Essay about De Beers

2666 Words Dec 22nd, 2012 11 Pages
Q1. What does exhibit 1 tells us?
First of all, it tells us that the inventory strategy is consistent regardless of how CSO sales and overall profit from operations perform. This strategy was launched so that the De Beers could control demand and prices. Evidently it also shows that the 1980’s bust is a low peaking point for De Beers, as inventory levels for the first time is significantly higher than OP and CSO SALES.
Q2. Please briefly talk about the recent boom-and-bust
The 1970s were a turbulent time for the diamond market, which saw the growth of inflation that led to speculation and hoarding in the rough diamond market. Eventually, the drastic increase in interest rates to the diamond trade coupled with falling retail demand burst
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By doing Surprise on site audit, CSO can make sure sight holders they have chosen will behave with higher degree of compliant. Due to price of diamond parcels is not negotiable by sight holders, this will further stabilize the diamond price. • Understand the diamond channeling segment and further potential end-side customers. Due to almost 80% of sight holders are in diamond cutting/polishing industry. These 80% of sight holders will then sell their diamonds into pipeline. Surprise on site audit can enable CSO to witness the process of above. The remaining 20% of sight holders, who were given the largest, most valuable parcels, will sell to independent cutter from Antwerp, Tel Aviv, New York, and Bombay. By conducting surprise on site audit, CSO can peek what are future potential customers are from these 4 cities.
Q8. What does exhibit7 tells us?
Take year 1971 as reference data, IMF price index is exactly 100. • From year 1971~1983, even though price index keeps increasing almost twice, high inflation surprisingly stimulate the demand of diamond to soar even the price goes up. This shows consumers may not only purchase diamonds for own usage, but also treat diamonds as investment goods and hold them as asset inventory whenever high inflation occurs. Investors rather to hold diamonds than cash especially during high inflation, slow growth

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