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Marketin

07-045 January 7, 2008

DeBeers’s Diamond Dilemma
David McAdams and Cate Reavis

The mystique of natural diamonds has been built by the industry. One hundred fifty million carats of mined diamonds are produced every year, so they are really not that special if you look at those terms. 1 —CEO of Gemesis Corporation We don’t see synthetic diamonds as a threat, but you cannot ignore it completely. 2 —Stuart Brown, Finance Director, De Beers It was early summer 2007 and Lee Mandell decided that the time was right to propose to Diane, his girlfriend of 4-years. Being the romantic he was, Lee wanted to pop the question over a candle light dinner that included an exceptional bottle of Bordeaux. Logistical details of where to buy the special ring and what type of diamond, however, were less certain in his mind. Lee and Diane had recently rented the movie Blood Diamond, set in Sierra Leone in the 1990s when a civil war was raging and the rebel group, the Revolutionary United Front, relied on proceeds from smuggled diamonds to finance its military operation. The 11-year war, which ended in 2002, resulted in the deaths of tens of thousands and the displacement of more than 2 million people, nearly onethird of the country’s population. Both Diane and Lee had been disturbed by the story the movie told, the hardship and violence, the children who were forcibly recruited to fight, and the lives that were destroyed all over gems that were worn by hundreds of millions of people, men and women alike, throughout the world.

1 2

Karen Goldberg Goff, “Cultivated Carats,” The Washington Times, February 4, 2007. Danielle Rossingh, “DeBeers Says it Can’t Ignore Synthetic Diamonds,” Bloomberg, May 17, 2007.

This case was prepared by Cate Reavis under the supervision of Professor David McAdams. Professor McAdams is the Cecil and Ida Green Career Development Professor. Copyright © 2008, David McAdams. This work is licensed under the Creative Commons Attribution-Noncommercial-No...