Faculty of Management Studies

Department of Business Administration

SQA HND
Academic Year: 2021

Assessor : Hiruni Rathwatta Student No:

Unit Code : HR2V 47
Title of the Unit : Business : Graded Unit 1
Outcome : All Batch : 39

Examination Date : 19/12/2021

Examination Start time : 9.00 a. m – 12.00 p.m
Duration of Examination : 03 hours

Diamond Telecommunications Plc — Case Study

The Early Years
Diamond Communications was established in 1971 as a wholly owned subsidiary of the Post
Office, then a public corporation. The company was originally called UK CarCom, and control
passed from the Post Office to the then state owned British Telecom. At this time the head office
for UK CarCom were relocated to Edinburgh. In 1984 the UK government sold a majority stake
in British Telecom, and sold the whole of UK CarCom. A controlling share in UK CarCom was
purchased by a consortium of London based venture capitalists, with the remaining shares being
placed with the main banks and small investors. The new owners had seen the opportunities that
were opening up as a result of the deregulation of telecommunication markets. Deregulation
involved the removal of many government rules and regulations and the encouragement of
competition in the market, a process that was to be enthusiastically adopted by many countries.
Under British Telecom, UK CarCom had specialised in developing car phone technology, and
prior to the sale had started to research and develop mobile phone and network technologies. The
company with its new owners was well placed to take advantage of the rapidly changing and
developing telecommunications markets.
British Telecom had allowed UK CarCom to operate under a number of names in different
European countries, where they worked in partnership on small projects with the then mainly
state owned telecommunications firms. In 1985 the new owners decided to end this fragmented
brand approach and at the same time decided that the name UK CarCom was no longer
appropriate. They adopted a single name that could be used on the international stage, and
rebranded the firm Diamond Telecommunications Plc.
The Dawn of the Mobile Era
Throughout the remainder of the 1980s Diamond strengthened its links with state telecoms firms
across Europe. A major breakthrough came in 1985 with a contract to help maintain and expand
the world’s first cellular telephone network operated by the Nordic Mobile Telephone (NMT)
service. The network operated across several Nordic countries and was the first to allow
customers the use of their mobile phones in any location (international roaming) regardless of
which country they were in. The NMT network proved a catalyst and cellular networks rapidly
began to develop across Europe and the developed world.
Diamond first commercially launched their hand-held mobile phones in 1986 and although they
were heavy, bulky and difficult to use, their launch and subsequent success represented a
significant step for the company. Their first hand-held phones were priced at about £4,000
because of the high research and development costs and the need for highly specialised
production facilities. Whilst the prices were high they were comparable with those of Motorola,
and their early entry into the market gave them an advantage over later entrants.
The Global System for Mobile communications (GSM) was adopted in 1987 as the European
standard. This allowed for high-quality voice calls, the ability for customers to use their phones
across international boundaries, and text messaging, thus laying the foundations for a worldwide
boom in mobile phone use.
In the late 1980s and throughout the 90s further deregulation of the telecommunications markets
enabled Diamond to capitalise on a number of opportunities. The company continued to work
closely with several of the former state telecoms firms in developing and operating mobile
networks, further cementing its position as an influential player in the telecommunications
market. Diamond’s main focus has remained in Europe, but they have ventured into the North
and South American, and Asian marketplaces. The recent ‘opening-up’ of the Chinese market is
currently providing Diamond with opportunities for further expansion both in the provision of
networks and in sales of mobile devices. This expansion has, and will continue to require
substantial investment. In 1998 the owners sought fresh capital from existing shareholders to
allow them to take advantage of the expansion opportunities.
The Internet Era
In 2000 Diamond was a medium sized producer of handsets which could connect to the Internet
(3G technology). This significant development ensured that consumers had the products that met
and continue to meet their growing telecommunications needs, ranging from downloading music,
watching TV, web browsing to multiplayer online gaming. Diamond has invested heavily in
market research and has been very successful in identifying market trends and then using the
latest technological developments to satisfy customer needs.
Intense competition and rapid changes in mobile technologies have resulted in very large
research and development costs. New products are continually being developed, and market
expectations demand a steady stream of innovative products. As a consequence Diamond has
entered into partnership agreements with Siemens and Nokia to allow for the joint development
of new products and the sharing of technology. At the same time they have entered into several
partnership agreements with other Network operators to jointly develop networks in emerging
markets. Diamond is working with its partners to continue to develop and market cutting-edge
products and to raise its standards of service as a major Network operator. In addition, a number
of working agreements have been made with industry bodies (see Appendix 1) involved in
establishing common specifications and protocols within the industry. The company views
partnership agreements as a crucial part of its strategy in entering new markets and in particular
the Chinese market which has enormous potential.
Reorganization
Diamond underwent a reorganization in 2011 rearranging itself into a number of core business
areas (see Appendix 2). Prior to this, the production of mobile devices and operating mobile
