De Beers

DE BEERS

MARKET

Supply chain:

Suppliers->CSO->Cutters->Dealers->Jewelry manufactures->Retailers->Costumers

PRODUCT

* Diamonds: gems, near-gems, industrial diamonds

* Deposited in mines

* Costly

SUPPLIERS

* Various countries

* The economies of those countries are strictly dependent on diamonds sell

* Africa/Russia/Australia

* Exclusively agreements

CUSTOMERS

* 1) Sightholders

* Selected, rich

* Big buyers ($100,000-$10,000,000)

* Relations severely ruled

* 2) Cutting and polishing industries (NY/Tel Aviv/Antwerp- specialized and expensive)

* 3) Final consumers: men engaged or married/women

ENTRY BARRIERS

* Strong contracts with suppliers and other players of producing process

* Almost monopoly (Strong presence of De Beers)

* CSO

1. What functions does the CSO perform as a global intermediary? How do these functions help expand the economic pie in the diamond industry?

* It’s De Beers’ Central Selling Organization

* It buys diamonds from every part of the world (Russia; Zaire; South Africa; Australia; Botswana; Angola etc.)

* Holds the stockpile of diamonds

* CSO also sorts rough diamond into more than 3,000 different grades and values each stone by its list price. It also stores diamonds in its headquarters at Two Charterhouse Street in London. For this reason it engages in a higly controlled selling routine called a sight and it prepare also parcels for sightholders

* It sells rough diamonds to selected buyers through a selling routine called “sight”

* It makes market surveys (1 every 3 years)

* It monitors diamond inventories at each stage of distribution in order to adjust the quantity and mix of diamonds to release.

It helped De Beers to dominate the 65% of the market.

In this way CSO simplify the distribution aspect, because there is only CSO that takes care of distribution,

CSO contributed in expanding the economic pie...