The Dhamani Jewels: Strategic Perspectives. Case Study.
CONTENTS
I. Introduction 3
II. Background 3
III. Alternatives 4
B. Difficulty in developing future strategy 4
C. Poor system of data-collection 5
D. Non-presence in the e-segment 5
IV. Proposed Solution 5
V. Recommendations 6
References 7
Introduction
The analyzed case study revealed that although by the standards of luxury jewelry standards Dhamani is a relatively young company, yet, provided that the company management maintains and improves its grasp on strategic planning and marketing, it has bright future. Thus, both the annual revenues, accrued by Dhamani, its market segmentation, location of its stores, and customers portfolio demonstrates that the firm is close to joining the ‘first league’ of the international jewelry companies, which is today dominated by Bvlgari, Cartier and several other internationally recognized brands (Bain & Company, 2014).
However, despite quick growth of the company and its strong positions on the Eastern jewelry markets, Dhamani remains a family-owned business (Applegate & Mazzanti, 2016). Many notable business analysts agree on the principle that the concepts of a family-owned business and supremacy on the upscale markets are rarely compatible (Sheehan, 2011). Maintaining supreme quality standards, as well as getting premium and even ‘royal’ customers, requires innovative and highly specialized approaches to marketing, brand positioning and corporate governance. In other words, transformation from the family owned business into a traditional corporation seems to be inevitable for Dhamani. Yet, with all due respect to the Dhamani brothers’ expertise and experience, the presence of professional and seasoned in the ‘luxury’ markets executives is becoming strikingly necessary.
In addition, whatever option for future expansion is chosen by Dhamani, fundamental developments of the company are impossible without raising extra capital. Thus, together with developing new approaches to marketing, the company’s managers should focus on gaining additional financial resources.
Background
Specifically, the case study also shows that Dhamani is exposed to several managerial and marketing vulnerabilities. In particular, the case materials demonstrated that the company’s decisions to open manufacturing units in Thailand and retail stores in the United Arab Emirates and Qatar were mainly the results of the firm’s managers ‘gut business instinct’. Specifically, Abu Dhabi and Dubai were chosen as the chief marketing destinations for the firm, because these cities acquired the reputation of luxuriant tour destinations. The managers of Dhamani became aware that the tourists in these cities willingly purchase jewelry, because the prices are considerably lower than in the traditional western markets (Applegate & Mazzanti, 2016). In other words, the case demonstrated that the company has not conducted any thorough analysis of the market.
Additionally, the case study shows that the company managers are emphatically discussing the possibility of launching a retail store in London (Applegate & Mazzanti, 2016). Their main assumption is that a store in London means membership in the elite league of the international jewelry manufacturers. Yet, the practice shows that its gross revenues and profits define successfulness of the company, not by the presence in specific geographical regions (Laudon & Traver, 2014; Sheehan, 2011). Focusing on alternative, but nonetheless profitable markets, especially in the countries with emergent economies (e.g. Brazil, Argentina, China or the SAR) appears to be a good alternative, which is for some reason ignored by Dhamani.
Moreover, the research showed that the biggest portion of the sold gemstones and other pieces of jewelry is within US$ 3,000 – 15,000 (Applegate & Mazzanti, 2016). Many potential customers for this category of Dhamani products reside in the developing countries, where the average buying capacity is on rise, but whose residents are not frequent visitors to the United Arab Emirates and other locations, where the company has retail presence. Assumedly, travelling to these countries simply for the sake of buying a piece of jewelry, or a gemstone, which price is comparable to the costs of trip there is not financially reasonable for such clients. Instead, they will buy from the Dhamani competitors in their home countries, even though the products of Dhamani may be better. Therefore, launching an internet-based platform for ordering stones and other products appears to be a justified approach.
Finally, any strategic growth option requires professional analysis and execution. Seemingly, because the brothers Dhamani managed to build such a large jewelry empire, they are very accomplished businesspersons. However, as discussed before, entering the ‘premier jewelry league’ requires fresh insights and innovativeness, especially in the rapidly evolving era of digital technology (Laudon & Traver, 2014).
Alternatives
Generally, the analysis revealed that there are four areas, where Dhamani business may experience performance difficulties in the near future. Thus, the following alternatives may be useful for solving these issues.
The necessity of professional management
As discussed before, future growth of Dhamani business requires the presence of professional managers on the board. Yet, the Dhamani brothers are still young, and although they may understand that they lack some modern management wit, it is unlikely that they will yield the reins of the company to the hired executives. Therefore, the following alternatives appear reasonable:
Transforming the company into the corporation and hiring a professional, skilled and experienced CEO. Dhamani brothers will act as directors on the board, and each CEO decisions will require their approval.
The company may preserve its current organizational structure, but professional managers should be invited into the board of directors. Becoming an internationally recognized luxury brand, while remaining a family-owned, and, most importantly, family-managed business is hardly possible. Expertise and experience of the professional managers will help to professional deficiencies of the brothers Dhamani.
