De Beers - Rise and Fall - Diamonds Case
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Transcript of De Beers - Rise and Fall - Diamonds Case
![Page 1: De Beers - Rise and Fall - Diamonds Case](https://reader036.fdocuments.in/reader036/viewer/2022081818/5a64b7587f8b9a2c5d8b46eb/html5/thumbnails/1.jpg)
De Beers
The Rise & Fall
![Page 2: De Beers - Rise and Fall - Diamonds Case](https://reader036.fdocuments.in/reader036/viewer/2022081818/5a64b7587f8b9a2c5d8b46eb/html5/thumbnails/2.jpg)
• De Beers was founded in 1888 by Cecil Rhodes
•
• De Beers group of companies was leading in the following manufacturing sectors:-
1. Diamond exploration
2. Diamond Mining
3. Diamond Retail
4. Diamond Trading
5. Indrustrial Diamond
• Historically had therefore owned 85% of the Diamond share Market and hence known for influencing supply and demand to control prices.
History
![Page 3: De Beers - Rise and Fall - Diamonds Case](https://reader036.fdocuments.in/reader036/viewer/2022081818/5a64b7587f8b9a2c5d8b46eb/html5/thumbnails/3.jpg)
Controlling Demand
• Generated the myth that supply was scarce when in reality they had collected rough diamonds from majority sellers and stockpiled them to maintain high prices.
• Marketing Campaign – “A Diamond is Forever” : A Campaign used to convince people not to sell or buy used diamonds
• Regulated and manipulated their supply to maintain the demand.
• Had Government support in major African nations like Namibia, South Africa as they delivered big and stable revenues for the government.
• This monopoly helped in demand and supply control process.
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Losing Control of Demand
• 1991: Dissolution of Soviet Union.
Weakened partnership
• 1996: Argyle mine pulls out of cartel.
Weakened their monopoly and broke the cartel
• 1998: Commencement of production from Canada’s Ekati mine
Further weakened their monopoly in controlling supply & prices
• 2001: Class Action suits filed.
Created legal barriers to do business in America
• 2003: Commencement of production from Canada’s Ekati mine.
• The Graph below shows how these factors affected its market share.
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Graph depicting depreciation of De Beers’ Market Share
By the end of the 1990’s, De Beers’ market share had fallen from as high as 90% in the 1980’s to less than 60%.
![Page 6: De Beers - Rise and Fall - Diamonds Case](https://reader036.fdocuments.in/reader036/viewer/2022081818/5a64b7587f8b9a2c5d8b46eb/html5/thumbnails/6.jpg)
Other Reasons
• Other Big Miners developed their own supply of Diamonds
• Extra-ordinary Public relations pressure after the news De Beers sells conflict Diamonds.(purchase of these diamonds from Africa was resulting funding of the rebel armies there.)
• Demands for synthetic diamonds increased
• Israeli diamond retailer “Lev Leviev” supplied stones directly at a lower price to his own polishers.