Question

As Tom Montgomery, how would you convince the De Beers Executive Committee to launch IIDV as a standalone business unit?

Answer 1

would not because there are too many unknown factors. Although the business is planning to ramp up business over the next three years to generate gross margins of 20% to 25%, they do not expect IIDV to be a huge profit generator. The company plans to break even quickly, but coming from an overall economic viewpoint, what happens if the economy has a downturn? IIDV is not set up and does not have the backbone to overcome a large economic regression. There are lots of risks when dealing with expensive products because if consumers do not have the money to purchase the product, the business will go under. During times of economic distress, consumers are not going to be willing to spend lots of money on a diamond. The plan is to achieve higher selling process through re-cutting improvements which will allow the company to pay consumers even more. This is a great idea, but this is a future endeavor and until the company breaks even, I would hold off. Learning the unknowns and finding ways to achieve capital to expand business is a good starting point in starting to launch IIDV as a standalone business unit. Until these details are fulfilled, I believe IIDV should stay as a ‘prototype-based program’ due to the many risks and opportunities can be accounted for.