Managerial Communications. Components of a Case Study Analysis. DeBeers’ Diamond Dilemma

DeBeers’ Diamond Dilemma
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DeBeers’ Diamond Dilemma
Introduction
Before the 1990s, the South African diamond company, DeBeers, had a significant market share and control of the supply of gemstones worldwide. However, things started taking a different course when synthetic or laboratory-produced diamonds hit the jewelry industry. DeBeers produced about 45 percent of natural gemstones worldwide and supplied around 80 percent. Nevertheless, in 2007, the company produced approximately 40 percent and sold only 45 percent (McAdams & Reavis, 2008). Notably, the significant problem that DeBeers encountered was the threat posed by the establishment and sale of laboratory-grown diamonds, and it did not know how to respond. Although DeBeers was known for the production of high-quality natural diamonds, the establishment of synthetic gemstones caused it to lose a significant market share worldwide, something that made it give in and start producing laboratory-grown diamonds.
Background
For many years, DeBeers believed that the real value of diamonds was in the number of years it stayed during its formation. In particular, the youngest diamond was said to be 900 million years old. That is the reason why many people bought diamond engagement rings to symbolize the long-lasting nature of their love with each other. Sangeeta Singh-Kurtz (2018) asserts that the cost of one carat of a natural diamond ranges between $2,500 and $19,000. However, the introduction of synthetic diamonds relieved many individuals since they would get the same quantity at about $800 (Singh-Kurtz, 2018). In reality, DeBeers gave in to the production of laboratory-grown diamonds when it introduced the Lightbox jewelry. The company said that it took that action to respond to its increasing customers’ demand (Danziger, 2018). Consequently, DeBeers did something that it had hesitated doing for numerous years.
Alternatives
After the establishment of synthetic diamonds that retarded DeBeers’ growth and expansion, the company was left with three options. First, DeBeers would have responded by lowering the price of natural diamonds since it controlled a significant market share worldwide. The second alternative was to avoid wasting time and start the production of the laboratory-made diamond, which is what DeBeers did at the end (Munier, 2016). The third alternative was beginning a public campaign to convince people not to purchase synthetic diamonds. The first alternative would have been rejected since lowering the price of natural diamond would have made DeBeers count ...