Case Study Description of De Beers Consolidated Mines Ltd. (A)
Describes the problems facing De Beers at the start of 1983. De Beers had, since its formation in 1888, exercised a large measure of control over the world supply of diamonds. In 1983, the company itself mined over 40% of the world's natural diamonds and, through marketing arrangements with other producers, distributed over 70%. For 50 years up to 1983 the company had never lowered its prices and, overall, had raised them significantly ahead of the rate of inflation. However, in 1983 the company was faced with a series of problems that threatened the structure it had so carefully built. First, a large producing nation had stopped selling through De Beers. Second, new discoveries meant that the annual supply of mined diamonds would double by 1986. Finally, the industry was experiencing its worst slump since the 1930s, resulting in a significant deterioration in the company's financial position. Describes the structure and economics of the diamond industry and asks the student to decide whether or not De Beers should abandon the business strategy it had pursued for nearly a century.
Swot Analysis of "De Beers Consolidated Mines Ltd. (A)" written by Pankaj Ghemawat, Toby Lenk includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Beers 1983 facing as an external strategic factors. Some of the topics covered in De Beers Consolidated Mines Ltd. (A) case study are - Strategic Management Strategies, Crisis management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the De Beers Consolidated Mines Ltd. (A) casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic ,
increasing transportation and logistics costs, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of De Beers Consolidated Mines Ltd. (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in De Beers Consolidated Mines Ltd. (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Beers 1983, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Beers 1983 operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of De Beers Consolidated Mines Ltd. (A) can be done for the following purposes –
1. Strategic planning using facts provided in De Beers Consolidated Mines Ltd. (A) case study
2. Improving business portfolio management of Beers 1983
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Beers 1983
Strengths De Beers Consolidated Mines Ltd. (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Beers 1983 in De Beers Consolidated Mines Ltd. (A) Harvard Business Review case study are -
Successful track record of launching new products
– Beers 1983 has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Beers 1983 has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Highly skilled collaborators
– Beers 1983 has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in De Beers Consolidated Mines Ltd. (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Beers 1983 is one of the most innovative firm in sector. Manager in De Beers Consolidated Mines Ltd. (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Beers 1983 is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Beers 1983 is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in De Beers Consolidated Mines Ltd. (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Strategy & Execution field
– Beers 1983 is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Beers 1983 in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Beers 1983 is one of the leading recruiters in the industry. Managers in the De Beers Consolidated Mines Ltd. (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Beers 1983 is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Pankaj Ghemawat, Toby Lenk can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Sustainable margins compare to other players in Strategy & Execution industry
– De Beers Consolidated Mines Ltd. (A) firm has clearly differentiated products in the market place. This has enabled Beers 1983 to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Beers 1983 to invest into research and development (R&D) and innovation.
Training and development
– Beers 1983 has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in De Beers Consolidated Mines Ltd. (A) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Low bargaining power of suppliers
– Suppliers of Beers 1983 in the sector have low bargaining power. De Beers Consolidated Mines Ltd. (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Beers 1983 to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Beers 1983 is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the De Beers Consolidated Mines Ltd. (A) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Weaknesses De Beers Consolidated Mines Ltd. (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of De Beers Consolidated Mines Ltd. (A) are -
Low market penetration in new markets
– Outside its home market of Beers 1983, firm in the HBR case study De Beers Consolidated Mines Ltd. (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Beers 1983 has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Increasing silos among functional specialists
– The organizational structure of Beers 1983 is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Beers 1983 needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Beers 1983 to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study De Beers Consolidated Mines Ltd. (A), in the dynamic environment Beers 1983 has struggled to respond to the nimble upstart competition. Beers 1983 has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Beers 1983 needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Products dominated business model
– Even though Beers 1983 has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - De Beers Consolidated Mines Ltd. (A) should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Beers 1983 products
– To increase the profitability and margins on the products, Beers 1983 needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Beers 1983 has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High operating costs
– Compare to the competitors, firm in the HBR case study De Beers Consolidated Mines Ltd. (A) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Beers 1983 's lucrative customers.
Need for greater diversity
– Beers 1983 has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the De Beers Consolidated Mines Ltd. (A) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Beers 1983 has relatively successful track record of launching new products.
Opportunities De Beers Consolidated Mines Ltd. (A) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study De Beers Consolidated Mines Ltd. (A) are -
Leveraging digital technologies
– Beers 1983 can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Beers 1983 can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Beers 1983 has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study De Beers Consolidated Mines Ltd. (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Beers 1983 to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Beers 1983 can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Beers 1983 in the consumer business. Now Beers 1983 can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Beers 1983 can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Beers 1983 can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Beers 1983 is facing challenges because of the dominance of functional experts in the organization. De Beers Consolidated Mines Ltd. (A) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Developing new processes and practices
– Beers 1983 can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Beers 1983 in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Beers 1983 can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, De Beers Consolidated Mines Ltd. (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Beers 1983 can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Creating value in data economy
– The success of analytics program of Beers 1983 has opened avenues for new revenue streams for the organization in the industry. This can help Beers 1983 to build a more holistic ecosystem as suggested in the De Beers Consolidated Mines Ltd. (A) case study. Beers 1983 can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Beers 1983 to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Threats De Beers Consolidated Mines Ltd. (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study De Beers Consolidated Mines Ltd. (A) are -
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Beers 1983 business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Beers 1983 demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Shortening product life cycle
– it is one of the major threat that Beers 1983 is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Beers 1983 has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Beers 1983 needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Beers 1983
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Beers 1983.
Stagnating economy with rate increase
– Beers 1983 can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Beers 1983 with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Beers 1983.
Regulatory challenges
– Beers 1983 needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Beers 1983 needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Beers 1983 in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Beers 1983 in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of De Beers Consolidated Mines Ltd. (A) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study De Beers Consolidated Mines Ltd. (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study De Beers Consolidated Mines Ltd. (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study De Beers Consolidated Mines Ltd. (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of De Beers Consolidated Mines Ltd. (A) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Beers 1983 needs to make to build a sustainable competitive advantage.