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De Beers Case Analysis And Pest Analysis

2428 words - 10 pages

De Beers is currently being faced with some new challenges that are making it necessary for us to consider a change in the way we do business. With recent turmoil in Western Africa, where illicit diamonds are beginning to come from war torn villages, and other sources of diamonds being found in Russia and Australia, it is clear that we need to begin to move into the U.S. market. However, legally, De Beers is in violation of the U.S. antitrust laws and is therefore being prohibited from selling directly in the U.S. market. Throughout the following memo I will identify the problems we at De Beers are currently facing. I will then make a set of recommendations for action to help us move into the U.S. market by proposing a relaxation of U.S. antitrust laws with restrictions on illicit diamonds, and finally I will conclude with some implementation steps for the solutions that have been recommended.ChallengesA PEST analysis has been performed on the current situation facing De Beers. In the following section, I will focus on the most important problems identified in the PEST analysis for which we must find solutions and also on the most important positive forces that we must leverage to our advantage in order to maintain or gain market share. Please see Exhibit 1 for details on the PEST analysis and additional information on other issues we are facing and forces that might help or hinder our market share in the U.S.The most important of the problems we are faced with are due to Political issues in the United States and elsewhere. Due to war in western Africa, diamonds are beginning to flow from the war torn fields of Sierra Leone and Angola, and in Russia, mines are being controlled locally as opposed to in collaboration with De Beers. These challenges alone pose a threat to the power that De Beers currently holds over the diamond industry. Due to these challenges, we initiated a branding campaign attempting to brand De Beers diamonds to the consumers. This campaign was centered in the U.S., where "legally, the entire De Beers group - its officers, its operations, its marketing structure - was in violation of the U.S. antitrust law" (Burns, 2000). This prohibited De Beers from directly selling in the United States. Additionally, a political issue that we need to leverage to our advantage is the U.S. foreign policy towards helping to rebuild 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 fact that we need to be uninhibited in our marketing and sales efforts in the U.S. if we are to continue to be a successful company. Another economic issue that we are facing is that the historical price of diamonds is leveling off and may even be decreasing as new sources of diamonds are being found. This decrease in prices could be devastating to De Beers and the diamond industry as a whole and needs to be...

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