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Case Study De BEERS

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on 14 January 2014

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Transcript of Case Study De BEERS

De BEERS : down in the valley to the top
Manufacturing Challenges
Increasing COMPETITION in the mining activity
End of the Monopoly
Regulation changes
Reduction of market shares
DIVERSIFICATION strategy from your competitors
Need to decrease COSTS
General diagnosis
Main challenges identified through Porter's five forces :

Stronger and stronger competition
Rise of legal constraints
Change in the client's negotiation power
CSR Challenges
African countries pressure to share revenues > Legal barriers risk
Reputation issue : blood diamonds > Falling demand risk
Mining workers social claim > Strike risk
January 2001: Joint venture with LVMH
December 2001 : first boutique in London

Vertical forward integration
Control of the whole diamond value chain
De Beers’ jewellery activities
2006 : 14 boutiques all around the world
2006 : $100M turnover

Financial results are not as high as expected
Results in 2006
Should De Beers pursue the retailing activity?
Other motivations that financial one:
Image, branding
Increase the competition
We strongly advise you to continue the jewellery activities
1 - Targeting upmarket department stores and develop a “flagships stores strategy”

2 - Sponsoring of luxury activities

3 - Benchmarking
Recommendations : 3 axis methods
Advantages of this strategy :

Proximity with historical Jewellers => positive externality
Being identified as their main competitor
Arise interest of new customers
Open shops in department stores specialized in luxury goods
Branding strategy
Create an atmosphere in stores which fits De Beers’ values
Similar design all around the world
Cf: Apple and Abercrombie & Fitch
Flagship stores strategy
Demonstrate the values and the positioning of De Beers as jeweller
Increase the reputation of the Brand
Turn the visit of the store into a new experience
Attract new customers
Main objectives of this strategy are:
Horse Race
Prix d’Amérique
Prix de l’Arc de Triomphe
Grand Steeple Chase

Golf Cup
PGA Championchip
Le Masters
The British open

Budget: 3M€/events Total : 18M€ for 6 events, 10% Marketing Budget
Launch "limited edition” watch with De Beers’ diamonds
Increase the reputation and attract Rolex’s customers for bracelets, hearings, necklaces
3 - Benchmark to differentiate

Follow the competitors on Internet
Organize Mystery Shopping in the shops of competitors
Prepare a monthly report which resumes the best offer and practices.
Intensify Mining Activity
Exploit the new mines in Canada
Keep researching new promising areas like China, Siberia and Central Asia, to discover blue grounds
Continue the Vertical Forwards Integration Strategy
Control the cutting activity.
Sales of cutted diamonds amounts to six times mining costs whereas sale of rough diamonds only three times.
Enable the firm to control the supply to final costumers.
Diversification strategy
Diversification strategy
No diversification in others industries, stay focused in diamond
How? New luxury consumers, good margin
Why? History and image
Problem in long term: natural stones resources
Solution in long term: Diversification in synthetic diamonds
Why? History and image
How? R&D in manufacturing of synthetic diamonds for jewellery purpose
De BEERS Foundation
3 areas for projects :
Environmental
Social
Cultural
Involve in local economies development
Hire local people at management position
Undertake initiatives locally through the creation of
Communicate
About the processes to fight the blood diamond's issue
About the actions undertaken by the foundation
Improve working conditions
Meet basic standards in terms of
Safety
Salary
Health insurance
1 - Associate DeBeers brand with other activities considered as luxury activities :
2 - Make a partnership with a luxury watchmaker like Rolex :
SWOT Analysis
Thank you
Full transcript