Assignment 1: Social Performance of Organizations
Janet Jackson
Strayer University
BUS475
May 1, 2014
Instructor:

The De Beers Company is one of the wealthiest companies in the world. De Beers leads and dominates the diamond industry in diamond mining, diamond trading, and industrial diamond manufacturing. In 1871 a South African man named Cecil Rhodes created De Beers. Rhodes rented water pumps to miners then invested his profits by buying up small mining operations. In 2011 the De Beers Group sold their remaining stake to Anglo American for $5.1 billion in cash. (DeMarco, 2011). Before the sale the diamond company was owned by the Oppenheimer family. Now Anglo American own 85 percent of De Beers making them the primary stockholder while the Republic of Botswana owns the remaining 15 percent of the company.
Mining diamonds involves a lot of factors that can effect a company’s external environment. In order for De Beers to operate it has to account for things such as: local and foreign governments, globalization and trade, the ethics of business and labor, the effect on the environment, the perception of society, and the importance of new technology. In the case of the De Beers Diamond Company the two most important factors to the organization’s external environment are globalization and trade, and the perception of society.
Salient Stakeholders
When producing a product as fragile such as diamonds, a company needs many factors to come in place. In actuality a diamond is just a shiny rock found in the earth. A lot of people play a major role in insuring the value of the diamond. Three groups that have important stakes in De Beer Diamond Company are the stockholders, governments, and customers.
One of the key stakeholders for the De Beers Company was the stockholders. In most companies the most important part of business is making a profit. The stockholders in the De Beers Company had a large influence on the diamond industry and made De Beers a monopoly. These stockholders do a great job planning on how to keep the company making big profits. This gives these stockholders lots of control. De Beers has done a great job expanding their markets and making sure those places have high demand for their product. In an article on Telegraph.co.uk, Josephine Moulds states De Beer’s “ sales in the Middle East, India and Asia drove pre-tax profits up 74% to $1 billion in the first half (Moulds, 2011).
The governments in the diamond industry have a lot of control what the companies can do. When mining diamonds many of land and resources are used. Governments have to take the interest of their people and also take into account what impact the diamond industry has on the local environment. In the country of Angola diamond mining has had a huge impact. Brilliantearth.com states “irresponsible diamond mining has caused soil erosion, led to deforestation, and forced local populations to relocate” (Brilliant Earth, n.d.). Governments also have to regulate labor laws for their country. In some countries diamonds are mined by small children in unsafe conditions. These responsibilities fall under the local government to protect the land from these mining companies. Local governments can write laws and regulations require diamond mining companies to take extra precautions in order to operate. This could require the diamond company to decide is it worth it to follow these regulations or find a cheaper place to mind for diamonds. Governments can also influence diamond companies into backroom payoffs to avoid regulations and sanctions.
In the Diamond industry no group is more important than the customers buying the product. A diamond is really just a rock found in the ground and only worth what someone is willing to pay for them. The value of the diamond on the customer has plays a big role on the De Beers Company. In order to keep the value of the diamond up De Beers invests in many advertisements and promotion to keep the appeal of the diamond. Throughout the years diamond distributors have produced ads campaigning that diamonds are connected with showing your love or wealth. Ads claiming things like diamonds are a women’s best friend help keep the demand for the stones high and valuable.
Stakeholder Influence
In the diamond industry, companies have had a lot of control over the amount of diamonds out on the market for sale. This has given diamond companies some control over the supply and demand factor of diamonds. However, the stakeholders have lots of influence on the success of a diamond company. Stakeholders associated with diamond companies have the ability to: change laws and regulations; influence better working conditions and demand; and change operations and worker pay. All of these factors will influence the financial performance of an organization such as De Beers.
The governments have control over what laws and regulations diamond companies go by when operating in their jurisdiction. This could have an effect on a company financially. For example, in some countries there are no laws against child labor. This allows companies to operate and receive raw materials at a cheap cost, increasing their profit. Governments or politicians could also ask for kick backs or payment under the table for even allowing a company to operate in their jurisdiction.
The customers also hold a big influence on the performance of De Beer’s finances. The people who purchase diamonds decide what they are willing to pay for the stone. Wealthy people use diamonds as a show of status in most cases. Diamonds are very expensive so people who have normal incomes decide not to make that purchase diamond companies rely on the wealthy to make those purchases. If the wealthy or people with disposable incomes decide that diamonds hold no significant value a company like De Beers could collapse financially. Also customers can influence a company to become more socially responsible. People who feel diamond mining could have a negative effect on the environment could force companies to make changes. These changes could lead to more expensive labor or change in location for a company like De Beers. This could lead to an increase in overhead cost.
The workers and employees of De Beers themselves have influence over finances also. Employees and labor unions could request increases in salary and also demand better working conditions. For example, unions can ask for an increase of wages and working conditions that will cut into a company’s operating cost.
