Ethics case study

De Beers is the largest diamond-producing company in the world. Founded in 1888, De Beers controlled approximately 90% of the worlds diamond supply for most of the 20th century. De Beers control over supply led to it establishing single channel marketing De Beers would invite approximately 125 clients to purchase diamonds from De Beers, but the clients were required to buy them with no negotiation on price, quantity, or quality. If the client refused, they were not invited back to any future sales.

De Beers was able to establish single channel marketing by controlling the supply of diamonds globally and by driving consumer demand. De Beers controlled supply by purchasing large tracts of diamond-producing land and by establishing long-term contracts with diamond mines that would not sell their properties. De Beers also realized that by promoting diamonds as glamorous they could increase demand for their product. Voted the Top Advertising Slogan of the 20th Century, the A Diamond Is Forever marketing campaign started by De Beers in 1947 fundamentally altered diamond purchasing behaviors. The campaign equated the long-term value of a diamond with the proposal for marriage, signaling that an engagement ring made of any other stone did not indicate long-term commitment the way a diamond did. De Beers also convinced movie studios to include scenes in their movies highlighting diamonds. This included convincing the producers of the movie Gentlemen Prefer Blondes to have Marilyn Monroe sing Diamonds Are a Girls Best Friend in one scene.

Before the De Beers campaign, 10% of engagement rings were diamonds. After the campaign, 80% of engagement rings were made of diamonds and the market itself expanded dramatically. th

During the early 20 century, De Beers maintained its status as main supplier in part by receiving military aid from the British government in British colonies. As African countries in particular broke free of colonial powers, De Beers was able to purchase protection from whichever group had control over diamond-producing territory. This included the purchase of conflict diamonds.

Conflict or blood diamonds are diamonds that have been mined in a country that is in a war or limited war and the profits of which are used to fund military activities by either or both sides. One of the reasons why conflict diamonds are common in funding wars, especially in Africa, is their location. In Western African countries, diamonds are located in marshy areas and riverbeds. The diamonds are very close to the surface of the ground so it is very easy to mine the fields. These types of fields are usually controlled by anti-government forces, which often use children to mine as the adult population is engaged in fighting. The mining of these riverbeds usually causes the poisoning of the local water supply, forcing local residents to move or get very sick. In addition, diamonds are often found in dormant volcanoes, which are abundant in parts of Africa. Mining for diamonds in these areas requires heavy machinery and these areas are normally controlled by governments. When these areas have come under attack during wars, governments have often used explosives to collapse the mines, causing large amounts of air pollution which causes asthma and lung cancer for local residents.

Though De Beers was involved in the purchase of conflict diamonds, almost every other diamond purchaser bought conflict diamonds as well. At their peak, conflict diamonds represented only 4% of the global diamond market, but led to the deaths of approximately 3.7 million people and the dislocation of 6 million people.

De Beers was officially against apartheid in South Africa. Apartheid was the legal separation of black and white citizens. White citizens of South Africa controlled 86% of the land and legally forced blacks and other non-whites to move from their own land into mostly poor, segregated areas. Despite De Beers official opposition to apartheid, it continued operating in the country. DeBeers donates approximately $3 billion each year to NGOs in African countries where it operates.

After the information above was released to the public, DeBeers employees around the world began anonymously reporting to journalists further details about each of the elements in the case. DeBeers wanted to stop the leaking of this information from their employees so they used software in all DeBeers computers to find every employee who had contacted known journalists. DeBeers had not informed employees that the email tracking software was installed in their computers. DeBeers then fired each of these employees.

After the information above is released to the public, a DeBeers official made a public statement, saying: De Beers sees itself as something akin to Robin Hood. We persuade those people who can afford luxury goods to purchase those goods to help build schools in Africa.

Questions:

Question 1: Assume for this question only that DeBeers takes a duty-based ethical approach to its business. Explain how DeBeers has violated and/or upheld this ethical approach based on the facts in the case.

Question 2: Assume for this question only that DeBeers takes a utilitarian-based ethical approach to its business. Explain how DeBeers has violated and/or upheld this ethical approach based on the facts in the case.

Question 3: Assume for this question only that DeBeers takes a virtue-based ethical approach to its business. Explain how DeBeers has violated and/or upheld this ethical approach based on the facts in the case.