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Diego Nicolini
Mr. Perosevic
BOH 3M
October 28, 2010
Diamonds
They’re forever
DeBeers, the largest diamond corporation in the world, began in 1871 in
South Africa. Up until the late 20th century, they held a monopoly in the diamond
market, holding over 80% of it. In order to intimidate competitors and maintain
their monopoly, they would buy out new diamond producers or they would simply
flood the diamond market, wait until the new producer ran out of business and then
pull back the diamond to raise their prices. This could be considered a form of
predatory pricing, which is illegal, as they would lower their prices until their
competitor left and then raised them by limiting the supply of diamonds, raising its
price. They were also accused of trading conflict diamonds, which are diamonds that
are extracted from a war zone or a diamond gained through violence.
When DeBeers released their “Diamonds are Forever” campaign, diamonds
became the luxury good that men and women alike could enjoy. Diamonds have
been used in many things since then but they can all be linked to the original
marketing campaign. Once DeBeers had its hands around the entire diamond
industry, they could only expand by having to do unethical things. Once they were at
the top of their game, they were an unstoppable force that nobody could try and
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compete with. That was up until the late nineties, now, their whole business model
has changed.
Today DeBeers only holds a 40% share of the diamond market. At the
beginning of the 21st century, the executives of the company realized that they could
no longer hold the monopoly as the diamond market had fallen to other luxury
goods. They were also not allowed to go into some countries as monopolists were
not allowed to produce there. They also went through a radical change, going from a
supply-controlled market, to one controlled by demand. They are also making more
money now, with only 40% of the market, than they did when they had 80% of it.
This change could be attributed to the unethical decisions made by the
company as a monopoly. Now that they have significantly cut their market share,
they are less likely to take conflict diamonds or mess around with the supply of
them. Originally, they would have had the classical view on corporate social
responsibility as they only tried to maximize their profits through whatever means
necessary. They have now switched to a more socioeconomic view as they seem to
care about how they do business and how ethical it is.
Because of the change that DeBeers has gone through, I would say that, while
they may do some undisclosed deals, they are definitely more ethical than they used
to be and this is solely due to the fact that they are no longer in charge of the entire
market. It is harder to be unethical when you don’t have as much power as you used
to. While the diamond market is still an oligopoly, it has become a lot less unethical
but some companies will still do whatever it takes to attain diamonds.
