Debeers 's Diamond Dilemm A Case Study

For centuries, diamonds have been regarded as one of the most valuable commodities in the world and the industry has evolved into billions of dollars. At the top, De Beers dominated the entire industry worldwide, from exploration to retail selling. However, it has a reputation of a monopolist, where it influences supply and demand. The two critical factors that De Beers carefully maintained throughout the century to remain in monopoly was to create the illusion of the scarcity of the diamonds and to keep the prices high. Realizing the benefits of the cooperation and the dangers of the oversupply, most

Bluenail Company article , this company is a littel bit simmlar to the Dee Beers story purpose. It is to educate the readers and the buiers about the quality of Diamonds and to pursuade them to buy, and convencing them by giving them the chance to know theier favoraite type of diamond and its color , the ring size chart of their fingers, and the unbeliveable

This essay supports the statement “The price of diamonds is too high”. Diamonds have always been presumed to be rare. They have been present in history as a symbol of wealth and luxury as they were so difficult to find. Nowadays diamonds are mined and are found all over the world but they are sold through a cartel. (Epstein 1982) A cartel limits the supply of a product in order to keep prices high and to limit competition. (South African Pocket Oxford Dictionary: 2002) This raises the question of whether diamonds are actually worth their price. This essay focuses on the origins and the basic theory behind the diamond cartel; the early operation of the cartel; De Beers’ strong market campaign; determining De Beers’ current

25. How did the De Beers cartel try to maintain control of the price in the diamond market? How was this control undermined? Briefly discuss.

The economic principals discussed in this article are mainly focused on the fact that until 2000, the diamond industry was a monopoly. A monopoly, as defined by our book, has one firm, a unique product, and the entry into the market is blocked. The owner of the diamond industry, Cecil Rhodes, created this by buying all the available diamond mines. He started in 1870’s by buying the mines found in South Africa. As time went on,

The De Beers Group of Companies established itself in the diamond industry in the late 1800’s and it was only a matter of time until De Beers owned virtually every diamond mine in South Africa. Diamond distributors joined up with De Beers because of similar interests: they wanted to create a scarcity of diamonds, so that high prices would follow. Eventually, De Beers would establish exclusive contracts with suppliers and buyers, making it impossible to deal with diamonds outside of De Beers. For the remainder of the 20th century, the business model was the same: A subsidiary of De Beers would buy the diamonds and De Beers would determine the amount of diamonds they wanted to sell, and at what prices. In turn, De Beers funneled all of the

The story of these infamous diamonds all started with a fifteen year old who found a diamond in his father 's arm. The diamond business started in 1935 when “De Beers” took all control over dining prospects in Sierra Leone. De Beers are a group of companies has a main role in the exploration of diamonds, as well as diamond mining, diamond retail, diamond trading, and industrial diamond manufacturing sectors.This group was founded in 1888, and they are responsible for the problems Sierra Leone is facing today. These diamonds can be found in volcanic pipes. Diamonds are a pure form of carbon in a transparent state. Diamonds have always been a sign of wealth. Historically kings and queens were known for wearing these. Over time many people began lusting over them.

government of a country" (Campbell 127). "With this definition of "conflict diamonds", DeBeers has no only proved itself with linguistic maneuverability but trade maneuverability as well. It is no secret that "the industry, after all, is bigger than the company alone and in fact is critical to the economies of at least four nations." (Campbell 127) DeBeers has taken steps to ensure that some of their diamonds were conflict free with the demand for action so apparent. DeBeers first step in the right direction resulted in a devastating blow to earnings, a net loss

Diamonds are often associated with strength and permanence. However, the permanent beauty is not all there is as the damage done to the environment is severe and sometimes just as permanent. According to The Greener Diamond, the average size of the diamonds on engagement rings has increased from 0.30ct in 1920 to 1.25ct in today’s standards showing that the Canadian demand for larger diamonds has gone up. It was stated that for every carat of diamond mined, 1 750 tonnes of earth is removed through the use of machinery. Along with that, another 20 tonnes of mined waste are then leftover to great a gold ring for the diamond. Mined ores are injected with Cyanide, a poison, in order to dissolve the gold and silver from the rest of the ore and the

Sierra Leone is one of the poorest nations on earth second to last on the United Nations human development index. The first mine was established in the town of Kimberley by two farmers; the De Beers Brothers. (BloodDiamondsDocumentary) The De Beers sold diamonds at least ten times per year in London’s open market and controlled at least 90% of the world’s diamond production bringing in billions of dollars per year. The average person brings in about $220 per year income yet the nation remains rich in natural resources. (BloodDiamondsDocumentary) Places like Botswana, South Africa, Canada, and Russia are the largest diamond producing nations in the world with more than 20 tons produced per year and a revenue that equates to about 60 billion dollars per year with half of the merchandise being sold right here in the United States.

DeBeers’s was impacted by its decision to, “ditch the role of buyer of last resort,” measures and instead focus on its own stock and operations. The company had been stockpiling diamonds in a bid to control market prices which had seen its stock rise from $2.5 billion to $5 billion. The stockpile had to be bought at an inflated cost and heavily reduced their profitability especially as the resale value wasn’t as ideally high as the company needed it to be. At the same its stock price has fallen from $17 to $12 in the market due to its negative image in the press.

“The diamond industry provides significant revenues for market participants. In 1999, rough gem diamonds purchased at mine gate were valued by the Mining Journal at $7.3 billion. Diamonds sorted and polished were sold to jewelers for $14 billion. The value added by jewelers in the form of labor, gold, platinum and stones other than diamonds was estimated at $14 billion, bringing total production costs to some $28 billion. With a 100 percent retail margin, the value paid by consumers for diamond jewelry was estimated at $56 billion, of which almost half was sold in the United States. Most of the profit was made at the final stage in marketing the jewelry. An

Diamonds have been identified as being precious but expensive gems for many decades. Diamonds were extremely rare, only found in India and Brazil until the late nineteenth century (Vogelsang, 2005: 5). After the discovery of diamonds in South Africa, the diamond industry began to flourish. Diamonds then became very abundant and cheap to produce. In order for the value of diamonds to remain as high as they were during the phase in which they were still rare, a diamond cartel was introduced. A cartel is defined as a group of firms that gets together to make output and price decisions (Cartel Theory of Oligopoly, n.d.). Hence, the diamond cartel aimed to maintain high prices to maximise the profits of the suppliers by restricting the supply.

rough diamonds produced. The industry is controlled as a monopoly by the De Beers diamond company which operates from South Africa and London. The wholesale trade and cutting of diamonds is limited to only

Color. Clarity. Cut. Carat Weight: These four words are what jewelers in the industry use to determine the monetary value of a diamond. However in 1947 De Beers found a way to not only boost their sales but also make a psychological necessity out of this sparkly stone, and it all began with four vastly different words, “A Diamond Is Forever” (Frances Garety), and accompanied by phrases such as “Isn’t two months’ salary a small price to pay for something that lasts forever (N.W. Ayers)?