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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. It is the reason the company spends $180 million a year worldwide to advertise cut diamonds--a product it doesn't even sell. There are very few companies ... you may struggle to find even one, that has been the leader of its industry for its entire - Miner and buyer of 70-90% of the world's rough diamonds - Buys rough diamonds directly from the diamond mine owners - Cutters sell the cut diamonds to the dealers who in turn sell them to the jewelry stores. - And still De Beers spends $180m a year worldwide to advertise cut diamonds--a product it doesn't even sell!!! Inefficiencies created by monopolies and Antitrust regulators in the U.S. - Other commodity prices (e.g. gold, silver, grains) fluctuate greatly in response to economic conditions 20th century, De Beers sold 85% to 90% of the diamonds worldwide 2. Rockefeller's Standard Oil and Gates' Microsoft may have briefly approached this kind of dominance, but the length and extent of De Beers' supremacy is unprecedented. Artificially keep diamond prices stable by matching its supply to world demand. De Beers acts like the theory of monopoly predicts: - It is almost the sole seller of diamonds (sells almost 90% of world production). - Sells a commodity with no close substitutes (created this illusion by advertising) - It restricts output and it responds to changes in market demand. When demand contracts De Beers cut back on its sales and vice versa. GOAL: S=D for diamonds at a high Price B) HISTORY(CREATION OF THE DE BEERS EMPIRE) Before the 19th century, diamonds were exceptionally rare -small quantities in India and Brazil - no diamond mines were discovered Now: Diamonds/Mines Republic of South Africa Sub-Saharan countries Siberia Australia Canada's NWT But De Beers still manages to control the world Market and still manages to make us believe that diamonds are Rare!!! Mid 1860s-1890s 1869: First diamond mines in the colonies of southern Africadrastically increased the number of stones available. 1870: Many diamond hunters bought mines. Cecil Rhodes bought the rights to two mines on the farm of Nicolas and Diedrick DeBeer in the Cape Colony (now South Africa). Diamond hunters realized that their price depended on their scarcity. Had no other alternative than to merge their interests into a single entity - control the mines' production
The power of a government-created monopoly over the market depends on the existence of close substitute products. If people view emeralds, rubies and sapphires as quite worthy substitutes diamonds over the market power of a relatively limited. In this case, any attempt to achieve increase of diamond prices will lead to the fact that consumers will switch to the acquisition of other precious stones. But if people believe that these stones are considerably inferior diamonds, the company is able to significantly affect the market price of the latter.
In Nicky Oppenheimer's speech, he states that diamonds are a valuable luxury desired by many and DeBeers strives to preserve their value. Furthermore, he claimed that it is essential for DeBeers to "be able to clear the market of all rough diamond production". Other companies who deal with this luxury will be motivated by evil greed, so DeBeers has the duty to ensure that these types of companies will not gain power. From the discovery of diamonds in certain countries in Africa, DeBeers has allowed their economies to drastically grow. Oppenheimer also brings up an interesting point when he compares how similar the diamond and oil industries are with their regulations standards, which lessens the negative views on DeBeers' brand, since they
Women buying diamonds for themselves, for the joy of wearing them invested in jewelry in case of emergency.
A beautiful precious diamond can last forever, but what most people do not know is that a majority of our diamonds come from Africa. The civil wars in Africa over diamonds began around 1961 and ended in 2003. Conflict diamonds were rampant and it would be difficult to say if any jewelry sold prior to 2003 was conflict free. Conflict diamonds are diamonds that have been mined and were controlled by African rebels. The rebels would use the profits from selling conflict diamonds to fund illegal activity and to purchase more weapons for their armies. While rebels had control of the diamond mines they killed approximately 4 million people and countless families were displaced.
It’s hard to imagine that a mineral could be fueling wars and funding corrupt governments. This mineral can be smuggled undetected across countries in a coat pocket, then be sold for vast amounts of money. This mineral is used in power tools, parts of x-ray machines, and microchips but mostly jewelry. Once considered the ultimate symbol of love, the diamond has a darker story. "Blood" diamonds or "conflict" diamonds are those mined, polished, or traded in areas of the world where the rule of law does not exist. They often originate in war-torn countries like Liberia, Sierra Leone, Angola, and Côte d'Ivoire were rebels use these gems to fund genocide or other questionable objectives. Even with a system known as the Kimberly process which tracks diamonds to prevent trade of these illicit gems, infractions continue as the process is seriously flawed. The continuation of the blood diamond trade is inhuman, and unethical, and in order to cease this illicit trade further action to redefine a conflict diamond, as well as reform to the diamond certification prosess is nessasary.
