Write a 10 page essay on DeBeers Diamond Dilemma.
Starting off as a public company incorporated in 1988, DeBeers was the undisputed market leader in the diamond industry for more than a century (Goldschein, 2011). As far as 1990 the company was selling off 80% of the world diamond supply and enjoying the benefits of its “Diamonds are forever” campaign which had catapulted the mineral to luxury status (Epstein, 1982, p1). The company had maintained its leadership through a calculated strategy of controlling the world diamond supply. pressurizing its suppliers and undertaking a series of price fixing actions that had inflated the value of diamonds globally. While these questionably illegal activities had not won the company many fans it was true that their expertise, business mechanism and network within the diamond industry was highly effective and efficient
At the turn of the century the diamond industry went through a number of changes brought upon by political, social and economic factors. These new trends successfully threatened DeBeer’s monopoly on the Diamond trade. by 2007 the company was only producing 40% of the global supply and selling off 45% (Johannesburg and Windhoek, 2004). This decrease in production and sales had followed a radical change in the direction of the company’s mode of operations. The focus now was not on market share but on the value to be made from a strong branded demand. Diamond demand had resulted in a price increase of almost 30% from 1996-2005 (McAdams & Reavis, 2008, p3) and DeBeers was determined to gain from it.
Among the many changes that the diamond industry has undergone in recent years, the major impact has been brought by the ones described below. The factors pose as serious challenges to DeBeers but at the same time also point towards new future opportunities if the company is responsive in a timely manner.
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