a diamond is forever. ’The branding of De Beers, as depicted in its advertising over the years, was one where a diamond was certainly an exclusive product and a symbol of love, wealth, and power. Consumers were brought to the notion of buying diamonds as they represented a certain status and position in society.

The company tried to localize its branding strategy in various regions of the world where it operated. For example, in China, white color was a symbol of despair; hence, the company changed its branding to a color of red.

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