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Has The De Beer Diamond Lost I - College Essay

Has The De Beer Diamond Lost I

"And while the law [of competition] may be sometimes hard for the individual, it is best for the race, because it ensures the survival of the fittest in every department."
Since the 1930’s when Sir Ernest Oppenheimer established the Central Selling Organisation, De Beers Consolidated Mines have controlled the selling and marketing of approximately 80% of the world’s rough diamond production (Capon, 1998). However, in 1996, Australian company, Argyle, stunned the world by announcing that they would no longer market diamonds through De Beers C.S.O. Many economists predicted that Argyle wouldn’t be able to compete against the mammoth De Beers. Yet in the year to December 31, Argyle recorded ...

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over the quantity of goods or services available for sale and the price at which the items are sold (Butterworths Business .. Dictionary, 1997). De Beers Consolidated Mines Central Selling Organisation has had a monopoly on the selling of rough diamonds since the 1930’s.
A monopoly industry is characterised by having no close substitutes. Although there are substitutes for diamonds such as rubies, emeralds and cubic zirconias, many believe that there are no other gems that exhibit the same beauty of the diamond. Perhaps this belief was created out of De Beers advertising campaign, “A Diamond is Forever” (Capon, 1998, pg 6) which began in 1947. Whatever the reason that consumers want diamonds, and diamonds only, doesn’t matter. Consumers demand the real thing and will pay for the luxury.
The second factor which creates a monopoly market are barriers to enter the market. Common barriers to entry include licenses, patents, entry lags, economics of scale and control of inputs ...

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PAPER DETAILS

Added: 4/26/2004 05:49:55 PM
Category: Miscellaneous
Type: Premium Paper
Words: 1136
Pages: 5

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