DE Beers Diamond Dilemma Case Study Example | Topics and Well Written Essays - 2250 words

DE Beers Diamond Dilemma - parapraxis Study ExamplePolitical factors These factors emerge from the various policies, which are imposed by the government. De Beers as an incorporation had to deal with different political upthrow since it operated in different countries and had to distribute its products to different countries as puff up (Gillespie, 2009). The political upheaval in Soviet Union in the year 1991 causes a lot of emolument loss to De Beers Incorporation (Danielle, 2005). Before this upheaval, the Soviet Union and De Beer Incorporation had job agreements and that dates back to the year 1950s. In this aforementioned(prenominal) year, deposits of Diamond were found in Siberia and from the trading agreement Soviet Union had agreed to sell all their baseball diamonds to this Incorporation. The integration of the Soviet system resulted into the collapse of the trading agreements that De Beer had with them and therefore, the enforcement of the various contracts were not possible. The political upheaval in Angola in the year 1990 also weakened the operations of De Beer Incorporation. The rebels were able to take control of study diamonds mines from the then President Dos Santos and this forced De Beer to purchase wrinkle diamonds. Apart from Angola, other African countries, which were trading partners for De Beer, also suffered a lot of political upheaval. Countries like Sierra Leone, Democratic Republic of Congo, and Liberia were equally bear upon by the political upheaval and that led to deoxidised trading by De Beer. Trading in blood diamond afterwards caused the company many revenues following their exposure in the year 1998. Economic factors Changes in the economy greatly affected the operations and organization of many business corporations (Gillespie, 2009). Due to hard scotch times in diamond trade in the year 1999, De Beer was able to experience some shifts in its value chain (Danielle, 2005). A lot of integration in terms of forward and backward straw man was experienced. Many investments in mines by the retail outlets were being experienced at that time and at the same time many mines were equally becoming retailers. This integration be it tough for De Beer since the company returns were greatly reduced. In the same year, jeweler Tiffany and Company that has been sourcing most of diamonds from De Beer announced its withdrawal and it bought some mining concerns from Canada at a cost worth $ 104 million. These economic factors affected De Beer Company and the Company opted to safeguard its market dominance. The safeguarding practiced proved to be very expensive for this company since it was forced to buy diamonds from idealistic prices. Some of the diamonds, which were purchased at inflated prices, were later sold at very low prices. The emergence of Australian Argyle Company into the diamond trade further weakened the market bases for De Beer since this company was able to produce low quality diamonds, whic h were later sold cheaply. The inflation in prices of diamonds from other countries where De Beer was sourcing them also made this company in the year 1990 to nod off a lot of its market share (Danielle, 2005). The share price for this company was also able to reduce from 17 to 12 $ between the year, 1989 and the year 1998 and the fall in price presented a percentage terminate of close to 30. Social factors These factors generally affect the demands of the various products produced by an organization. These factors circumrotate on the labor and the workforce inside an organization (Gillespie, 2009). The processing of diamond in De Beer Company had several processing industries, which were helpful in the in the altogether and polishing of the processed diamonds. The Indians dominated the workforce in the organization and close to 1 million workers in the processing