De Beers Case Study This case study of De Beers outlines the company’s evolution from its formation in the mid-1800s to year 2000. In these 200 years span of time, De Beers was the leader in the mining of diamonds and their leadership contributed to what the industry is today. As the leader in the industry, De Beers had large stakes in mining fields in South Africa. Their dominance in the country also meant being socially responsible. At the onset, this was difficult to validate because social responsibility for businesses hasn’t been really discovered yet, especially in countries such as Africa.
During the great depression of the 1930s, racial tension rose. The depression “fueled Afrikaner nationalism and the drive for white supremacy and racial separation” (page 12 of case study). By the 1940s, De Beers CEO Ernie Oppenheimer, wanted to promote social progress for black Africans. Their strength in mining diamond unfortunately wasn’t able to curtail the era of apartheid or racial discrimination. This however, did not stop De Beers to do the socially responsible thing, which was to oppose the apartheid, but also had to do it in a way to not affect its business.
The company is successful and essentially has a monopoly in the diamond market. Their success and monopoly didn’t come with heavy criticism from legal entities and local communities. Such criticisms like child and cheap labor. Some of these negative publicities were clouded by some of their contribution to local cities, building schools and living conditions for black Africans. De Beers’ control of the diamond market comes with pressures and challenges from government entities. For instance, De Beers for the longest time could not operate in the U.
S. because of indictments issued by the U. S. Justice Department for antimonopoly cases and for refusing to provide industrial diamonds during World War II. De Beers appears to be heading to the right direction, strengthening their governance practices, which was one of their weakest areas. Their review of their corporate strategy in 1998 resulted in a new strategy for the company for the new century. These are business strategies that are sound and also business practices that are ethical and responsible.
Post Enron and Arthur Anderson, came Sarbanes-Oxley for U. S. companies and De Beers’ new business strategy and practices seems to be aligned with these rules. Similarly, De Beers seems to be addressing child labor issues, similar to what Gap, Inc. had to address (ABC World News, 10-27-08). This active approach is also aligned with their new strategies, which is to be more sensitive and to adhere to strict social requirements and responsibilities, but to be sensitive to the overall impact of operations on the local community.