Strategic Management and Competitive Advantage

The assignment requires students to analyze a series of case studies on various companies and their strategic management practices. Students will need to apply relevant theories and concepts from strategic management, such as competitive advantage, dynamic capabilities, resource-based view, and stakeholder theory, to evaluate the effectiveness of these strategies. The analysis should focus on how companies create and sustain competitive advantage in the face of changing market conditions and challenges.

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION.........................................................................................................................................3
TASK 1..........................................................................................................................................................3
1.1...............................................................................................................................................................3
1.2...............................................................................................................................................................4
TASK 2..........................................................................................................................................................5
2.1...............................................................................................................................................................5
2.2...............................................................................................................................................................6
TASK 3..........................................................................................................................................................7
3.1...............................................................................................................................................................7
3.2...............................................................................................................................................................8
TASK 4..........................................................................................................................................................9
CONCLUSION............................................................................................................................................10
REFERENCES............................................................................................................................................11

INTRODUCTION
Strategic management includes the implementation and formulation of major objectives and goals
of a firm which are taken by higher authority of corporation on behalf of its owners. The purpose of this
report is to develop mission and vision statement for DeBeers to achieve organizational goals and targets.
DeBeers is a leading diamond company which involves in mining, exploration, production, retailing,
distribution and selling. By reading this report learner will be able to identify the various stakeholders of
DeBeers and their importance in context to run the business (Wong and Karia, 2010). It will also describe
about various uncertainties faced by this enterprise. Importance and effectiveness of strategic capabilities
and resource are also going to be explained in this study to achieve sustainable competitive advantage.
TASK 1
1.1
Mission and vision statement are two different elements but are often combine to facilitate
company’s goals, values and purposes. Mission describes the wants, requirements, goals and objectives of
firm while vision outlines desired future position of the enterprise. DeBeers is a well known diamond
company in the world which has its values, mission and vision to achieve brilliance. This enterprise has
big dreams for its members, employees and customers. Vision of this entity is to focus on unlocking full
economic value of its leadership position all over the diamond industry. In order to turn out its dreams
into reality it needs to maximize its global partnerships and employee engagement and their skills
(Poister, 2010). There are following vision and missions that DeBeers need to consider for its success and
growth in global market:
 Pulling together: Management needs to create an environment where all workers and employees
can work as a team. As a result of pulling all members of firm together, it can accomplish its
goals and objectives effectively. Being unified in actions and principles of corporation, managers
may turn diversity of its workforce and their skills and experience.
 Shape the future: It is a perfect vision for DeBeers where it can find new ways to outline its
future requirements and wants. Vision helps management to figure out new things and ideas and
set targets and goals to achieve them effectively. It is generally consists of tough decisions and
risks involved in it because it is truly said that to get higher returns, entity has to face high risks.
 Building trust: To accomplish the mission of DeBeers it has to work as a team and for this trust
among members of firm plays a vital role (Wheelen and Hunger, 2011). Building a trust among
people of organization is a mission which is very necessary to achieve organizational goals.