Controversial Social Responsibility Concern
For many years human rights groups have been fighting the issue of conflict diamonds and their effects in the Third World Nations. Conflict diamonds or blood diamonds are traded illegally to fund conflict in war-torn areas such as central and western Africa. (Armstrong, 2011). Local governments in these countries are in constant conflict with rebel forces that are funded by the sale of these diamonds. Not only do thousands of people in these countries suffer from this violence, many men, women, and children are forced into slave labor by these forces to extract diamonds. In 2006 there was a movie starring Leonardo DiCaprio and Dijmon Hounsou depicting the horrors of the conflict diamond crisis. This led to more heighten awareness of the issue. For a company like De Beers this was an issue that needed to be addressed.
Stakeholder Plan of Action
In addressing the issue of conflict diamonds, many groups can have power to take some form of action. However, I believe the stakeholder group that would be the most influential would be the general public. I believe through social media and activism this issue could be moved up the ladder of important issues. In order to increase awareness a plan that includes the other stakeholders such as the community, media, environmental groups, governments, and customers will be involved.
The first part of this plan is using the popularity factor of the social media world to gain the awareness of the issue. I believe in the world today the general public with the help of social media can bring lots of attention to issues quickly. For example, the protest during the Arab Spring and Occupy Wall Street Movement helped change in political power for some of those nations. Mass protest around the world would lead to the next step in the plan which is influencing the media.
Today’s 24 hour news cycle would work great in this case of influencing people to take action in the conflict diamond crisis. The media would increase the voices that are needed to influence the next stakeholder group in the plan which is the governments. With the issue of conflict diamonds expanding to multiple countries many governments would need to be involved. An easy target to include in this outline would be organizations like the United Nations and other human rights groups. These groups would more than likely lead to the necessary action to address the controversial issue. The U.N. could send in forces to combat forces who utilize the conflict diamonds. Also world trade organizations can issue sanctions to governments allowing these types of actions. Sanctions could also be held against certain diamond companies themselves if they don’t apply to new laws or regulations.
Challenges for Action
Throughout time many social change issues have faced lots of obstruction from different things. For example, the civil rights movement had some push back from state governments and some of the general public. In the case of getting a coalition to address conflict diamonds three potential issues may involve the media, customers, and governments.
In many news organizations the lead story is always the most attention getting story of the moment. News stations and news publications are very conscious of ratings and sales. The ratings and sales are what drive the news. If a news organization fails to grab the viewer’s attention with a certain issue they will move on to the next story. This could be a potential challenge for the media being a part of the coalition. The media can easily burry the story of the conflict diamond issue, leading to it being more of a less concern to the public. In order to address this issue I would advise the media to connect the conflict diamond issue with other issues. For example, point out the corruption associated with blood diamonds and make a story of the governments and politicians who may be involved. Stories like these can grab ratings and keep the issue in the news.
Another challenge would be the customers. Some customers do not care how their product is manufactured or produced. This leads to the continuation of issue. There have been many organizations throughout the years making customers more aware of the certain products they buy. I would use their tactics to address this challenge. For example, animal rights organizations such as People for the Ethical Treatment of Animals (PETA) have used ads and promotions to show customers the cruelty used in the production of the products they purchase. For this cause I would contact human rights organizations to help make the conflict diamond issue aware to customers.
Finally the biggest challenge to the coalition would be the governments. Governments hold power and can be influenced good or bad into making decisions. Corruption would be a major challenge. In some cases a diamond company or local mob/gangs would a large amount of influence over government officials or political leaders. Overcoming this issue would be difficult in a third world environment. However, to overcome this obstacle would be the power of the general public. For example, the mass protest of the Arab Spring was crucial in the over through political leaders such as Mubarak and Muammar Gaddafi. The power of the general public would be needed the change of these governments.

References
Armstrong, P. (2011, December 5). What are 'conflict diamonds?' - CNN.com. Retrieved February 14, 2014, from http://www.cnn.com/2011/12/05/world/africa/conflict-diamonds-explainer/
Brilliant Earth (n.d.). Blood Diamonds - Environmental Impact in Sierra Leone, Angola, Africa. Retrieved February 2, 2014, from http://www.brilliantearth.com/blood-diamond-environmental-impact/
DeMarco, A. (2011, November 4). De Beers Sells Out to Anglo American for $5.1 Billion - Forbes. Retrieved February 2, 2014, from http://www.forbes.com/sites/anthonydemarco/2011/11/04/de-beers-sells-out-to-anglo-american-for-5-1-billion/
Epstein, E. (1982, February 1). Have You Ever Tried to Sell a Diamond? - Edward Jay Epstein - The Atlantic. Retrieved February 2, 2014, from http://www.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/304575/
Moulds, J. (2011, July 26). Diamond producer De Beers sees profits jump 74pc - Telegraph. Retrieved February 2, 2014, from http://www.telegraph.co.uk/finance/newsbysector/industry/mining/8663847/Diamond-producer-De-Beers-sees-profits-jump-74pc.html