...Case study De Beers- An Ethical Idealism “At De Beers there has always been a clear recognition that, while our primary purpose as a business shapes what it is that we do, it is how we work that defines who we are.” -Nicky Oppenheimer Executive Chairman, De Beers Introduction For generations, diamonds have been marketed as tokens of power and love. For some however, diamonds have a more utilitarian appeal. Easily concealed, immensely valuable and largely untraceable, stones from rebel-held mines have raised billions of dollars on world markets to finance revolution in Angola, Sierra Leone and the Democratic Republic of Congo (DRC). For years these "conflict diamonds" have encourage rebel leaders to arm and equip their armies in violation of UN weapons and financial sanctions. Diamond monopoly De Beers is notable for its monopolistic practices throughout the 20th century, whereby it used its dominant position to control the international diamond market. The company used several techniques to exercise this manipulation over the market: Firstly, it persuade 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 price control through supply. In 2000, the De Beers forced to change the model, due to certain unavoidable factors such as the decision by producers in Russia,...
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...Strayer University BUS475 May 1, 2014 Instructor: The De Beers Company is one of the wealthiest companies in the world. De Beers leads and dominates the diamond industry in diamond mining, diamond trading, and industrial diamond manufacturing. In 1871 a South African man named Cecil Rhodes created De Beers. Rhodes rented water pumps to miners then invested his profits by buying up small mining operations. In 2011 the De Beers Group sold their remaining stake to Anglo American for $5.1 billion in cash. (DeMarco, 2011). Before the sale the diamond company was owned by the Oppenheimer family. Now Anglo American own 85 percent of De Beers making them the primary stockholder while the Republic of Botswana owns the remaining 15 percent of the company. Mining diamonds involves a lot of factors that can effect a company’s external environment. In order for De Beers to operate it has to account for things such as: local and foreign governments, globalization and trade, the ethics of business and labor, the effect on the environment, the perception of society, and the importance of new technology. In the case of the De Beers Diamond Company the two most important factors to the organization’s external environment are globalization and trade, and the perception of society. Salient Stakeholders When producing a product as fragile such as diamonds, a company needs many factors to come in place. In actuality a diamond is just a shiny rock found in the earth. A lot of people...
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...Forever: De Beers at the Millennium – Study Questions 1. Who writes the rules of the international diamond market? How are they enforced? * De Beers and the other diamond companies of the their time and specifically the Central Selling Organization (CSO) and the government partners where they are mining (?) * Their sorting process and the which went through many different grades that measured the 4 Cs: carat, color, clarity, and cuttability (?) 2. How has De Beers structured its relationship with the U.S. diamond dealers and the U.S. government? Are these relationships sustainable? * Most expensive stones were cut and polished in New York. The U.S. was the biggest market for De Beers. The Gemological Institute of America (GIA), the largest, most respected nonprofit institute in its field, had developed the widely-used D-Z color scale and the Flawless-I3 clarity scale for polished diamonds. De Beers had irked U.S. authorities by failing to appear, in 1994, in a suite by the Department of Justice alleging price-fixing in industrial diamonds in which it was a co-defendant along with General Electric. And socially, the diamond industry began to be criticized for dealing in “conflict diamonds” from African countries. (?) * These relationships cannot be sustainable (?) 3. What should the U.S. government do about the flow of diamonds from Angola, the Congo and Sierra Leone? What should De Beers do? * Continue the fight started by the...
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...adverse effect of diamonds on the people of Africa. It also addresses the real price of diamonds which it believes to be the lives of millions of Africans. Additionally, it examines the response from the United Nations and question if enough is being done to crack done on the sale of blood diamonds. The famous phrase “Diamonds are Forever” is known to most people all over the world. What most people do not know is where most of these diamonds are coming from and how they came to become perfect gestures of love and romance. Looking at a clear cut diamond ring, it is hard to imagine the possibility of thousands of innocent people being murdered, tortured, and forced to mine for these stones; unfortunately that is the case in Africa. Diamonds in West Africa have been used for the last 30 years to fund rebel groups and their desire to take control of their nations by violence and intimidation. In such conflicted regions of the world, diamonds lose their connotation of beauty and elegance and are stained with blood. In this paper, I will discuss the many ways in which “conflict diamond” has brought nothing but poverty, suffering and war to the West African people. I will further explain what world organizations such as the United Nation have done in order to counteract the adverse effects of the conflict diamond on the African community, and the extent to which such efforts have been successful. Conflict diamonds are diamonds illegally traded to fund conflict in war-torn...
