Case Study On Diamond Retailing

The companies that are competing in this industry are Blue Nile, Zales, Tiffany 's, Online Jewelry Stores (Diamonds.com, etc…), and Local Jewelers. The Rivalry among the competing sellers is strong because there are many competitors and they are basically offering the same product. Also, the costs buyers experience when switching brands are low.

Diamonds have been known to man since ancient times and with new technology of the 21st century many diamonds rich areas have been identified and supply chain been established in line with those reserves.

As a dealer in jewelry products, Tiffany & Co. gets its raw materials from mines and various suppliers of the minerals the company needs. It is reported that, owing to its concern for the environment and welfare of miners, Tiffany & Co. gets all its diamonds from mines that are and from credible suppliers (Hower, n.p). This is in line with the company’s corporate social responsibility. Tiffany & Co. gets much of its raw materials directly from the countries where the mines are produced. For instance, the company gets its diamond from diamond-producing countries such as South Africa, Botswana, Australia, Canada, Russia, Namibia, Russia, and Sierra Leone (Annual Report, n.p).

Even though Strategies #1 & #2 do hold the potential for greater growth in the short-term, Diamond must focus on Strategy #3 to keep its long-term vision alive. Once the company is in a better place financially, has increased its market share with its new products, and has shown it can translate these objectives into greater shareholder value, Diamond should then focus its efforts on potential acquisitions. Until then, the company should keep with its current business model and grow a more solid foundation on which to build.

This essay discusses the statement “the price of diamonds is too high”; it will analyze the diamond cartel and its history in order to determine the validity of this statement. Various microeconomic theories will be discussed and explained, all of which are involved in the diamond cartel. The Oxford Dictionary defines a cartel as “an association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition” [Oxford Dictionaries; unknown]. Therefore, the diamond cartel consists of a group of manufacturers/suppliers of diamonds who come together in order to restrict supply and as a result increase the price of diamonds. This essay will focus, mainly; on

A more significant threat for the company has been the rise of the synthetic diamond market where essentially real diamonds are manufactured within plants and don’t have to undergo millions of years of formation underground in addition to grueling extraction processes. These diamonds possess a lot of quality while being sold at a fraction of the prices of natural diamonds and have seen a rise in demand and in the total diamond market share. While DeBeers has played down the

Situation: The De Beers name has always been synonymous with diamonds due largely impart to the fact that in order for anyone to deal in the diamond business, at some point they will have to deal with at least one of our subsidiary companies, retailers or distributors. De Beers owns 43% of the worlds’ market shares of rough diamonds, but this is way down from the 80% we were at in the 80’s. The diamond demand is at the mercy of an extremely volatile market which is largely based off of the consumer’s disposable income and with the current recession and cutbacks in consumer spending, it is important that we find a way to maintain a competitive hold on the market.

Diamonds are relatively price inelastic, are durable and easily stored. Therefore the market can be easily cartelised and the rewards from controlling the supply through a cartel are significant. (Kelliher, n.d.) A cartel is a collusion of investors with the same goal that that come together to protect their interests. Once formed, cartels are able to set prices to the satisfaction of the members and in this way competition is avoided. Cartels are at their most effective when there is a barrier to entry and a monopoly power in place. (Cartels, n.d.)

Exhibit 5 portrays the different diamond production characteristics in terms of quality produced by different countries. Gems account for 25% of total diamond production. The Soviet Union demonstrates that they are a major producer by producing 26% of world production, but De Beer still has a significant amount of 46% of total gem production, where they own South Africa, Botswana and Namibia mines. Exhibit 6 summarized the evolution of the CSO’s aver list price since 1949 and indicates that over the years, while real prices sustained a rate that was relatively close to the baseline level, but nominal prices of diamonds increased dramatically starting from 1973 and onwards.

“A Diamond is forever.” Or is it really? For about 80 years, the De Beers diamond company has pulled off one of the best marketing schemes a company could wish for. Indeed, how much would you estimate your diamond engagement ring wrapped around your finger? A fair amount would be the right thing to say. However, the compressed carbon stone is worth less than anyone would imagine, which is why De Beers has been so successful, which, thanks to a good use of marketing as well as strategy, has led the entire planet to believe that diamonds are rare, luxurious and expensive stones. They are the leader in their field, as De Beers’ diamond output from their own activities is about 40% of the world’s total rough diamonds. The key to their success

JEM has taken the effort to design an e-commerce site that is in line with their brand mission and personality. Each piece has information about where it was sourced, price, certificate, details and information about the recyclable packaging. There are no misunderstandings; there is only clarity and consistency of a sustainable brand that is taking efforts to make a global difference while building prosperous and healthy relationships within jewelry sourcing. Figure 34 shows how the product is represented. JEM has gone above and beyond to stand out among its competitors and fill a void in luxury jewelry that is often unspoken:

Besides that, it also can consist of the negative impact because it contains many of the customers that they are very familiar and comfortable with buying the jewelry from the online jewelry retailers. Next, the workers in the company will not feel very happy because they also will lose some of the potential markets to the brick-and-mortar

It is not easy to getting started in the jewelry industry and a new company will have to take into consideration three important factors: capital, strong supplier relationships, and reputation. Jewelry companies have high capital requirements in order for them to compete in this industry. For new companies coming into this industry it may prove hard to obtain the necessary capital requirements to sustain the business.

Through good times and bad, diamonds have held a special place in the minds of most Western consumers. Diamonds appeal to both their emotional and pragmatic sides,

The gems and jewellery sector has been one of the fastest-growing sectors in India in the past few years. The sector has gained global popularity because of its talented craftsmen, its superior practices in cutting and polishing fine diamonds and precious stones, and its cost-efficiencies. The sector has been vital to the Indian economy as well; during 2008-09, the sector accounted for around 13% of the country’s total exports.