Deep within African mines, elusive diamonds lay enveloped in the Earth’s crust. Possessing much influence, beauty, and tension, nature’s hardest known substance causes parallel occurrences of unity and destruction on opposite sides of the globe. Diamonds, derived from the Greek word "adamas", meaning invincible, are formed deep within the mantle, and are composed entirely from carbon. Moreover, only under tremendous amounts of heat and pressure can diamonds form into their preliminary crystal state. In fact, diamonds are formed approximately 150km- 200km below the surface and at radical temperatures ranging from 900-1300 C°. When these extremes meet, carbon atoms are forced together creating diamond crystals. Yet how do these gems, ranking a ten on Moh’s hardness scale, impact the individual lives of millions of people besides coaxing a squeal out of brides-to-be? These colorless, yellow, brown, green, blue, reddish, pink, grey and black minerals are gorgeous in their cut state, but how are these otherwise dull gems recognized and harvested? Furthermore, how and why is bloodshed and violence caused over diamonds in Africa, the supplier of approximately 65% of the world’s diamonds? (Bertoni) The environmental, social, and economic impact of harvesting, transporting, and processing diamonds is crucial because contrary to popular belief, much blood has been spilled over first-world “bling”.
The beer market has turned itself into an oligopoly in the past 100 years. Where there once were hundreds of brewers across America, there now are just a few major players in the industry. But what is an oligopoly? As defined by Ayers & Collinge in the textbook Microeconomics, “an oligopoly is characterized by multiple firms, one or more of which will produce a significant portion of industry output”(microeconomics). Oligopolies exist where a few large firms producing a homogeneous or differentiated product dominate a market. There must be few enough firms so that they are mutually interdependent, which means they must consider rival’s reactions in response to decisions about prices, output, and advertising. The causes of the beer oligopoly are as followed: 1. Economies of scale exist, which indicate that a few large firms would be more efficient that many small ones. 2. A high degree of capital investment required. 3. Other barriers to entry may exist like patents, control of raw materials, large advertising budgets, and traditional brand loyalty.
Na Tie. “If You want long life, never touch the diamond.” DOUBAN. 22 May 2007.
Santarossa, B. (2004, January 13). Diamonds: Adding lustre to the Canadian economy. Retrieved November 06, 2017, from https://www.statcan.gc.ca/pub/11-621-m/11-621-m2004008-eng.htm
Diamonds are supposed to be symbols of love, and commitment, and joyful new beginnings, but for many people in diamond rich countries, these sparkling stones are more a curse than a blessing. Too often, the world’s diamond mines produce not only diamonds, but also civil wars, violence, worker exploitation, environmental degradation, and unspeakable human suffering; these diamonds are commonly referred to as “conflict diamonds” or “blood diamonds”. The negative effects of diamond mining have been reduced in the last decade due to public scrutiny and public as wells private action to erase all conflict diamonds from the market; yet the issue persists. Diamonds have been used as resources to fuel civil wars and violence around the Africa since the early 1990’s if not earlier. “’They are a form of currency,’ remarked Mark Dick Bockstael of the Diamond High Council in Antwerp.
Deutsche Brauerei has been a family owned and operated corporation for 12 generations, which has created a high level of focus and control. Each generation has kept the management and operations processes relatively simple, centered on brewing practices and quality. Deutsche Brauerei’s rapid growth in recent years can be attributed to several factors. First and foremost, the company’s success is centered on the product itself, which has won numerous quality awards and is quite popular in Germany. Another contributing factor to the recent growth may have been a bit inadvertent. The purchase of new equipment in 1994, which was necessary as a result of a fire that destroyed the old equipment, allowed the company to increase brewing capacity and efficiency. Finally, Deutsche Brauerei’s decision to enter the Ukranian market in 1998 contributed significantly to the rapid growth. The collapse of the U.S.S.R. brought market reforms, and Deutsche Brauerei jumped on the opportunity to enter the fragmented beer industry, capture the large population and capitalize on the prime location in Europe. Lukas Schweitzer was savvy enough to hire local expert Oleg Pinchuk away from a competitor as the marketing manager, and Oleg was instrumental in building the business in Ukraine by securing accounts and implementing the field warehousing to support distributors. Deutsche’s beer was hugely popular in the Ukraine almost immediately, and volume sales more than offset the depreciation of the Ukrainian currency. Sales in Ukraine accounted for 28% of Deutsche’s total sales, and skyrocketed from 4,262 euros in 1998 to 25,847 euros in 2001.
iii. India dominates the world’s cut and polished diamonds (CPD) market. In value terms, the country accounts for approximately 55 percent of global polished diamond market and nearly 9 percent of the jewellery market. According to GJEPC's provisional estimate, cut and polished diamonds registered 19.06 percent growth in exports at US$ 7.11 mn.
In “ “Blood Diamonds” and Africa’s Armed Conflicts in the Post – Cold War Era, “ Orogun (2004) said that diamonds are referring as “clean stones”. This article explains about the black market is really happening in African. I am using this article to support how the black market of diamond trades is still not regulated, and they defined it as “licit” trade.
Number Three: The De Beers Centenary Diamond In third place on our list is the De Beers Centenary Diamond, which was revealed to the public in 1991. This lovely diamond is externally flawless and is 273.85 carats. It's also the Premier Mine's third-largest diamond ever produced. The De Beers Centenary Diamond will set you back a whopping 100 million dollars.
When a suppliers' costs changes for a given output, the supply curve shifts in the same direction. For example, assume that someone invents a better way of growing corn so that the cost of corn that can be grown for a given quantity will decrease. Basically producers will be willing to supply more corn at every price and this shifts the supply curve outward, an increase in supply. This increase in supply...