Case Study

Case study: diamond industry

Table of Contents

About the company3

Growth history4

Industry scenario5

Alteration in industry structure6

De beers in the diamond industry7

Source: Bain & company7

Crucial incidents; the response of De beers8

The advent of synthetic diamonds10

Key strategic decisions and critical analysis10

Possible future strategic actions12

Compare and contrast13

References14

Case study: diamond industry

About the company

'De beers' is the leading name in selling natural and mined diamonds to the world. It is a British organization that creates finest quality diamonds for jewellery. The company positions itself with eternity of diamond, that is, it says 'a diamond is forever'. De beers evolved in the year 1888. Today it dominates the production, mining, trading and manufacture of natural diamond across the globe. It works in all fields of diamond mining and extraction. It currently conducts mining in Botswana, Namibia, Canada and South Africa. The company now operates across the globe and hits huge revenues. In the year 2009, it hit revenue of $6.8 billion.

The company was initiated by an idea of Cecil Rhodes, who used to rent water pumps to the miners in diamond rush of 1980. Rhodes started to invest his earning profits into small claims of miners. Later he was financed by Rothschild family, and expanded the business. De beers have been the global trademark for producing finest diamonds. The company is well-known for its monopolistic approach, and often tries to control the diamond pricing. The company has mining ventures in Botswana, Namibia, Canada and South Africa with their functioning governments. Extraction is done on 50-50 profit sharing basis. The company has been extremely successful before the advent of synthetic and manmade diamond (industry review, 2007, pp. 3-7).

At the present day, the global diamond industry worth $ 30 billion. The annual sales of the exotic item signify the living of an individual. The target market for the industry pertains to females, as well as, commercial buyers. The diamond prices have shown stabilization ever since their discovery, whereas, De beers monopolizes the diamond market. At the advent of 20th century, de beers got strong hold of the diamond market and manufactured almost 45% of the global diamond production, whereas, supplied almost 80% of the diamond. The company has branded and promoted the use of natural diamonds, and claims to discover and produce finest quality of natural diamonds for the globe. It played around by controlling the demand and supply of the diamond, that is, it acquires most diamond that is sold by the miners through competing on purchases, whereas, it grabs the global supply by effective marketing strategies including advertising campaigns and retails outlets.

Growth history

The company was initiated with its functioning and operations in the year 1888. It operated in the extraction of diamonds from mines, and owned huge claims in mining. In the year 1914, the rival called 'culllinan' was overtaken by the company. The company has a self-controlled monopoly over the entire global diamond market, since 1927. It controlled the price by controlling the supply and demand ...