 Showing care: It is another mission of DeBeers which builds up good relations among all
members of company. It is the responsibility of management of this firm to show care about its
all members and people engaged in this entity.
All the above statements help DeBeers to maintain a sustainable competitive advantage.
Dominion Diamond Corporation is its major competitor which is a Canadian diamond mining company.
Through adoption of the above statements by DeBeers, it will develop a combination of attributes which
allow this firm to do better than its competitor. When DeBeers will pull all its members, employees and
workers together then it will directly affects performance it firm and will help in achieving more success
than its competitors (Schilke, 2014). By creating trust and showing care for workforce of DeBeers will
help in increate in employee engagement and job satisfaction level which will attract them towards their
jobs.
1.2
Stakeholders are those persons, individuals, groups and institutions who are directly or indirectly
connected with the company. People are generally connected with an entity with the interst involved with
it. DeBeers includes many stakeholders who plays very important role in the growth and success of
diamond business. Each and every day, DeBeers engaged with these persons and group of people and
face sustainable challenges. These are explained as under: Employees: These are persons with whom DeBeers deals on regular basis. They are one of the
main part of company with out whom this firm cannot run properly. Every enterprise requires
number of employees and workers who work for them to achieve its goals and objectives. As
DeBeers is a diamond corporation which requires many people to work with it on daily basis. Shareholders: These are those who have a direct interest with the organizations. They are the
owners of firm who invest their money in up gradation of corporation (Li and Liu, 2014). They
are also key stakeholder of enterprise who has direct interest in the share of profit and loss of
business. Local communities: These people also play an important role in building up a business.
Management of DeBeers talk formally to these communities and teams of firm develop a detailed
impact on community to ensure concern and needs of local public. Customers: Customers play a significant role in the success of a business enterprise. Here also
customers have a great impact on progress of DeBeers (Hodgkinson and Healey, 2011).
Generally, a firm is incorporated with an aim to fulfill needs and wants of customers. It is very
necessary to understand the interest and actions of consumers which will help management to

support and create confidence among public or customers. Therefore, end users of products of
DeBeers help management to become a good, effective and sustainable operator. Government: Government also plays a role of stakeholder for DeBeers. Every firm has to face
some political issues which may has both positive and negative impact on functioning of
corporation. Government has enacted many acts, laws and provisions which are very necessary to
be followed by DeBeers for its betterment. It may influence various operations of business.
Stakeholder management is an essential aspect of any industry or company. Generally, the
process of managing stakeholders of firm is viewed by mangers of entity which is known as risk
management. Stakeholder or project management is really very important for DeBeers because it
facilitates free resources for entity (Noland and Phillips, 2010). An effective stakeholder management
identifies, analyzes and reduces risks involved in business. It also helps in increase in perception of
success and facilitates easier project closure.
TASK 2
2.1
There are some following trends which shape the future of diamond industry.
 Production of rough diamond for next ten years: The production of rough diamond will be
remaining constant for next ten years. It is expected that there will be increase in short term
investment in next ten years. Therefore, large economical viable funds will remain stable.
 Pressure from producing countries to extract more values: The resources driven countries all
around the world are eager to pull out more value from their natural resources. This can be done
by increasing taxes and royalties.
 Shifting in the demand of emerging markets: There are so many emerging markets which have a
heavy demand for diamonds for their growth. This demand comes from Asian customers like
Indian and Chinese which will increase the wealth of these countries in next ten years.
 Increase in costs of mining: It is expected that in coming next ten years a heavy share of
production will come from deeper mine which are very complex and costly to handle
(McWilliams and Siegel, 2011). Along with this, additional investments re also required to drive
productivity. Additionally, cost of unit capital, labor, foreign exchange and energy are also
expected to increase.
 Change in consumer preferences: As per the recent research it is assumed that in coming next
ten years preferences and tastes of customers will have a positive and negative impact on

