Debeers case analysis

De beers case study questions

In , the De Beers model changed, due to factors such as the decision by producers in Russia, Canada and Australia, to distribute diamonds outside of the De Beers channel, thus effectively ending the monopoly. Rhodes was concerned about the breakup of the new monopoly, stating to shareholders in that: Our only risk is the sudden discovery of new mines, which human nature will work recklessly to the detriment of us all. The other players in the diamond industry, mentioned above, benefit from this perception as well, so it should be relatively simple to gain their cooperation in this matter. Due to the development in laboratory technology, synthetic diamonds were able to be used for industrial purposes. The company used several methods to exercise this control over the market: Firstly, it convinced independent producers to join its single channel monopoly, it flooded the market with diamonds similar to those of producers who refused to join the cartel, and lastly, it purchased and stockpiled diamonds produced by other manufacturers in order to control prices through supply. Introduction Few names are more famous or notorious in the diamond business than De Beers. By leveraging our relationships with other diamond mine owners, distributors, wholesalers, and retailers, we can work together to convince U. What is the deadweight loss under monopoly? In order to implement this, we need to conduct some consumer surveys to support the fact that consumers are pleased with stable diamond prices and present these facts to U. These funds then underwrote their respective armed conflicts in Sierra Leone, Liberia, and the Congo.

Some of the countries in Africa that are currently suffering from violent wars could greatly benefit from their diamond assets if helped by De Beers. The other items are also important, however solutions to these problems are out of the scope of this document.

Assume DeBeers is operating as a monopoly. Beforediamonds had been rare, but when massive discoveries were found in South Africa, the rock was on the verge of losing its value. We need to convince the U.

De beers monopoly

Few companies in any industry have cornered the global market in their space than De Beers. Exhibit 2 References Burns, Jennifer L. Instead, the mine started selling to a pair of independent dealers named Bernard and Ernest Oppenheimer, thereby weakening the De Beers cartel. In addition to creating more prestige around our brand of diamonds, we are also certifying that our diamonds do not come from the war torn rebel controlled mines of Africa. The other items are also important, however solutions to these problems are out of the scope of this document. Exhibit 1 PEST Analysis Items of high importance are marked with an upward arrow for strong positive forces and a downward arrow for strong negative forces. If you were to do exercise 1 in for every marginal change in price, you would find the marginal revenue curve. In , the De Beers model changed, due to factors such as the decision by producers in Russia, Canada and Australia, to distribute diamonds outside of the De Beers channel, thus effectively ending the monopoly. By leveraging our relationships with other diamond mine owners, distributors, wholesalers, and retailers, we can work together to convince U. How much market power does de beers have? This single distribution channel has been at the core of our ability to regulate the diamond market and without this means of distribution, De Beers and the entire diamond industry would greatly suffer. These synthetic diamonds also came in colors which truly cut into the natural diamond market. De beers pays for large amounts of advertising. It targets women and focuses on showing women how to give men diamonds. Due to war in western Africa, diamonds are beginning to flow from the war torn fields of Sierra Leone and Angola, and in Russia, mines are being controlled locally as opposed to in collaboration with De Beers.

Late one night in Frances Gerety, a young copywriter at the N. We will also pledge to the U.

de beers diamond dilemma swot analysis

Alrosa began to take the market share from DeBeers after their Soviet contracts became void. The real change was inwhen the company hired N. The company used several methods to exercise this control over the market: Firstly, it convinced independent producers to join its single channel monopoly, it flooded the market with diamonds similar to those of producers who refused to join the cartel, and lastly, it purchased and stockpiled diamonds produced by other manufacturers in order to control prices through supply.

De Beers Consolidated Mines was formed in by the merger of the companies of Barney Barnato and Cecil Rhodes, by which time the company was the sole owner of all diamond mining operations in the country. As market pressures have finally caught up, De Beers has had to face a number of obstacles to maintain their large share of the diamond market.

They own this unique niche and if they decided to enter the synthetic diamond market, it would hurt their branding. Socially, the perception of diamonds is that of a beautiful and rare stone that is a symbol of romance and of greed and has been treasured as such for centuries.

Making the diagnosis De Beers would be wise to continue to educate the public on the origination of their natural diamonds and how natural diamonds are much more precious than synthetic.

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