Difficulty in developing future strategy
The case study demonstrated that the company founders have some disagreements in relation to further expansion of the company. While some of the executives are arguing that the firm is ready for immediate launch of the next retail center in London, others contend that opening a store in Singapore is necessary to make an additional test of the company capabilities and image. In order to solve these difficulties, the following alternatives appear to be effective:
The management should consider exploring the markets, where no other internationally recognized brands are present, such as Argentina, The Republic of South Africa, Brazil, and other dynamically developing countries (Bain & Company, 2014).
The management should attempt working with the luxury hotels in London first. If the project is successful, then the company may start considering opening a store there. The preferences of the London customers should be thoroughly tested, before a full-scale expansion can be launched.
Poor system of data-collection
The practice demonstrates that when the company faced different ‘inflection points’ the managers mainly relied on their experience, business wit and assumptions, rather than collecting real data and analyzing it. Fortunately, the projects were comparatively successful. However, this approach to decision-making can no longer be used, because huge investments require reliable data background (Sheehan, 2011). The following options are open for Dhamani to overcome this difficulty:
The company can establish its own, in-house department of marketing research. This approach is advantageous, because it enables the company owners to be in full control of all research operations, and, thus, be assured in the validity of all findings
The company can hire an independent business consulting company, which specializes in marketing research and data interpretation. This method is good, because it allows the company to rely on third-party expertise and experience, as well as it spares financial resources of the company.
Non-presence in the e-segment
Digital commerce is a booming trend nowadays, which is expected to become the dominant method of doing business during the next decades (Laudon & Traver, 2014). Thus, the company has two options in this regard:
Dhamani can open its web-based platform for selling diamonds, jewelry and other products. This approach will help the firm to increase its market share in the medium segment. At the same time, this approach may be negative for the cultivated ‘exceptionalism’ of the company’s products. VIP and royal clients may start thinking that if the company products are openly available to the general public, then Dhamani is no longer a top-notch manufacturer.
On other hand, Dhamani can preserve its traditional approaches to marketing, but the chances are high that the VIP and royal consumers may change their perceptions about e-buying. In any case, additional data is required to make a definite, statistically backed conclusion.
Proposed Solution
In the light of the problems and the alternatives mentioned above, the following course of actions appears to be the most effective for Dhamani.
Firstly, seasoned professional in jewelry marketing and management should definitely join the company management board. The case study illustratively shows that the brothers Dhamani are experiencing serious challenges in reaching agreement regarding particular strategic planning decisions. Therefore, in order to minimize the impacts of potentially wrong decisions, the company should hire outside experts, who faced similar situations in the past, and who are aware of the potential consequences.
Secondly, the presence of a professional manager, experienced in the jewelry industry, on board of the company will help the company in solving other difficulties. In particular, a specialist, who has prior experience in working for Cartier, Harry Winston, Bvlgari or Tiffani, is familiar with the most effective methods of solving similar problems.
The method of ‘poaching’ qualified executives is a popular approach to strategic management, especially, when the market contestants are trying to compete with the well-established brands (Joshi, Liao & Martocchio, 2011). The practice shows that the companies in finance, IT, automotive and other industries entice successful executives from their competitors, promising higher compensation packages and benefits.
Practically, hiring an independent consultant has also extra benefits. Not only such professional will contribute his/her relevant industry experience in strategic planning, but also he may have new ideas, which are omitted by the Dhamani brothers.
Recommendations
If the brothers Dhamani approves this idea, and decide to allow someone not from the family to join the board of directors, then the critical task is finding this professional. Obviously, this headhunting target should have the following characteristics:
He/she should have at least 10+ years with one of the top-5 jewelry brands as a C-ranked officer, desirably in marketing and strategic planning units.
This professional should have successful record of market penetration projects.
This professional should be actively looking for personal and professional change.
The employment contract of this professional with his past employer should not contain a ‘non-competition’ clause, banning him from working with a competitor.
At the same time, assuming the fact that Dhamani is a family-owned business, where relations between the brothers’ families and their father are preponderant over the commercial interests of the company, it is important to ensure that such a decision is unanimous and all family stakeholders approve the idea of extending board membership. In other words, before any recruiting initiatives are started, the company founders should understand what is more important for them – strategic growth and active development in the ‘elite’ league of the international jewelry brands, or tight family control over the business affairs. Specifically, understanding that surviving in highly competitive markets, while preserving family control and management is difficult, if possible altogether, is essential.
References
Applegate, L. & Mazzanti, L. (2016). Dhamani jewels: Becoming a global luxury brand. Harvard Business School.
Bain & Company. (2014). The global diamond report 2014. Web. Retrieved from http://www.bain.com/Images/BAIN_REPORT_The_Global_Diamond_Report_2014.pdf
Joshi, A., Liao, H., & Martocchio, J. (2011). Research in personnel and human resources management. Bingley, U.K.: Emerald.
Laudon, K. & Traver, C. (2014). E-commerce : business, technology, society. Upper Saddle River, New Jersey: Pearson.
Sheehan, B. (2011). Marketing management. Lausanne, Switzerland: AVA Pub.