networks had been run as a single division.
Increasing competition led Diamond to separate these two core parts of the business, creating a
division for each. Diamond networks had until 2011 exclusively used Diamond phones. Sales of
Diamond phones to other networks had been restricted to small networks in emerging markets to
keep the phones largely exclusive to Diamond network customers. This was severely restricting
growth, and this combined with intense competition between networks and between mobile
phone manufacturers meant that change was essential.
After the reorganization, the Diamond networks were allowed to sell phones produced by other
manufacturers, providing greater choice for their network customers. At the same time the
mobile devices division was permitted to sell their phones to competing networks allowing
access to a much larger market. Sales of Diamond phones have gradually grown since the change
in strategy, and new customers have been attracted to the Diamond networks because of the
greater handset choice.
Growth has also been vigorously pursued through the use of imaginative promotional campaigns,
which while successful have led to a relatively slow growth in revenue and profit. The main
problem has been the need to cut prices for mobile devices as a result of highly competitive
offerings from other firms. Similar competitive pressure has led to a reduction in the tariffs
Diamond can charge their network customers. Whilst the number of handsets sold has risen, and
more network users have been signed up, the downward pressure on prices has led to lower
profit margins and a reduced rate of growth in revenue. (See Appendix 4)
As part of its overall marketing strategy Diamond has adopted a strong stance in relation to the
environment, and actively seeks to promote social responsibility and environmental
sustainability. They were one of the first phone manufacturers in the world to offer a
comprehensive mobile phone recycling scheme. They offer a mobile application that provides
information and offers discounts on ‘environmentally friendly’ products and services. Prototype
products made from plant-based plastics, and recycled metals and alloys are nearing readiness
for launch. The development of a sensory wrist strap made from solar cells that provides
information about the local environment and health information and which can interact with
Diamond mobiles is also nearing completion. Diamond continues to invest money in other
innovative products but will only do so if the products will have a positive impact upon people’s
quality of life and a minimal impact upon the environment. (See Appendix 3)
Expansion into the Chinese Market
China is potentially the largest global telecommunications market. It leads both the US and India
in size and provides Diamond with an unrivalled opportunity to generate growth. There are
currently upwards of 750,000,000 mobile subscribers in China with an additional 8,000,000
being added each month. There is still room for massive expansion and projections from market
analysts suggest that a further 600,000,000 subscribers in China will be enlisted within the next
five years. Competition is likely to be severe with 43 foreign national manufacturers and network
providers already having a presence in China and a further 25 medium to large firms set to enter
the market over the coming 3 years.
Diamond has joined forces with Siemens and they are working in partnership in China with
Huawei Technologies. The regulatory complexities of operating within the Chinese market make
the use of a local partner practically essential and Huawei is a long established and well
respected player in the Chinese telecoms market. Significant cultural differences exist, and a
Chinese partnership not only gives access to local knowledge but also provides an air of
acceptability that is important when conducting business in China. Huawei’s wealth of
experience will also help to ensure that product development and customer service is specifically
targeted at meeting the local needs and demands of the Chinese market.
Through its partnership working agreement with Huawei, Diamond and Siemens have
established manufacturing facilities within China and have invested almost £200 million to
provide a state of the art production facility. The new plant has a capacity not only capable of
meeting the demands of the Chinese market, but one which can produce handsets for the global
market at significantly lower unit costs than the manufacturing facilities currently used in
Europe.
Once agreement is reached with the Chinese Ministry of Telecommunications, Diamond and
Siemens aim to exercise an option to purchase a share in Huawei’s existing network operations,
currently the fifth largest in China. They will then look to expand the network and rapidly attract
new customers through offering a range of attractive tariffs and the most up-to-date mobile
devices. The strategy will involve offering a first class service but at a lower price than existing
networks and other foreign entrants that are in the process of entering the markets. Both Siemens
and Diamond will need to raise fresh finance if they are to pursue this growth strategy, which is
not without its risks.
Appendix 1
Partnership Working
In addition to working with a number of electronics companies and network operators, Diamond
currently works in partnership with the following industry bodies:
 3GPP: The Third Generation Partnership Project (3GPP) is a worldwide body which is
developing and promoting a common set of standards for the creation, delivery and playback
of multimedia over high-speed wireless networks
 Bluetooth SIG: The Bluetooth Special Interest Group drives the development of a wireless
specification for connecting digital devices including mobile phones. Bluetooth is a widely
used technology that allows for the exchange of data between wireless devices.
 WiMAX Forum: A non-profit association that works for the deployment of broadband
wireless networks based upon a common standard.
 W3C: The World Wide Web Consortium (W3C) is tasked with developing common
protocols and data formats that promote the evolution of the World Wide Web. Organisations
join in order to work and exchange ideas with other members including premier Internet and
technology companies