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...A selection of rough diamonds from Voorspoed Mine ACTION ETHICS Protecting THE INTEGRITY OF DIAMONDS 33 ETHICS OUR COMMITMENT TO MEETING THE highest ethical standards IS FOUNDED ON OUR aspiration TO LIVE UP TO THE unique qualities OF DIAMONDS. THE BEHAVIOUR OF OUR EMPLOYEES, THE ROBUSTNESS OF OUR COMPLIANCE SYSTEMS and our commitment to transparency maintain stakeholder confidence in our business and play a key role in upholding ‘diamond equity’. De Beers aims to meet or exceed all applicable statutory requirements, as well as international standards on ethical issues ranging from conflict diamonds to anti-corruption. We also work with our business partners to embed ethical standards throughout the diamond value chain. 34 Report to Society 2010 Ethics The ethical provenance of diamonds is an important element of both their financial and emotional value – what we call ‘diamond equity’. To ensure that the journey from mine to finger meets the highest ethical standards, we have a mandatory, third party assured, code of ethical business conduct – the Best Practice Principles Assurance Programme (BPPs) – that applies not only to our own operations, but also to our Sightholders, contractors and suppliers. HIGHLIGHTS • All diamonds sold by De Beers are 100% conflict free. Compliance with the Kimberley Process and System of Warranties for 2010 was verified by Société Générale de Surveillance (p38) To support ethical standards more broadly we work with sectoral initiatives...
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...Conflict Diamonds in the early 2000s, a common concern emerged among members of an oddly matched group : the diamond industry, the united nations, several goverments, and human rights campaigners. All wished to end the trade in conflict diamonds, gemstonesthat are mined or stolen by rebels fighting internationally recognized goverments. The $6 billion a year diamond industryhas long been dominated by the De Beers Corporation. Founded in south Africa by Cecil Rhodes in the 1880, the beers strategy has been to own as many diamond mine as possible and to sell its rough (uncut) stones exclusively to a small group of preferred dealers at prices set by the company. To maintain its control over supply, De Beers operated buying offices all over the world, “sweeping up” diamonds produced in mines operated by others. The result, for many years, was a virtual monopoly. De Beers has also been a shrewd marketer, pouring millions of dollars over the years into advertising. Using the slogan “a diamond is forever”, the company cultivated and association between diamonds and romance. The company first promoted solitaire engagement rings, later, it shifted its marketing focus to the so called eternity ring, a band of multiple smaller stones aimed at older married couples. In the early 1990s, event in several diamond-rich African nations converged to tarnish the gem’s carefully cultivated image of love and purity. During the cold war, many partisans in civil conflicts in Africa received funding...
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...your chosen organization, and two (2) key factors in the organization’s external environment that can affect its success. Provide explanation to support the rationale. De Beers Diamond Company is an industry that currently produces $13 billion worth of rough diamonds each year, leading to the employment of 10 million people globally from mining to retailing. 70% of rough diamonds are sold for industrial purposes with the remaining 30% “gem quality” being distributed to experts for cutting, polishing and jewelry manufacturing (Stein, 2001). The global jewelry market has increased three-fold in the last 25 years and is currently worth $72 billion each year. Jewelry diamonds are unjustifiably expensive given that they are not actually scarce. Upon the discovery of other diamond reserves globally, De Beers set up a subsidiary called the Central Selling Organization (CSO), responsible for buying the production for all mines worldwide then selling the produce to dealers in return for a percentage fee (10 – 20 %) from producers (Stein, 2001). The CSO was able to maintain illusion of scarcity by deciding the quantity of diamonds to be supplied to the world market and in turn, allowing individual producers to produce a certain percentage of that amount (De Beers Group, 2012). The CSO then sold batches of rough diamonds to selected dealers at their exclusive sightings. The CSO were able to dictate inflated prices to dealers, as if dealers tried to negotiate on price, they were not invited...
