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De Beers Multi face upted Strategy Shift A diamond may be forever, as De Beers famous advertising slogan cont quits, save is the aforementioned(prenominal) true of a credit line model? That was the question face Gareth Penny, managing director of De Beers, in the late 1990s, when the famed diamond reliance found itself beset by a series of events that pull round forced it to examine and then retool its business strategy. Since the caller-out was founded in 1888, De Beers followed a strategy of supply control. In appendix to mining its own diamonds, it bought diamonds from other producers and had what it called the central sell organization, chesty some 90% of the worlds diamonds. Its tight control over such(prenominal) a vast amount of supply enabled De Beers to keep prices risque for a commodity that is neither particularly scarce nor useful. If a rival offered diamonds on the commercialise outside of De Beers central selling organization, De Beers would just flood the market with similar stones, thus eliminating every determine power the competitor might offer.

By the end of the 1990s, the business model of controlling supply and managing how much of its account went to market at any time was no eagle-eyed-term effective: naked as a jaybird sources of diamonds were discovered in sufficient mensuration that they could be sell competitively outside of De Beers central selling organization. Demand for diamonds was drop at a time when quest for other opulence goods was increasing. Brand-conscious consumers viewed the stones as anonymous commodities, and the prec ious stones, long marketed as an emblem of ! eternal love, became tainted by the musical phrase channel diamonds and came to symbolize the ill-gotten gains of rogue governments. Patricia OConnell is Management editor computer program for BusinessWeek.com.If you want to get a full essay, order it on our website: OrderCustomPaper.com

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