The De Beers Group: Exploring the Diamond Reselling Opportunity SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The De Beers Group: Exploring the Diamond Reselling Opportunity
In September 2014, Tom Montgomery (SVP of strategic initiatives at the De Beers Group) and his team launched a pilot program in the United States to explore the $1 billion diamond market for pre-owned (recycled) diamonds. According to Montgomery, the motivation for the pilot program was to improve the consumer reselling experience and to enhance "diamond equity". Somewhat paradoxically, consumers typically received very low prices when they tried to sell diamonds (5-20% of the original retail price) leaving them reluctant to purchase diamonds in the future and making them into ambassadors of ill will. At a meeting scheduled for November 2015, the De Beers Executive Committee would have to decide whether to end the pilot program, extend it for another year to gather more information, or convert it into a new standalone business unit. Because De Beers had historically focused on producing rough diamonds (the "upstream" business), yet the new business unit offered an opportunity to enter and enhance the market for polished diamonds (the "downstream" business), the decision was particularly noteworthy.
Authors :: Benjamin C. Esty, Daniel P. Gross, Lauren G. Pickle
Swot Analysis of "The De Beers Group: Exploring the Diamond Reselling Opportunity" written by Benjamin C. Esty, Daniel P. Gross, Lauren G. Pickle includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Diamonds Beers facing as an external strategic factors. Some of the topics covered in The De Beers Group: Exploring the Diamond Reselling Opportunity case study are - Strategic Management Strategies, Economy, Growth strategy, Mergers & acquisitions, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the The De Beers Group: Exploring the Diamond Reselling Opportunity casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, wage bills are increasing, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings,
supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of The De Beers Group: Exploring the Diamond Reselling Opportunity
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The De Beers Group: Exploring the Diamond Reselling Opportunity case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Diamonds Beers, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Diamonds Beers 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 The De Beers Group: Exploring the Diamond Reselling Opportunity can be done for the following purposes –
1. Strategic planning using facts provided in The De Beers Group: Exploring the Diamond Reselling Opportunity case study
2. Improving business portfolio management of Diamonds Beers
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 Diamonds Beers
Strengths The De Beers Group: Exploring the Diamond Reselling Opportunity | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Diamonds Beers in The De Beers Group: Exploring the Diamond Reselling Opportunity Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Diamonds Beers in the sector have low bargaining power. The De Beers Group: Exploring the Diamond Reselling Opportunity has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Diamonds Beers to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Diamonds Beers is one of the leading recruiters in the industry. Managers in the The De Beers Group: Exploring the Diamond Reselling Opportunity are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Strategy & Execution industry
– The De Beers Group: Exploring the Diamond Reselling Opportunity firm has clearly differentiated products in the market place. This has enabled Diamonds Beers to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Diamonds Beers to invest into research and development (R&D) and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Diamonds Beers digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Diamonds Beers has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Successful track record of launching new products
– Diamonds Beers has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Diamonds Beers 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.
High switching costs
– The high switching costs that Diamonds Beers has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Analytics focus
– Diamonds Beers 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 Benjamin C. Esty, Daniel P. Gross, Lauren G. Pickle 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.
High brand equity
– Diamonds Beers has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Diamonds Beers to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Diamonds Beers has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study The De Beers Group: Exploring the Diamond Reselling Opportunity - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the The De Beers Group: Exploring the Diamond Reselling Opportunity 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.
Diverse revenue streams
– Diamonds Beers is present in almost all the verticals within the industry. This has provided firm in The De Beers Group: Exploring the Diamond Reselling Opportunity case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Learning organization
- Diamonds Beers 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 Diamonds Beers is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The De Beers Group: Exploring the Diamond Reselling Opportunity Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses The De Beers Group: Exploring the Diamond Reselling Opportunity | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The De Beers Group: Exploring the Diamond Reselling Opportunity are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Diamonds Beers is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The De Beers Group: Exploring the Diamond Reselling Opportunity can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As The De Beers Group: Exploring the Diamond Reselling Opportunity HBR case study mentions - Diamonds Beers takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The De Beers Group: Exploring the Diamond Reselling Opportunity, is just above the industry average. Diamonds Beers needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Interest costs
– Compare to the competition, Diamonds Beers 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Diamonds Beers 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.
Skills based hiring
– The stress on hiring functional specialists at Diamonds Beers 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.
High cash cycle compare to competitors
Diamonds Beers has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
No frontier risks strategy
– After analyzing the HBR case study The De Beers Group: Exploring the Diamond Reselling Opportunity, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Capital Spending Reduction
– Even during the low interest decade, Diamonds Beers has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Lack of clear differentiation of Diamonds Beers products
– To increase the profitability and margins on the products, Diamonds Beers needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Diamonds Beers is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Diamonds Beers needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Diamonds Beers to focus more on services rather than just following the product oriented approach.
Opportunities The De Beers Group: Exploring the Diamond Reselling Opportunity | 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 The De Beers Group: Exploring the Diamond Reselling Opportunity are -
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 Diamonds Beers in the consumer business. Now Diamonds Beers can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Diamonds Beers to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Diamonds Beers to hire the very best people irrespective of their geographical location.
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. Diamonds Beers can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Diamonds Beers 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, The De Beers Group: Exploring the Diamond Reselling Opportunity, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Diamonds Beers can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Better consumer reach
– The expansion of the 5G network will help Diamonds Beers to increase its market reach. Diamonds Beers will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Manufacturing automation
– Diamonds Beers can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Creating value in data economy
– The success of analytics program of Diamonds Beers has opened avenues for new revenue streams for the organization in the industry. This can help Diamonds Beers to build a more holistic ecosystem as suggested in the The De Beers Group: Exploring the Diamond Reselling Opportunity case study. Diamonds Beers can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Diamonds Beers is facing challenges because of the dominance of functional experts in the organization. The De Beers Group: Exploring the Diamond Reselling Opportunity 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.
Buying journey improvements
– Diamonds Beers can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The De Beers Group: Exploring the Diamond Reselling Opportunity suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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 Diamonds Beers 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.
Leveraging digital technologies
– Diamonds Beers 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.
Loyalty marketing
– Diamonds Beers has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats The De Beers Group: Exploring the Diamond Reselling Opportunity External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The De Beers Group: Exploring the Diamond Reselling Opportunity are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Diamonds Beers can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study The De Beers Group: Exploring the Diamond Reselling Opportunity .
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Diamonds Beers can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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 Diamonds Beers.
Consumer confidence and its impact on Diamonds Beers 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The De Beers Group: Exploring the Diamond Reselling Opportunity, Diamonds Beers may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Regulatory challenges
– Diamonds Beers 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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Shortening product life cycle
– it is one of the major threat that Diamonds Beers is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Diamonds Beers
– 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 Diamonds Beers.
Environmental challenges
– Diamonds Beers needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Diamonds Beers can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
High dependence on third party suppliers
– Diamonds Beers high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Diamonds Beers will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Weighted SWOT Analysis of The De Beers Group: Exploring the Diamond Reselling Opportunity 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 The De Beers Group: Exploring the Diamond Reselling Opportunity 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 The De Beers Group: Exploring the Diamond Reselling Opportunity 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 The De Beers Group: Exploring the Diamond Reselling Opportunity 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 The De Beers Group: Exploring the Diamond Reselling Opportunity 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 Diamonds Beers needs to make to build a sustainable competitive advantage.