Social Performance of De Beers Diamond Manufacturer - Case Study Example

Running head: social performance of organizations 11th April Introduction De Beers Diamond Company, whose headquarters are in Luxembourg City, is well known for the mining of diamond, operating of diamond shops, trading as well as manufacturing of various diamond products. Having being founded by Cecil Rhodes through the support of Alfred Beit, a Southern African businessman and N M Rothschild & Sons, a London based bank, De Beers is well known for its manipulation of the diamond market including prices and demand especially in the 20th Century. For instance, at one time, the company controlled the diamond market by convincing other producers to join it. However, some of the producers refused making the De Beer to flood the market with products that were similar to those who refused to join it and it afterwards purchased all the products that were produced by the rivals thus controlling the market prices (Edward, 1982). The company is involved in mining activities in various countries. For example, in Botswana De Beers mine through the company referred to as Debswana. In South Africa, De Beers Consolidated Mines is responsible for the mining activities. As far as business structure is concerned, De Beer has two major shareholdings which include Botswana government owning 15% and Anglo America Company that owns 85%. Other related companies that are involved in the De Beers diamond value chain include Diamdel, Namdeb, De Beers Canada, Diamond Trading Company South Africa and Namibia Diamond Trading Company. As an international company, De Beers can be affected by two main external environment factors. First, the custom duties and quotas imposed by countries may make the company demand for its products to decrease. This is based on the government’s policy to lower the importation of foreign products in order to enhance domestic consumption. Secondly, the stiff competition from other companies in the mining industry may result to decrease in the prices of the company products. This may be due to the other companies’ intention to face off the companies in the international market. One of the major stakeholders of De Beers Diamond Company is Diamond Trading Company (DTC). DTC main duties include selling and distribution of the company products. By selling approximately 75% of rough diamond in the international market, DTC is able to generate high revenue for De Beers an aspect that has made the company to effectively expand in the international market (Martin, 2007). The second important part of the stakeholders is the employees. With more than 20,000 employees, the company objectives are effectively met. The major role of the employees is to distribute the company products as well as undertaking exploration as well as mining activities. In addition, the employees are involved in making suggestions on the way to improve the activities of the company. De Beers’s managers including Mark Cutifani, the Chairman and Philippe Mellier, the chief executive officer are also salient who have significantly contributed to the success of the company. Through its efforts to implement effective marketing strategies, the top management has made the company to remain competitive in the diamond industry. As one of the primary stakeholders, Diamond Trading Company can influence the company financial performance by improving on their selling techniques especially in the developed countries where there is stiff competition. By use of the 4Ps that includes product, price, promotion and place, DTC can maintain strong customer loyalty that will result to repeated purchases (Kotler and Keller, 2012). On their part, the employees can improve the financial performance of the company by being more productive thus increasing the output resulting to high sales. In order for the employees to be more productive, it is vital that the company management team emulates various extrinsic as well as intrinsic factors including training, bonuses, commissions, holidays and gift vouchers among others. The third way that De Beers Company financial performance can be influenced by managers is by initiating marketing as well as financial policies including expanding capital base and assets in order to have a strong borrowing power. The shareholders on their part can provide additional capital in the form of additional shares. In this way, the company can have adequate resources to purchase more assets including drilling machines and other modern machines. The top managers can also expand members of the chain in order to ensure that more distribution outlets are established thus increasing the sales and profits of the company. In the contemporary business environment, firms have embarked on various corporate social responsibilities in order to create a positive image in the eyes of the public. Despite their efforts to create a strong awareness among the consumers, firms have sometimes been involved in controversial social responsibilities. In Botswana, there has been an extensive dispute between De Beers and the San tribe that resides in the land where mining is undertaken. Through the government, the San has been subjected to threats and conflicts since the diamond was discovered (Janine, 2003). According to San tribe, their hunting and gathering activities have been interfered with by the company. Additionally, their wildlife has been damaged. In order to ensure that the San tribe leaves the area, the government through the support of the company cut down the water supply. When the fashion models who were advertising De Beers, realized there was negative relationship between the company and the local community, they withdrew their support for the company. As a leader of the De Beers shareholders association, I have a duty of ensuring that even if we are aimed at getting high returns on our investment, the company has a positive implication on the communities surrounding including conservation of wildlife. To address the issue of conflict between the company and the San community, will the main objective of the reconciliation team. The first step would be to select the members of the team. The coalition group would consist of about eight members from the surrounding community, four government officials, four company officials and an environment expert. In this way, each of the conflicting group would be sufficiently represented including the environment. The involvement of the environment expert is a major factor that will ensure that the two groups reach a consensus. It is vital to note that while mining is important for any country such as Botswana, the rights of the surrounding community must be taken into consideration. Various meetings will be conducted under my leadership. During the meetings, aspect such as the compensation of the communities surrounding, employment of members of the community by the company, the role of De Beers in wildlife conservation and the rights of the community would be discussed. At the end, a sustainable solution would be achieved. Notwithstanding my skills in leading a team and my eagerness to ensure peaceful coexistence between the company and the local community, there is possibility of facing challenges that may interfere with the reconciliation process. One of the major challenges that I may face is fear from the members of the local community. Based on the torture that members of the local community have undergone on the hands of the government officers, they may not be willing to come into close contact with the same government (Gardner, 2005). Another challenge is difficulty in convincing the government to be involved in the negotiation taking into consideration the positive implications of the diamond on the Botswana economy. This implies that the government officers may strongly support the mining process not considering its effects on the environment and the local community. The third challenge that I may face is the influence of De Beers on the decisions of the government and the members of the team from the local community. For example, the company may give money to the members of the local community or the government in order for them to support their stand of continuing with the mining process. One of the notable steps that I would adopt to address these challenges is making the reconciliation process public. Thus any case of harassment would be avoided. Additionally, I would discuss with all the members separately before combining the entire team. In that case, I would be aware of the problems and challenges that each of the parties is facing thus I will be in a position to come with a strategy on how to connect the interest of each group. Conclusion Based on the above discussion, it is clear that for any company to be successful it has to ensure it create a positive relationship with the external environment. The relationship between a firm and the society must be considered especially in the mining industry. While De Beers is well known for providing quality diamond, it has engaged in a controversial corporate social responsibility that has resulted into a conflict with local community. On its part, instead of mitigating the removal of local communities, it should look for sustainable solution to the problem. References Edward, J. (1982).  The Rise and Fall of Diamonds (The Diamond Invention). London: London Press. Gardner, S. (2005). The Essential Role of Local Government. Lanham: University Press Of America. Janine, R. (2003). Glitter & Greed: The Secret World of the Diamond Empire. New York: The Disinformation Company. Kotler, P and Keller, L. (2012). Marketing Management. London: Pearson Education Limited. Martin, M. (2007). Diamonds Gold and War. New York: Simon & Schuster Limited. Read More