Throughout this report I will attempt to identify the problems that De Beers are at present facing. I will then formulate a set of recommendations for action to facilitate them to move into the U.S. market by means of proposing a relaxation of U.S. antitrust laws with limitations on illicit diamonds, and in conclusion I will finish off with a number of implementation steps intended for the solutions that have been suggested.
This $400 million employs 760 people, working day and night.
De Beers is at present being faced with a quantity of new challenges that are making it essential for us to believe a change in the way that they do business. With new chaos in Western Africa, where illegal diamonds are starting to come from war torn villages, as well as other sources of diamonds are being discovered in Russia as well as Australia, it is obvious that they seriously need to start to move into the U.S. market.
Antitrust law permits the imposition of a maximum fine of $10 million, or twice the gain or loss caused by a price-fixing scheme. The indictment does not specify how much the scheme cost purchasers of industrial diamonds. (http://www.nytimes.com/2004/07/10/business/worldbusiness/10diamond.htmlex=1247112000&en=20aa08705cd558b8&ei=5090&partner=rssuserland)
A PEST analysis has been performed on the current situation facing De Beers. In the following section, I will focus on the most important problems identified in the PEST analysis for which we must find solutions and also on the most important positive forces that we must leverage to our advantage in order to maintain or gain market share. Please see Exhibit 1 for details on the PEST analysis and additional information on other issues we are facing and forces that might help or hinder our market share in the U.S.
The most important of the problems we are faced with are due to Political issues in the United States and elsewhere. Due to war in western Africa, diamonds are beginning to flow from the war torn fields of Sierra Leone and Angola, and in Russia, mines are being controlled locally as opposed to in collaboration with De Beers. These challenges alone pose a threat to the power that De Beers currently holds over the diamond industry. Due to these challenges, we initiated a branding campaign attempting to brand De Beers diamonds to the consumers. This campaign was cantered in the U.S., where "legally, the entire De Beers group - its officers, its operations, its marketing structure - was in violation of the U.S. antitrust law" .This prohibited De Beers from directly selling in the United States. Additionally, a political issue that we need to leverage to our advantage is the U.S. foreign policy towards helping to rebuild Africa. These political issues will be further addressed in the recommendations section.
Economically, there is an expected surge in diamond sales expected to occur in the U.S. this year. This emphasizes ...
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