Ass #2 Key Terms & Concepts PDF

Ass #2 : KEY TERMS Auction—A competitive sales process where rough diamonds are sold to the highest bidder. Beneficiation—A commitment to reserve a portion of the resources derived from a country for the economic development of that country. Bort—A form of industrial-grade diamond that...

Ass #2 : KEY TERMS Auction—A competitive sales process where rough diamonds are sold to the highest bidder. Beneficiation—A commitment to reserve a portion of the resources derived from a country for the economic development of that country. Bort—A form of industrial-grade diamond that usually occurs as very included single crystals in a range of yellows, grays, and browns. Central Selling Organisation (CSO)—An agency that functioned as the sales arm of De Beers. Diamond Exchange—A membership-based entity that provides service and venue to facilitate diamond trading. Diamond Trading Company (DTC)—The marketing and sales arm of De Beers (the CSO was its predecessor). Downstream—The retail portion of the diamond value chain. Dry Diggings—A prospector’s term for diamond deposits away from water. Gem-Quality Diamonds—Diamonds that meet certain criteria to be used as gems in the jewelry market. Industrial Diamonds—Diamonds designated for industrial use. London Diamond Syndicate—A group of diamond merchants formed in 1890 to buy and sell rough diamonds. Major—Large-scale industry leader specializing in diamond mining. Secondary Market—The gem and jewelry resale market. Sight—Rough diamond sales event where long-term customers buy from producers based on contracts. Sightholder—A buyer admitted by a rough diamond producer as a long-term customer. Single-Channel Marketing—A centrally controlled marketing strategy for rough diamonds. Upstream—The rough supply portion of the diamond value chain, including mining and rough distribution. Value-Adding Process—Activity that adds something to a product that increases its value for consumers. Vertical Integration—A business strategy of operating in more than one segment of the value chain. KEY CONCEPTS : India was the only diamond source until the early 18th century. Brazil was the world’s leading diamond producer from the early 1700s to the late 1800s. The diamond rush began with the discovery of the Star of South Africa. Cecil Rhodes established De Beers Consolidated Mines Ltd. in the late 1800s. Cecil Rhodes used production control to stabilize diamond prices. De Beers solidified its single-channel marketing strategy through centralized control of rough diamond supply, buying, marketing, and sales. De Beers’s global campaign established the tradition of the diamond engagement ring worldwide. The rise of important new producers made it difficult for De Beers to control diamond supply. The disintegration of single-channel supply and sales of rough diamonds forced the industry to transform to multi-channel. The diamond value chain can be roughly defined by six segments. *Mining is the value chain segment with the most risk and unpredictability. *Together ALROSA and De Beers supply more than half of the world’s rough diamonds by value. *Uncertainty and capital investment are two big challenges for diamond mining companies.  *The objective of rough sorting is to facilitate rough diamond sales. Sorters categorize gem-quality diamonds based on weight, shape, clarity, and color. Long-term contracts, the primary sales channel for rough diamonds, benefit both sellers and buyers due to their predictability. Rough diamond auctions (tenders) provide an opportunity for all buyers to source directly from the producers. Cutting and polishing are critical processes to unveil a diamond’s beauty and add value. The majority of the world’s diamond production is cut and polished in India. Online trading has emerged as a popular venue for polished diamond sales. The risk and resources required in upstream segments limit the number of players. The highest profits are realized at the two ends of the supply chain. Technological advances impact the entire diamond supply chain. The United States is still the number one jewelry-consuming market, followed by Greater China. The secondary market is a good indicator of a diamond’s value. Recognizing the demands of new consumer generations is critical for jewelers to secure and expand their customer base. Social media is an important advertising platform in the new era. The Internet and social media are important jewelry retail avenues.