De beers diamond monopoly case study

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The De Beers Diamond Company

The De Beers Diamond Company Free Essay Example

In: Business and Management. De Beers' Multifaceted Strategy Shift Faced with such challenges as new sources of competition and suspicion about conflict diamonds, Gareth Penny had to rethink the basics A diamond may be forever, as De Beers' famous advertising slogan contends, but is the same true of a business model? That was the question facing Gareth Penny, managing director of De Beers, in the late 19'90s, when the famed diamond cartel found itself beset by a series of events that ultimately forced it to examine and then retool its business strategy. Since the company was founded in , De Beers followed a strategy of supply control. Its tight control over such a vast amount of supply enabled De Beers to keep prices high for a commodity that is neither particularly scarce nor useful. If a competitor offered diamonds on the market outside of De Beers' central selling organization, De Beers would simply flood the market with similar stones, thus eliminating any pricing power the competitor might offer.

De Beers Case Study Solution

De Beers : A Monopoly in the Diamond Industry De Beers advertising slogan "A Diamond Is Forever" has been the center of its effort to establish the stone as the only appropriate gem to symbolize lifetime love and commitment. The more ad money spent, the more diamonds people buy. And when people buy diamonds , De Beers profits.
Search this site. March 20, In the late 19th century a massive diamond discovery in South Africa prompted a diamond rush. Businessman Cecil Rhodes bought as many diamond-mining claims as he could and his accumulation of properties eventually became De Beers Consolidated Mines Limited. De Beers maintained a hold on what was a relatively small industry at the time by expanding the business outside of mining with a focus on monopolizing diamond distribution.
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