Chairman,
President &
Chief Executive Director
Southwest Airlines
Corporate
Services
Executive
Vice President Operations
Executive
Vice President & Chief Operations Officer
Customers
Executive
Vice President Internal
Audit and Special Projects
Vice
President
Finance Vice
President &
Chief
Financial
Officer Advertising/Promotion
Vice
President Schedule
Planning
Vice
President
General
Counsel
Vice
President Government
Affairs
Vice
President Flights
Operations
Vice
President
Reservations
Vice
President Marketing
& Sales
Vice
President Fuel
& Administrative Purchasing Vice
President
Revenue
Management Vice
President People
Vice
President
Ground
Operations
Vice
President
Systems
Vice
President
Special
Marketing
Vice
President Inflight
Services
Vice
President
Maintenance &
Engineering Vice
President
VI. DIAMONDS ARE FOREVER
Read and translate the article:
Invented by one of the richest companies in the world, Diamonds are Forever is a slogan which does not bear close examination.
Common and untradeable
Diamonds are neither valuable nor rare. Though fabulously expensive, they are actually one of the most common minerals on earth. In the West cut diamonds outnumber cars. They are almost untradeable as a commodity. Their resale value is significantly lower than their original cost, and nowadays they can easily be substituted in all their industrial uses. In fact, without the tradition and romance which have always given diamonds their sentimental value, they would be almost worthless.
Artificially high prices
The high price of diamonds is a triumph of the commercial clout and marketing genius of De Beers, the South African conglomerate that has an 80% stake in world diamond supply. By strictly regulating the mining and distribution of diamonds, De Beers has managed to keep prices artificially high. And by turning the diamond into a universal symbol of romance it has prevented secondhand diamonds from flooding the market and forcing prices down. Even in times of hardship people are reluctant to part with their diamonds. De Beers knows that if they ever did part with them, the market would be saturated overnight.
Supply outstrips demand
World supply of diamonds has consistently outstripped demand, so logically diamonds should be cheap. If not for De Beers, the world's greatest cartel, they would be. But such has been the power of De Beers that even a glut of diamonds, massive stockpiling, chronic cashflow problems and political uncertainty have been unable to loosen its stranglehold on the $60 billion world diamond market.
Cheap labour
Most of the diamonds traded internationally are mined by the African poor or bought on the cheap from the Russians. And three quarters of the world's gems are cut in poverty-stricken Surat in India, often by young children earning as little as four American cents per stone. Appalled by De Beers' business ethics, America outlawed the company, effectively preventing it from opening its own outlets in the United States. Ironically, America remains by far De Beers' single biggest market and the company operates through American dealers unhindered.
Engagement Rings
It was the marketing magic of De Beers which persuaded Americans at the turn of the century to adopt the European custom of giving a diamond engagement ring as a token of marriage. The same magic worked again in the 1950s when the Japanese in their desire to be Western became the world's second largest market for cut diamonds. And when the Oppenheimer family, who own De Beers, found themselves with a mountain of unsold small diamonds on their hands, they dreamt up the idea of the eternity ring as a means of getting rid of them.
Successful advertising
A perfect example of a near total monopoly, De Beers has always found ways to boost demand and cut surplus production. When General Electric discovered a way to produce high-grade synthetic diamonds, De Beers still managed somehow to prevent GE undercutting their prices. In fact, the Oppenheimers have spent more than $160 million a year repeating their message that "diamonds are forever", probably the most successful advertising slogan of all time. And even when profits are down and their share price takes a tumble, De Beers makes sure that the legend of the diamond lives on.
Massive stockpiling
Yet throughout its long and chequered history, what De Beers has feared most is the prospect of plunging prices if other diamond producers were ever to dump their surplus gems onto the world market. After all, it was by threatening to do just that that the Oppenheimers were able to seize control of De Beers in the first place. So far the company has managed to soak up excess supply by buying up most of the diamonds in the world. But this has led to a massive accumulation of stocks in South Africa with perhaps a further ten billion dollars worth in Russia alone. How long De Beers can contain such a huge surplus is now open to question and perhaps even they will eventually fall victim to the relentless laws of supply and demand.
Assignments:
1) What is your immediate reaction to the information given in the article?
Explain your statement.
1. I'm amazed.
2. I'm appalled.
3. I don't believe it.
4. I think it's a bit biased.
5. It doesn’t really surprise me.
6. Actually, I knew about it already.
In groups, spend 10 minutes preparing a set of questions about the article to ask the other group.
Use these question starters:
1. Why is that …?
2. What would you say was …?
3. What are the implications of …?
4. What precisely …?
5. What do you understand by …?
According to the article …?
How might …?