Name Aini Akbar

Roll No 11
Program MS Management Sciences
Course Global Strategy
Lev Leviev Fights De Beers
A Case Study
Introduction of Companies
South Africa based company and a main player of
the diamond industry.
The company was founded in 1888 by Cecil
Rhodes and financed by a South African Alfred
Beit and the London-based N.M Roths child &
Sons bank.
De Beers runs most of the diamond mines in
South Africa, Namibia and Botswana.
It brings all of its rough stones to a clearing
house in London and sorts them into
thousands of grades, judged by color, size,
shape and value.



De Beers
De Beers also manage both De Beers Consolidated
Mines Ltd. and Diamond Trading Company,
which markets rough diamonds for De Beers and
other companies.
De Beers is facing a gradual decrease in its market
share. In the 1980s, De Beers had 80% of the
market share, in 2000 it had 65%, and in 2005 it
had a mere 43% and less than 50% in 2012.
De Beers once controlled nearly 80% of the world
supply of rough stones. In 1998 it accounted for
nearly two-thirds of supply. Today production
from its own mines gives it a mere 45% share.
Investing in mines of Australia and Canada, will
help regain some of its lost market share.
Le Leviev
Le Leviev is a Russian company, largest cutter and
polisher of diamonds in the world.
It also owns mines and even designs jewelry in-
house.
Leviev was a buyer of De Beers rough diamonds.
Now the company provides stones for itself as well
to other cutters, polishers, and manufacturers
worldwide.
The company has factories in Ukraine, Israel,
Namibia, China, Armenia, and South Africa.
Le Leviev mines, designs, and markets its
own diamonds.
Le Leviev has an extremely integrated
supply system and has a lot of potential for
increased market share.
Leviev competes with De Beers in this
rivalry has taken business away from De
Beers in Angola and Russia.
Now the company provides diamond stones
for itself as well to other cutters, polishers,
and manufacturers worldwide.
Case Discussion Question
What characteristic made De Beers Cartel
long lasting?
What competitive and cooperative actions
have made Leviev De Beers enemy?
Future of rivalry between De Beers and
Leviev with special focus on the new arena
of retail competition with branded jewelry?
What characteristic made De Beers
Cartel long lasting?
Meaning of a Cartel

A cartel is a group of formally independent
producers whose goal is to increase their
collective profits by means of price fixing,
limiting supply, or other restrictive
practices.
Characteristics of cartel
Restricted by antitrust laws
Cartels by nature usually occur in
oligopolies
Firms get benefit being in cartel
Under certain market conditions, firms can
earn greater profit by coordinating their
operational activities rather than acting
independently.
Why De Beers cartel is long
lasting?
The De Beers Diamond Cartel is arguably the most
successful cartel in history both in terms of profit
and longevity. Following attributes made it
superior
1. Industry Attributes
High Concentrated diamond market
Price leader
Maintain friendly relations with participent
2. Firm Capabilities
Have clear strategy
Flexibility to adapt challenges
De Beers possesses both the unique will and
power to enforce cartel arrangements.
3. Institution Constrains
Have developed a good relation with
government and hold 50 percent share in
South Africa stock market
Maintain good relation with other
government and diamond producing
countries


What competitive and cooperative
actions have made Lev Leviev De
Beers eanemy?

Lev Leviev Cultivated close ties with Russian
politicians that had always sold its rough diamonds
to De Beers
Formed a joint venture with the state firm, now
called Alrosa and convenience the company that
stones for the factories to be supplied directly from
Russian mines, rather than diverted through De
Beers's central system.
In 1996 Lev Leviev formed Anglo Selling
Corporatin and Offered government 51 percent
share in exchange of exclusive rights to purchase
rough diamonds. A great shock to De Beers

He convinced Sam Nujoma, Namibia's president,
to open new diamond-polishing factory in
Windhoek, Namibia's capital.
So a diamond polish factory with local players was
establishes.
Leviev's step in Namibia is to challenge De Beers
directly. De Beers's mines are run in a joint
venture with the government called Namdeb. A
1999 mining law lets the government force any
miner to supply stones locally. If Lev Leviev
demands it, the government could tell De Beers to
provide stones directly to Mr Leviev's new factory.

Lev Leviev also diversified its business by holding
a gold mine in Kazakhstan.
Leviev is dealing in the every aspect of diamond
value chain
Leviev is also selling branding branded stones.
Taking part in CSR activities
Future of rivalry between De Beers
and Leviev with special focus on
the new arena of retail competition
with branded jewelry?

Rivalry in Future
Branded jewelry war
Increased pressure
Increased competition
Rivalry between Dees and Leviev will be in the
area of resource, supply and price control.
No more focus on cartel
Retail store has become an important part of
competition in diamond market.