diamond industry. Today, people want to buy branded diamonds and jewellery and in next ten
years it will become a fashion to buy high end diamond jewellery.
There are following uncertainties which could define the future of diamond industry:
 Global microeconomic outlook: It is the first uncertainty where demands for diamond will
increase or decrease with the GDP growth rate of nation (Bryson, Berry and Yang, 2010). This is
expected to be continue in future.
 Changes in customers’ attitudes: Over the next ten years, demands of consumers for diamonds
will continue to increase because retailers of diamond will innovate and invest relatively more for
new customers. Marketing of the product will help in changing the attitudes of people and
retailers play very important role in it.
There can be two possible scenarios for DeBeers which are discussed as under:
 Diamonds are forever: As per this scenario, demands of consumers rapidly grow. In the eyes of
customers brands become more important and they interestingly invests money to buy such
diamonds. It affects various variables like retail consolidation and branding, customers’ attitude,
supply of rough diamonds, etc.
 East renews global growth: According to this scenario, the emerging markets grow more than
the others specially India and China enjoying the rapid growth in diamond industry. As the
growth of emerging markets, base of consumer for diamonds broaden (Barney and Hesterly, ,
2015). Here, producers of diamond continue to invest in developing nations because it will give
them more returns.
2.2
The Porter’s five forces model helps to analyze attractiveness of diamond industry. Here are the
following forces:
 Threat of new entrance: Currently, the diamond industry is being controlled by single monopoly
where only one or two companies are engaged in supply of diamond and jewellery made of it.
DeBeers Corporation owns more than 80% share of diamond market across the world (Chang,
2011). For this entity there is no threat of any new entrance because for new entry a company
requires to invest very high capital.
 Bargaining power of consumers: In this industry, suppliers seized bargaining power so, users
may not able to use their bargaining power and other relative benefits. In this market no other
substitute is available for diamonds therefore; it restrains consumers from their bargaining power.

 Bargaining power of suppliers: In this industry, suppliers have more bargaining power than
customers because suppliers of rough goods and diamonds have full control over it. They can
demand prices for their raw goods as per their requirements.
 Threat of substitutes: As discussed above, it is a single monopoly market where only one or two
corporations exist. Every entity has to face a threat of substitute where buyers can switch to
another product of other company with same quality. There is no substitute of diamond. It is a
part of culture and traditions and people are emotionally attached with it (Hitt, Ireland and
Hoskisson, 2012). Therefore, diamond industry does not have a threat of substitute.
 Competitive rivalry: In every business a high degree of rivalry exists which affects its
productivity and profitability. Generally, high level of rivalry exists in such market where large
number of firms exists with similar products and services. As there is very less competition
available in market place, diamond companies have to face very low rivalry.
TASK 3
3.1
VRIO/VIRN is a framework of business analysis which is a larger part of strategic scheme of a
business. Generally basic strategic process of an entity is begins with vision and mission statement and
continues with objectives, strategic choices and implementation (Keller, Parameswaran and Jacob, 2011).
Every firm wants to achieve competitive advantage from these statements in the market place. VRIO
helps the entity to achieve such advantages which is an internal process of an organization. VRIO/VRIN
can be determined if resources provide source of a sustainable competitive advantage. DeBeers focuses
on vertical integration by its alliances an acquisitions and to serve this advantage resources must be
valuable, rare, imitate and organized and non substitutable. Here are some bases of strategic capabilities
of DeBeers which are explained as under:
 Valuable: It is the first element of internal analysis under which a question occurs that whether
available resources are valuable for entity or not. A source of grater value is accepted by the firm
in order to gain competitive advantage (Kindström, 2010). This capability is useful for DeBeers
to meet competitive advantage by adopting and availing valuable resources for production of
diamonds.
 Rare: It describe that the resources available to a corporation must be rare, that means it should
not be used by other companies or competitors. It will help a firm to boost its demand in market
place. This element also helpful to achieve viable benefits for DeBeers against its competitors.

