Ajay Arul

Case Study Bharat Raghavendran

Bai Lu
Shiva Shankar
Twisha Tejaswita

De Beers Company Profile
- History & Corporate profile
- Product Category &
Segmentation
- Company Value & Strategy
Contents
Purchasing Strategy
Purchasing Sourcing Strategy
Strategy
- Identify sourcing group
- Potential Supplier outlook.
• Supply Chain Situation
• Value Chain Analyze of current sourcing group - Pre select criteria
• 5 Porter’s - Identify ideal supplier
• Day one analysis - Pro’s & Con’s
• Market outlook
 • Established in 1888 from Merger of
Cecil Rhodes and Barney Barnato’s
Mining Corp.

• The “De Beers” name comes from the

brother who owned the farmland where
some of the productive mines were
found.

• In 1947, slogan named as “ A Diamond

is forever created ” .

• Oppenheimer Family sold its shares to

Anglo- American plc. in Nov, 2011
ending its 80 years of reign as the sole
controller of Diamond Production and
Supply.
History of De Beers Group
Company Timeline
 Introduction about De Beers Group
Profile Polishing
 Company is owned 85% by  Forevermark Company
Anglo- American and 15% by  2008 Launched
Govt. of the Republic of  2300 stores in 26
Botswana. markets.
 4 Mining Types– Open pit,  De Beers Jewelers
Underground, Marine and  2001 Launched
Alluvial.  Shipping to 100
 R & D Locations in Brazil, Countries.
China, Germany, Ireland,
South Africa, Sweden and
UK.
Technology
Joint Ventures Element Six is world
leader in
 Botswana- Govt of the Republic of Botswana.  Design
 Namibia – Govt of the Republic of Namibia.  Development
 South Africa - Ponahalo Holdings  Production of
 Canada - indigenous communities to create the Synthetic diamond
world’s newest diamond mine, Gahcho Kué for Industrial and
Electronic purpose.
 PRODUCT PROFILE

 Good exceptional  Ranging from VS  Ranging from VS  Ranging from SI

quality or quality and D to J to I quality in all to I qualities in all
fancy colors. color. colors. colors.

 Very high-end  High-end  Mid-range  Goods requiring

material typically material typically material typically multiple
destined for the destined for the destined for process typically
ultra- luxury segment. branded jewelry designed for
luxury segment. and chain or fashion retail
independent retail. market/Industrial
application.
Corporate
Value and
Strategy
3.6%

1.6 % 21.7 %

7.8 %

De Beers Global Market share as of 2018

Supply Chain Process
Value Chain
MARKET SHARE TIMELINE FROM 1991- 2018
HISTORY FOR DECLINING FROM 1991 - 2018
 MARKET OUTLOOK & IMPACT

PEOPLE
SOCIETY
Ensure the fundamentals are in place; Delivery profits for our shareholders,
Go beyond mere compliance with the laws on alongside benefits for our producer partner
health, safety and wellbeing to achieve our countries and communities.
ultimate goal of zero harm;
Reach employees full potential.

ENVIRONMENT

It is our responsibility to minimize our impact on

nature, so we set ourselves challenging targets to
reduce our reliance on scarce resources and to
develop our biodiversity stewardship.
5 PORTER’S FORCES Threat of New entry
 High cost of Entry, Strong Brand
 Existing Political / Mining relationships
 Own distribution channel
Bargaining power Bargaining power
of Supplier of Customer