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...Organizations The De Beers Diamond Corporation Dr. Beth Kane Business 475: Business and Society January 28, 2014 The De Beers Diamond Corporation is a multinational diamond mining, hops, trading, and manufacturing business. In this paper the nature, structure, and types of product this corporation is involved well be analyzed. As with every large corporation stakeholders salient stakeholders are involved with the shaping of the companies direction, three key stakeholders relationships and roles will be evaluated. There are five key points for primary stakeholders wielding influence inside the corporations mainframe and the evidence of this behavior at De Beers. During the building and development of most businesses there are social issues that arise to challenge the structure and integrity of the corporation, De Beers faced this as well. This paper will detail the issue in which De Beers faced as well as the corporate and social changes that were wrought from the situation. This paper will also cover a hypothetical situation were a first person narrative of the roles of forming a stakeholder coalition. During this hypothetical situation the leader role will explore three (3) potential holdups for the the forming of a stakeholder coalition. The De Beers Diamond Corporation is a privately owned multinational conglomerate established in 1888 by Cecil Rhodes. Rhodes invested money made from renting water pumps to diamond miners into buying...
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...以前的情况和遇到的问题： In early 1990s, DeBeers ruled the diamond industry (while at one time, it produced 45% of the world’s rough diamond and sold 80% of total supply). Its market dominance enabled its Central Selling Orgainzation to choose whom to sell to, how much to sell, and at what price.(掌控钻石产业，掌握供应链，决定买家，销售量已经价格。) First hit: Collapse of the Soviet Union（苏联解体，重要合同终止）. Second hit: Australian mine terminated contract with DeBeers（合同终止）. Finally: Emergence of Canada as a producer(加拿大大量的矿区都不受DEBEERS控制). Additionally: Antitrust Act prohibited DeBeers’ sales in United States（因为触犯反托拉斯法被禁止在美国进行商业活动）. Publically: A public relations nightmare(公关危机，DEBEERS为了掌控供应链，曾经支持反政府武装) Strategy focus: Supply-side. Controlling large portion of the diamond supply chain.（以往的战略更注重供应端） PEST ANALYSIS Political: () Before the Kimberley treaty, DeBeers was used by some factions to have an indirect control of some countries in conflict area. With time past, DeBeers bit by bit lose his absolutely control position. More and more diamond mining were founded in the world. The output of rough diamonds got a significant decline from 90% to 10%. On one hand, de beers don’t have enough money to buy all of the mining, on the other hand, most of other country’s government prevents de beers to buy their diamond mining, in order to protect local economic. Economic: DeBeers makes alliance with Russia, exploring diamonds with Tanzania, Namibia and so on. De beers put their manufacture factory in some country which...
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...CLA-6 Assignment #3 – Ethics Ethics is the study of the general nature of morals and of the specific moral choices made by individuals. Ethnics govern our behavior everyday of our lives. There are many different factors that shape our ethical world view such as family, religion, experience, and authority. Everyone does not have the same concept of ethics, everyone have his or her own ideas of right and wrong. Since ethics are different for each person, there would be different paths on the process of making a ethical decision. Beyond personal ethics, there are ethical systems are defined by religious systems and by our governing system. In our country we follow a “Judeo-Christian ethnics” system. That type of system lays out such behaviors such as respecting other’s property, honoring parents, and being kind to others. So overall, as society we try to adhere to such guidelines. But even with an ethical system like that, there are still laws in place by our government to ensure everyone is treated ethically. Even though each person follows a set of ethical standards, ethics works effectively when there are consequences to our actions. Knowing that there are consequences, people will choose different ethical choices than if there is no consequences. There are many laws and rules established by our government just to make sure we all are following ethical standards. By placing forms of punishments, our ethical decision making is always influenced to avoid punishment. Religions...
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...DeBeers “A Diamond is Forever” Prepared April 16, 2012 For decades, De Beers has been the preeminent name in diamonds. Thanks to a stockpile of the world's rough diamond supply, indelible marketing schemes and even negotiations with foreign governments for their diamonds, De Beers has been the most important name in one of the world's most lucrative businesses for almost a century. This paper will review the billion dollar rise and fall of a monopoly that has crushed competitors and cash-strapped governments since the 1800s. Diamonds became a symbol of love thanks to De Beers, which is fitting, since De Beers became what it is today because of a love story: the love of money. In the beginning, the diamond trade took place mostly in India and Brazil. With the discovery of diamonds in South Africa, the trade simultaneously took off and became much less profitable. Up until the mid-1800s, diamonds were a rarity and could be seen only on the hand of a monarch. But the diamond rush that began in South Africa in the second half of the 19th century flooded the market with diamonds, killing demand. It would take some ingenious plotting and advertising to keep the diamond's reputation as intrinsically valuable and desirable, which is where De Beers comes in (Goldschein, 2011). Company History and Overview De Beers got its start when English-born businessman Cecil Rhodes, broke into the diamond business in South Africa by renting water pumps to miners before buying diamond fields...