 Imitate: Imitate means coping resources of an enterprise by others. Sometimes, it is easy to copy
but sometimes it becomes very difficult. Internal imitate is also difficult for management because
availability of resources does not remain same for all the times. DeBeers is the best diamond
company of world which does not require to use this element because in this enterprise imitate
the strategy used by its competitors.
 Organization: Once the analyst realized that value, rarity and imitation of resources of firm are
capable than entity is organized by managers to exploit these resources. If it is done by
corporation successfully than it may enjoy sustainable competitive advantage (Freeman, 2010).
DeBeers needs to organize first two elements to compete with its rival.
 Non-substitutable: Under this, resources cannot be substitute by other resources. To gain
competitive advantage an undertaking need to avail such resources that does not include any
substitute of it. As DeBeers exists in a single monopoly market and produces such products
whose substitutes are not available in market place. That’s why the resources used by DeBeers
also do not have its substitutes.
3.2
Value chain framework is strategic tool which is used by a firm to analyze its internal activities
(Harrison, Bosse and Phillips, 2010). Its main purpose it to identify activities which are more valuable
and must be implemented to achieve competitive advantage. Therefore, it is directly related to the
capabilities of enterprise which is very important to recognize for growth of business. In corporate world
value chain plays a significant role in gaining competitive advantage for organizations. Value chain can
be used to formulate competitive strategies, to identify and develop relationships between activities and to
understand sources of competitive advantage. Competitive strategies are generally based on integrating
activities in value chain. Porter introduced the value chain model which shows all activities of a
manufacturing unit from starting to end (Barney, 2012). Value chain includes all primary activities which
directly add value to final or finished product. It includes all activities of firm form the production of a
product to the sale of it to end users.
DeBeers is a diamond company which involves activities from mining of diamonds to selling of
finished product in market place. Value chain of DeBeers includes diamond exploration – production of
rough diamond – sales and distribution of rough diamond – cutting and polishing – diamond jewellery
retail – global customer demand. Under this whole process of value chain, strategic capabilities of
DeBeers play an important role. Value chain is a larger part of a corporation which is used by DeBeers to
compete with its competitors (Ackermann and Eden, 2011). By framing this value chain company may
achieve its sustainable competitive advantage. Through this, five elements of capabilities i.e. valuable,

rarity, imitation, organized and non substitutable are determined. By knowing the process model of value
chain of firm, management of DeBeers may develop various strategies to improve the quality of its
production along with availability of its resources. Therefore, with the use of this model, DeBeers may
develop and improve its productivity and profitability.
TASK 4
A competitive advantage is the process which is possessed by an enterprise to get sustain or
maximum profits over its rivals (Keupp, Palmié and Gassmann, 2012). To achieve such advantage, a firm
needs to develop a model which will help management of the entity to accomplish its goals. Generally
these models are known as the business strategy to compete with its competitors. One of the main goal or
objective of DeBeers is to meet sustainable competitive advantage. Michael Porter described about two
models of competitive advantage i.e. cost and differentiation advantage. Competitive advantage exists in
a firm when it is able to deliver same benefits as its competitors but at lower costs with higher profits.
Cost and differentiation advantages are recognized as positional advantages (Hill, Jones and
Schilling, 2014). This will describe the position of entity in the industry as a leader or controller. A
resource based view emphasizes that to create a competitive advantage a firm uses its resources and
capabilities. It will result in superior value creation of entity. A firm creates a value by performing
various series of activities which are identified by value chain. In addition to this, DeBeers operates its
activities vertically. A superior value is created by lowering the cost of benefits to its customers. Cost
advantage is the process which is followed by an undertaking to compete its competitors on the basis of
cost and wants and sources of entity. This includes the following stages:
o Identifying primary activities of firm
o Establishing importance of each activity
o Identify cost drivers for every activity
o Recognizing link between activities
o Identify opportunities for reducing costs
Differentiation advantage is an approach which is used by corporation to create superior products
and services (Agha, Alrubaiee and Jamhour, 2012). It includes the following steps:
o Identify customers’ values creation activities
o Evaluation of differentiation strategies for improving value of consumers
o Finally identifying best sustainable differentiation

Thus, senior management of DeBeers should use the above model to meet sustainable
competitive advantage in global environment.
CONCLUSION
This report concluded that role of strategic management in a firm is very important and need to
perform all functions effectively. This study described about mission and vision statement of DeBeers
which is the first step of an enterprise and without which it cannot achieve its goals and objectives. As
DeBeers is a diamond company, it faces various trends and uncertainties which directly affect the shape
and future of diamond industry. A five force analysis given by M. Porter is made under this study to know
about the attractiveness of industry in market. DeBeers needs to utilize strategic capabilities which
includes elements i.e. VRIO/VRIN in order to achieve sustainable competitive advantage.

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