Appendix 2
Business Structure
In 2011 Diamond was reorganised into 7 core business areas as follows:
Mobile Devices Division
This division is responsible for the research, development and manufacturing of all mobile
devices. It currently produces over 120 models within its portfolio, including devices that use
state of the art smart phone technology. Product development requires significant levels of
funding and targeted investment to ensure a supply of new and updated products that will meet
customer expectations and help the company retain its market position.
Networks Division
The division is responsible for the maintenance of existing networks and for the expansion into
new markets. They work in partnership with other network providers and make decisions about
which devices to offer on the Diamond networks.
Service Development
The rapid advancement of mobile and digital technology in recent years has enabled Diamond to
promote the interface between mobile services and webbased services. Common developments
in music, maps, media, messaging and retail experience have been driven by consumer needs and
wants, and have led to a significant expansion of partnership working with developers and
content providers. The Service Development section is tasked with fostering these partnerships
to enhance the customer experience.
Customer Care
Diamond offers a huge range of services and packages to provide imaginative, creative and
innovative customer solutions. The Customer Care Section is tasked with concept development
and creating these solutions and ensuring that customer expectations are consistently met.
Marketing
The customer focus of the business is driven by the knowledge and creativity of the marketing
department. All brand and marketing activities, sales and distribution activities, supply chain
operations and customer interface are effectively directed and managed by this section.
Corporate Opportunity
The coordinating body of the organisation links the other sections of the business and promotes
strategic development and growth.
Special Projects
This section requires significant investment and provides the leading-edge technology required
for mobile and voice-guided navigation systems, internet based mapping applications, cutting
edge web services and other government and corporate solutions. Many of the projects involve
targeting niches that can be highly profitable and can lead to developments that can be used by
the Mobile Devices and Network Divisions.

Appendix 3
Diamond Telecommunications Plc Mission Statement
We promise to help our community stay true to what is important to them.
Key Values
 The customer deserves service excellence
 We accept that while we are driven by technology we will always aspire to drive
technology
  There is a tailor-made solution for each and every customer
 The global community is our local market
 Technology can safeguard a green new world
Diamond is a customer focused organisation. We demand continuous improvement and
progression for our stakeholders by engaging our community in global technology and
communications. As the global market expands, people need to feel the world becoming smaller
as communication embraces the web and the need to interact socially and professionally, locally
and internationally. Our community needs to be at the forefront of communication and be
connected regardless of time, place, preference and economic status. The community will always
be connected in new and better ways.
Diamond will use the community to develop and enhance our customer focus using social,
professional and technological solutions to the questions of each and every day. With solutions
comes service excellence. Excellence promotes community and harmony for our people
The mission of Diamond requires that we position ourselves for the needs and demands of the
global community. Our solutions and products become one with the wants and life of our
customers. Our organisational structure has evolved with our community and its technology and
we aim to place ourselves at the forefront of mobile, internet and computer technology, driving
the boundaries of customer satisfaction. We exist to build a better world through communication
and will strive to make the world a cleaner, greener community driven by facilitating technology
Appendix 4
Trading Results 2010–2014
Section 1

All questions in Section 1 must be answered.

Question 1

Part a

Identify and justify possible opportunities that may exist for Diamond which will enable it to
expand on a global scale. (10)

Part b

Evaluate the main factors that could be measured and used as an indicator of success for
Diamond.

(10)

Question 2

Part a

Explain the possible costs and benefits of Diamond’s focus upon meeting the increasing
telecommunication needs of customers. (8)

Part b

Assess the importance of customer loyalty to Diamond. (12)

Section 2

Three out of four questions in Section 2 must be answered.

Question 1

Part a Describe the main uses that stakeholders may have for the information published in
Appendix 4. (12)
Part b Appendix 4 illustrates an increase in revenue between 2010 and 2014 but fluctuations in
profit during the same period. Suggest and justify why profit may not have followed the same
pattern of increase as revenue during this period. (8)

Question 2

Part a

Explain possible economic factors that may impact upon the ability of Diamond to supply its
products to existing and emerging markets. (10)

Part b

The extent and focus of government regulation will substantially impact upon the market and
environment in which organizations operate. Explain the impact that government regulation may
have upon Diamond and its operations. (10)

Question 3

Part a

Assess the possible developments that Diamond could make to its product mix. (8)

Part b

Examine how the marketing function would need to work closely with the other key business
functions within Diamond to promote achievement of its objectives. (8)

Part c

Discuss the benefits of adopting a single brand name that has been used for the business on an
international stage. (4)

Question 4

Part a

Identify how the Mission Statement of Diamond may influence the formulation of organisational
objectives, goals and policies. (12)

Part b
Given the desire of Diamond to expand into new markets, evaluate the impact this would have
upon the role and actions of managers within the organisation. (8)