Sustainable Competitive Advantage

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THE DYNAMIC DIAMOND INDUSTRY: IS IT FEASIBLE FOR ITS PLAYERS TO GAIN SUSTAINABLE COMPETITIVE ADVANTAGE?

Nkiruka Chidia Maduekwe

ABSTRACT: This report seeks to analyse the diamond industry from a global point of view. The diamond industry is global in nature. Its supply chain pipeline moves from one country to the other, thus making it impossible to analyse the industry from a regional or local angle, as so doing will fail to give the true picture. As an industry whose product derives its value from the perception of its consumers, what is the feasibility for the players in the industry to gain sustainable competitive advantage? This notwithstanding, are there issues that can rob the industry of its profitability? The report will employ the Industry analysis tools created by Michael Porter, Prahalad & Hamel. The report shall examine the five forces together with the macro-environment factors. In addition, in order to give a balanced view, the report will seek to discuss the effect the chaos theory can have in attaining Sustainable Competitive Advantage (SCA) and the importance of stakeholder management to SCA for the firms in the diamond industry. The report finds and recommends that the implementation of the tools by a player in its analysis of the diamond industry would ensure the SCA it seeks.

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The author was called to the Nigerian Bar in 2008. She is completing an LL.M in Environmental Law & Policy and M.Sc in International Oil & Gas Management at the CEPMLP, University of Dundee. She is a member of the Nigerian Bar Association, Society Petroleum of Engineers, and the Energy Institute. Email: nikksidia2k2@yahoo.com.

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TABLE OF CONTENTS Page ABBREVIATIONS...................................................................................................................... iii

LIST OF FIGURES…………………………………………………………………………......iv

TERMS OF REFERENCE …………………………………………..………………………....v

1. Introduction……………………………………………………………………………….….1

2. Industry Profile………………………………………………………………………..….….2

3. Players in the Diamond Industry: Achieving Sustainable Competitive Advantage….….5

4. The Five Forces, PESTEL, and the Diamond Industry: Where do they fit?.....................7

5. Conclusion and Recommendation……………………………….………………………...11

BIBLIOGRAPHY

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ABBREVIATIONS

BHBP

Broken Hill Proprietary Billiton

GIA

Gemological Institute of America

IDE

Israel Diamond Exchange

LLD

Le Leviev Diamonds

NGOs

Non-governmental Organisation

PESTEL

Political, Economical, Social, Technological, Environmental, and Legal

RTD

Rio Tinto Diamonds

SCA

Sustainable Competitive Advantage

SMEs

Small and Medium Enterprises

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LIST OF FIGURES

Page Strategic grouping of firms in the diamond industry……………………………4

Figure 1:

Figure 2:

Long-term rough diamond supply/demand outlook 2000 to 2018 prepared by WWW International Diamond Consultants Ltd. using January 2009 values…….9

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Terms of Reference

The Aim of this Strategic Management Report is to carry out an analysis of the diamond industry.

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1. INTRODUCTION

The diamond industry is global in nature. Its supply chain pipeline moves from one country to the other.1 This makes it impossible to analyse the industry from a regional or local angle, as so doing will fail to give the true picture. For a long time, the diamond industry was under the control of a cartel – The De Beers of South Africa. This is no longer the case as certain situations have led to the evolvement of the industry thus, characterising it with:

a. A major player (De Beers);

b. A number of strong competitors (Rio Tinto Diamonds [RTD]; Broken Hill Proprietary Billiton [BHPB]; and Alrosa), and

c. In addition, firms, which can be, termed as mid-tier or junior companies for example Le Leviev Diamonds [LLD], Gems Diamonds, Petra Diamonds, amongst others.

Thus, the competitive structure that is evident in this...
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