Post #1 – Ginger Cermak
To complete a PESTLE analysis, we have to look at all of the external factors of the business at the time that caused a boom in the diamond business. I think it is a really interesting idea that the value of diamonds has always been an illusion and an overstatement of worth due to what seems to have been a massive marketing success for diamonds. The external factor that affects this the most in my opinion is the sociocultural side, because people began their views of diamonds watching role models and famous people like Elizabeth Taylor and Marilyn Monroe wearing loads of them. It quickly became a visual of one’s status, which made these diamonds so high in demand. Another major factor that contributes to the monetary value of the diamond would be economic factors. There is no question that the heightened demand and growing popularity of diamonds raised the price of diamonds rather quickly. In terms of the environmental side of the diamond business, I think that extracting them wasn’t a huge problem in a sense of finding them, but more like getting them ready to sell quick enough for the rising demand. It is interesting to hear from the researcher that it was never really the issue of extraction or locating diamonds at all. Technologically, the extraction process was not as easy as it is now. This may have contributed to the value, but not as much to rise the price as much as it had. Legally and politically, there were not too many laws and regulations that protected diamond extraction/cutting from the beginning of the diamond business. Later though around the late 90s and early 2000’s, there have been laws put in place against blood diamonds, which are generally underground diamonds business that usually goes towards causes that are not good for the US like government defunding. There are now regulations for labor that made a large change in the diamond business as well, due to the amount of diamond extraction sites that were conducting illegal labor.
Three resources or capabilities:
Extraction Machines- These are non-substitutable because there is certain and exact machinery that needs to be used for successful extraction and sorting of rocks to find diamonds.
Riverbeds/Coastlines- These are plentiful, but inimitable. This is because they are diamond hot spots and there is not anything like it. African Coast lines are the most plentiful still today of diamond mines and formation of these precious rocks.
Development of safe labor- cartels, smuggling, and unsafe labor caused an issue that was noticed because of the rise of diamonds. It was not until much later, but there were many laws and regulations put in place for reasons like diamond extraction. These laws are valuable to all people and morals of the United States especially.
The value chain of the diamond business is very interesting because we start all the way from the bottom of the chain at the mining and extraction sites at African Coastlines, Oppenheim Diamond Empire, and other places that were extracting large amounts of diamonds. After this stage of finding the rocks, they are sent to cutters who develop the diamonds to be beautiful and petite like they are advertised to be. The cutters have to take the diamonds that begin looking like rocks, and shave them down to get them to the desired karat value. After this stage, they make their way to the jewelers and shops that sell these high end rocks to the end user. The last stage of the value chain is of course the customer, who has to be willing to spend extremely large amounts of money on a small piece of jewelry, and single diamonds. Some little rocks in the video were even worth upwards of one million dollars. This value chain is extremely important and interesting in a business view, because these rocks made of carbon are literally multiplied in value by a huge margin, creating massive amounts of value for each player going up the value chain.
The amount of resources and capabilities used are endless. The extraction process, cutting process, importation, and selling piece all take lots of specialized product, tools, and machinery to be able to curate these diamonds that are so popular still today. Extraction machinery, cutting machines, lots of labor, land, water, mining licenses, advertising at places like movie theaters and television, etc. There is a lot for work and resources that go into the diamond business, and they are still gaining value today as we speak.
Post #2 – Camaron Borg
P.E.S.T.E.L. Analysis:
P: There are multiple political factors at play. The first is the diamondy companies involvement in various conflicts across south and west Africa. Another policial
E: Economic factors in this include the manufactured demand of diamonds on the market due to the withholding of many diamonds around the world, which causes the prices of diamonds to be vastly increased.
S: The social factor at work here is the increased social popularity of diamonds. This came about in various ways such as Hollywood popularizing them in films, and other marketing tricks such as the belief that one should not ever sell diamonds once they have them.
T: Technological factors include the creation of artificial diamonds.
E: Diamonds are found predominantly in Africa both underground and at the bottom of the ocean. Although they have been found in other areas such as Russia, and the United States.
L: The largest legal factor at play in the movie is the DeBeers corporation being targeted by the United States government (which is the largest consumer of diamonds in the world) for antitrust law violations.
Three resources / capabilities from the video:
Societal perception of diamonds (intangible): Diamonds are highly sought after rare minerals, especially in western nations such as the United States and western europe. This is by far the biggest resource gathered from the video because if it weren’t for this high demand, the market wouldn’t exist as it does.
Diamonds (unsubstitutable): There is no substitute for a diamond found in the ground.
Product that they deliver (imitability): DeBeers is one of the few suppliers of diamonds in the world and by far the largest. They have been able to deliver diamonds to distributors who will in turn either sell the diamonds to other manufacturers or turn them into precious gems themselves. As a result of this process these diamond mining companies can generate a high profit margin on the diamonds sold.
Value Chain Analysis:
The diamonds are extracted from the ground. From here they are sold to manufacturers who will cut and polish the diamonds. These manufacturers usually have contracts with the diamond company over a set period of time. After this the diamond is usually cut and polished by the manufacturer. From here the synthesis from uncut gem to the diamond we usually associate with requires a skilled professional with a trained eye to cut and polish the diamond into a shiny gem. Finally the diamonds are ready to be sold, either as individual gems, or to be augmented into other pieces of jewelry. The resources used are the demand for diamonds across the globe, the diamonds themselves, and the delivery of the product to the market through their trade agreements.
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