April 11, 2013
DeBeers Consolidated Mines Ltd. 1st POV
Situation: DeBeers Consolidated Mines Limited (DBCM) occupies a major presence in the diamond industry. Discoveries of diamonds in the late 1800s were pioneered in South Africa, in which DeBeers held a heavy monopoly over. Since then, they have cultivated an impressive track record and leadership position. The Central Selling Organization (CSO) controls and regulates the flow and sale of rough diamonds, and was acquired by DeBeers in the 1930s. Due to a stable economy both locally and internationally, DBCM was the world’s largest producer and distributor of diamonds in late 1998. However, just before the turn of the century, globalization and developments in international markets had affected all industries of business. This enlarged economy attracted and enabled emerging and junior companies to increase mining competition. Demand for this area of commerce became subject to volatility due to market expansion, in addition to the fact that continued existence of such a market was solely linked to disposable consumer income.
Problem: The problem at hand concerns the degree of control over rough diamonds and the industry. With increasing market placeholder and pressures from emerging competitors and the attention brought to regulating environmental impact of diamond mines, DeBeers needed to secure their place in the industry and do it without losing significant margins of profit or resources. By 1999, DeBeers Consolidated had a notorious name and major domination of the rough diamond market, with over half of the world’s rough diamonds mined by DBCM, several joint ventures with non-competitors, unparalleled knowledge and assets, and control of over 70 percent of all diamond sales worldwide. DeBeers needed to differentiate themselves from new entrants as well as establish a secure route of long-term control over their precious commodity.
Cause: As previously mentioned, the turn of the century...