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...Conflict Diamonds and the Kimberly Process What this case is about was that ion the 2000’s, a common concern emerged among members of the diamond industry, the United Nations, several governments and Human Rights campaigners who all wished to end the trade in Conflict Diamonds which were gemstones that were being mined or stolen by rebels fighting internationally recognized governments. To end this, they embarked an unusual collaboration called the Kimberly Process. The Kimberly Process was a scheme for tracking diamonds all the way from the mine to the jewelry shop, so that consumers could be assured that the gems they were buying were conflict free. 1. Conflict Diamonds are diamonds that are illegally traded to fund conflicts. In recent times, conflicts in some of the poorest parts of Africa have often focused on rebels controlling their country’s natural resources and assets, for example, oil, wood, minerals and also diamonds. They are diamonds that had originated from areas controlled by forces or factions opposed to legitimate and internationally recognized governments, and are used to fund military action in opposition to those governments. Conflict diamonds came to the attention of the world media during the extremely brutal conflict in Sierra Leone in the 1990s. The groups that were benefited from the trade in conflict diamonds were the combatants, including the Revolutionary United Front. Diamonds played a key role in obtaining funds to provide these...
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...Report on Argyle Diamonds and the Diamond Industry 1 INTRODUCTION India was the only known source of diamonds before the eighteenth century when diamonds were discovered in Brazil. The modern diamond industry was born in 1867 when diamonds were discovered in the Kimberley region of South Africa. The De Beers mining company was formed and they controlled 80-90 per cent of the rough diamonds entering the diamond market. The De Beers share of the diamond market fell in the 1990’s when the Soviet Union moved to a free market economy as Russian diamond mining companies were selling their diamonds on the open market. The Central selling Organisation (CSO) controlled by De Beers is responsible for regulating the price of diamonds on the market and marketing a large percentage of the world’s diamonds. The CSO protected the dominance of the diamond cartel but this monopoly was challenged by Argyle Diamonds when they refused to renew their marketing contract with De Beers. Argyle has been characterised by low value coloured diamonds, however their highly sought after pink diamonds has successfully differentiated their products from other diamonds the in the market (Vinciullo, Annear and Disbury, Not dated). 1.1 AIM OF THE ASSIGNMENT The aim of the assignment is to research and analyse the diamond industry and to evaluate Argyle Diamonds’ strategic position in the diamond industry. 1.2 OBJECTIVES OF THE ASIGNMENT • To research and evaluate competition in the precious...
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...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 1888, De Beers followed a strategy of supply control. In addition to mining its own diamonds, it bought diamonds from other producers and had what it called the "central selling organization," controlling some 90% of the world's diamonds. 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. By the end of the 1990s, the business model of controlling supply and managing how much of its inventory went to market at any time was no longer effective: New sources of diamonds were discovered in sufficient quantity that they could be sold competitively outside of De Beers' central selling organization. Demand for...
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...Conflict Diamonds and the Kimberly Process Conflict diamonds are gemstones that are mined or stolen by rebels fighting internationally recognized governments. The groups that benefited from the trade of conflict diamonds were the combatants, including the Revolutionary United Front. Diamond companies such as De Beers were hurt by the conflict diamonds. Three sectors that were concerned with the problem of conflict diamonds were the rebels, the diamond companies, and human rights organizations such as the United Nations. The rebels were interested making money. Diamond companies obviously wanted to keep their images pure. Human rights organizations wanted to keep people safe. Thus the interest was joined together and the Kimberly Process was developed. I do not think any of these three sectors would have acted unilaterally because they would not have agreed on everything. The Human Rights Organizations and the diamond companies would have been able to work together. They had the same goals in mind and were seeking the same end to the situation. The Kimberly Process will be successful to a certain point. As with anything that is put into place, there are those that will find the weaknesses and the ways to get around them. De Beers will continue to support and push for the sealed, numbered tamper proof container. The rebels will find ways to smuggle diamonds around the countries that are being monitored and into them illegally. Human Rights Organizations are...
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