1. An Analysis of Porter’s Five
Forces Framework in Diamond
Industry
Kriti Gupta
Roll No. 1062
Sem III

2. Porter Five Forces Analysis
• Porter five forces analysis is a framework to
analyse level of competition within an
industry and business strategy development.
• They consist of those forces close to a
company that affect its ability to serve its
customers and make a profit.
• Porter’s five forces include- three forces from
“horizontal ‘ competition and two forces from
‘vertical’ competition.

4. The Diamond Industry
• India is the biggest consumer in the world when it
comes to rough diamonds.
• India is the largest diamond cutting and polishing
center in the world, it enjoys 60% value share for
diamond cutting and polishing.
• In and , the nation’s imports of diamonds rough were
worth approximately $11 billion while the export of
polished diamonds were priced at about $28 billion.
• Indian Diamond Industry currently constitutes about
15% of Rs. 900 crores approx. of the market and is
growing at the rate of 40%.

7. Developments in the Diamond
Industry
• India has recently emerged as world’s third-largest
market for diamond jewelry.
• The annual sales is of $8.5 billion, about 12%
of global demand, surpassing japan, the
European Union and Gulf region.
• Demand for all kinds of jewelry is rising at 19%
per year since 2005.
• Diamonds’ share of Indian jewelry market has
grown from 24% in 2005 to 27% in 2011.

9. Trends in Diamond Industry
• The jewelry retail environment is large and
diverse, with more than 300,000 stores, ranging
from tiny storefronts in Mumbai’s Zaveri Bazar to
lavish specialty stores in stylish shopping malls.
• The retail landscape is highly fragmented, and
about 95% of purchases are from independent
local boutiques.
• Family-owned shops remain a key part of the
ecosystem, as Indian consumers are highly loyal
to their local jewelers, which their families in
many cases have patronized for generations.

11. Organised Retailers
• Gitanjali and Tanishq are leading the
transformation of the retail landscape .
• Gitanjali’s market coverage, with about 1,100
outlets, is second to none, while Tanishq tops all
comers in brand recognition and sales.
• Many other chains are spreading across multiple
regions of the country, with particular focus on
Tier-2 and Tier-3 cities such as Coimbatore,
Nagpur and Vadodara. With relatively sparse
store coverage in such regions, chain retailers will
have ample room for growth for years to come.

12. Porter’s Five Forces
Analysis

13. Threat of New Entrants
• The cartel like character of the diamond industry
had created a barrier to entry, making it
impossible for new entrants into the industry.
• The changing trend in the industry has also made
it possible for mid-tier or junior companies to
come on stream.
• In fact to
• enable them have a stronger hold in the industry,
the past few years has seen the merging and
• acquisition between these mid-tier companies.

14. Bargaining Power of Suppliers
• Entrance of new rivals comes with its own
share of problem – oversupply.
• This has led to buying up and stockpiling to
prevent the huge flood of supply in the market
and as a result, increase supplier bargaining
power.

15. Bargaining Power of Buyers
• The structure of the diamond industry had never
given buyers the bargaining power they might
have enjoyed in other industries until the global
economic crisis hit the diamond industry, causing
a fall in demand, which invariably meant
oversupply and reduction in price.
• The effect of this created low supply of diiamonds
and now with increasing demand of diamond in
new markets like China, the diamond industry is
seeing a shift from dmand-control to supply-control.

16. Threat of Substitute
• For the diamond industry, modern technology poses a new threat
as it has made the production of synthetic diamonds a reality.
• It pose a serious threat to natural diamond industry as it could-
1. Destroy the carefully constructed public perception of the
diamond as a product of nature and symbol of purity
2. Conquer at least a part of the market due to their cheap price
3. Undermine the market for natural diamonds if their quality were
similar to the real ones
4. Due to the fact that they are laboratorial grown, they cannot be
classified as conflict diamond
5. They satisfy the issue of environmental sustainability, as they do
not involve mining.

17. Industry Rivalry
• The major competition is amongst the
established brands like Tanishq and Gitanjali.
• Also, the consumer pay more reliance on the
unorganised sector jewelers which form the
major part of the diamond sales in India.
• This is also a major threat in the Diamond
industry for the organised sector.

18. Thank You!