The Management of Global Trade Distribution - De Beers Essay

The Management of Global Trade Distribution - De Beers - Essay ExampleIt was equal to exert noncompetitive influence among suppliers in the diamond industry to sell their rough diamonds to De Beers channel which was thence the Central change brass or CSO which then enabled De Beers to control the global supply of diamonds even if the diamonds did not came from De Beers mines (Ziminisky2013). II. De Beers scattering system Monopoly De Beers is one of the few companies that exerted monopoly in its supply and distribution that it creative a competitive reinforcement for the attach to. During its height in 1902, it was able to control an overwhelmingly 90 percent of the diamond industry that it gutter dictate the toll and availability of diamonds (Sehgal 2011). Monopoly exists when a only a single company exists to dominate a certain industry in the provision of goods or services (Milton 2002). Its high footing today and its acquaintance of being a valued commodity rear be a ttributed to De Beers strategy to justify the increase of the price of diamonds because diamonds perse have no practical use and its high price does not reflect its scarcity because its price remains high even if it is in abundance (Yu nd). III. Forms of distribution of De Beers CSO and DTC De Beers is probably the most successful and biggest monopoly company in the world that virtually operated in almost absolute cartel from its beginning in 1800s until 2001. It was able to establish its cartel like monopoly in the diamond industry when Ernest Oppenheimer achieved a controlling stake in De Beers in the mid 1920s when it expanded into various operations of the diamond industry with the goal of monopolizing its distribution. It did so by influencing suppliers in a multitude of ways to sell its produce of rough diamonds to De Beers channel which was then the Central Selling Organisation or CSO which then enabled De Beers to control the global supply of diamonds even if the diamonds di d not came from De Beers mines (Bergenstock et al 2006). De Beers cartel like distribution channel which is the Central Selling Organisation or CSO and later evolved to become Diamond Trading Centers or DTC is probably the most successful monopolistic distribution system in the world. It can basically dictate the entire diamond industry because it can determine what should be sold, when, where and how much. Since it controlled majority of the supply (85% to 90% of the market) through its CSO or DTC, buyers have no alternative but to avail diamonds through De Beers distribution system of CSO or DTC. To be able to buy diamonds from De Beers distribution system, it has to become a member or Sightholder because De Beers only sell diamonds to qualified Sightholders until today. According to De Beer, this event of exchange diamonds are known as Sights because, during the sales period, their customers are able to physically inspect the stones we are pass them before deciding whether to purchase (De Beer 2012). These customers are selected according the Supplier of Choice contractcriteria (De Beers 2012). In essence, however, these Sightholders are powerless during sights because they have to accept the terms set forth by De Beers where they are not allowed to manage and can only accept