Question

a recent bloomberg business week article reported that de beers (an international corporation that specializes in diamond exploration, diamond mining and diamond retail business), is lowring prices for the first time in years in reaction to an oversupply of polished gems. one might point towerds the impact of economic and technological macro environmental factors

Answer 1

Solution:

The lowering of prices by the company that is not known to do so because of oversupply of polished gems is the way of posing competition to the new entrant rival into the market. The company which has been operational for years and has been leading the pact in the industry will have to undergo certain changes to deal with the entry of new players and hence oversupply of the polished gems in the market. This will give the consumers enough options to choose from because of a high supply hence putting the power into the hands of buyers. HEnce, the market is now changing from seller's market to the buyer's market.

Thus, to tackle this situation it is necessary that the company comes up with a strategy to deal with this oversupply which can have adverse effects on the business of the cmpany. This is why the company is coming with a strategy to compete on price to tackle this situation. This will provide the consumers a choice to shop from their preferred retailer at a discounted price which has a potential to boost the sales because of price drop.

Hence, such situations arise because of the changes in the macro environment of the economy leading to signiicant changes in some of themarkets. Hence, the step taken by the company is appropriate for the given situation.