 Own Distribution Existing Customer Rivalry  Only game in

Channel/ Control  Strong Brand/ Expertise/ Historical town w/o any
output holding substitutes
 Relationship with  Control of output/ Distribution channel  Custom / War
foreign Govts  Trust already built with consumers and  Quality of
 Cash is partners product
Dwindling  Luxury items
 Sight holders  Decreasing retail
decrease from demand
over 250 - 150 Threat of Substitutes
 No substitutes for diamonds
 Cultural history
 Social issues/ Status
 High cost of entry
 P S E
E T L
POLITICAL SOCIAL ENVIRONMENT
• Taxation • Demographic • Extreme
policies ECONOMIC • Power TECHNOLOGY weather LEGAL
• Regulatory Structure • Environmenta
• Growing • Technology • Data
Practices
economic • Attitude l Norms and
transfer and protection
• Blood towards guides
performances licensing laws
Diamonds
• Liberalization health and
issues • Waste • Health safety
• Instability in safety Management
of trade • Supply chain norms
existing • Evolving • Renewable
policy disruption • Intellectual
markets Gender Roles technology
• Exchange • Innovation property
in market
Rates • R&D • Environmenta
• Government investment l laws
intervention
 POSITIONING MATRIX • Few suppliers
• High impact
on business
• Good
relationship
is the key

HIGH
STRATEGIC STRATEGIC
LEVERAGES RELATIONSHIP CHARACTERISTICS
• Long term relationship
• Custom design/Unique
BUSINESS IMPACT
products
• Diversify business
• Integrated product
BOTTLE NECK development
NON – CRITICAL
• Value chain
optimization

LOW MARKET COMPLEXITY HIGH

• Reinforce long term
relationship
• Consumer understanding
• Control of output
• Customer base tapping
• Mutual interfaces defined
• Business growth
 SUPPLY CHAIN INNOVATION

Blockchain Midstream operators Laboratory-grown Midstream

technology is being are increasingly diamonds can more processes
developed for the using digital easily be detected are becoming
diamond pipeline by platforms to inform at speed using increasingly
TracrTM, manufacturers and equipment such as automated. For eg,
Everledger, retailers “AMS-2” and polishing from the
TrustChain and of their polished “SYNTHdetect” Fenix system, and
Clara. inventory, allowing from the cutting and shaping
‘just-in-time’ International technology from
polished diamond Institute of Diamond Synova (in
sourcing and Grading & Research development with
improving cash flow. De Beers Group).
DEMAND FORECAST FOR 2023
 DE BEERS SHARE IN THE GLOBAL PRODUCTION

Details

 Global diamond production values

are estimated at US$17.5 billion in
2017, 15 per cent increase on 2016.
 Total volume terms, production
increased 14 per cent
to 164 million carats.
 De Beers Group accounted for the
largest increase in production
volumes (+6.1 million carats),
followed by Rio Tinto (+3.7 million
carats) and ALROSA (+2.3 million
carats).
 DE BEERS REVENUE FROM 2014- 2018

Title Units FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Revenue USD ( Million) 7,114 4,671 6,068 5,841 6,082
Underlying EBITDA USD ( Million) 1,818 990 1,406 1,435 1,245
Underlying EBIT USD ( Million) 1,363 571 1,019 873 694
Capex USD ( Million) 689 697 526 273 417
Return on capital employed USD ( Million) 13 6 11 9 8
 Market Outlook and Impact
Title Comments Impacts

The long-term outlook for the diamond market remains positive. ... The expected
World Economic outlook demand for natural rough diamonds to stay flat or grow up to 2% annually through Steady market growth
2030 in real terms (2% to 4% in nominal),

Global consumer demand for diamonds especially in the jeweler category. Has seen
positive growth and is expected to grow along with expected trends. Demand is positive with major markets
Demand
Us was the main driver of growth. China another major consumer of diamonds, showing recovery and/or steady growth
shows recovery from the us-china trade war

Despite steady increase in demand, supply for natural rough diamonds is expected
to decrease. Expected decrease in supply will affect
Supply
De Beers alone has closed or sold several mines as they were no longer feasible. supply chain and pricing
No new mines are expected to be found.

Quality Improvement and advances in technology has seen improvement in quality. Translates to increase in supplier power.

Introduction of lab grown diamonds in to the market.

Disrupting the Disruptors and
Technology Synthetic diamonds has been gaining popularity, with De Beers opening a separate
Revolutionized the Diamond market
branch “Element Six” dedicated to it.

Summary Despite growing demand for diamonds, supply is expected to decline. Lab grown or Synthetic diamonds.
Marketing strategies
Chemical Vapour Deposition Process