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1. What function does the CSO perform as a global intermediary? How do these functions help expand the economic pie in the diamond industry?
CSO stands for Central Selling Organisation. After Rhoodes flooded the market with diamond inventory and therefore decreased its price, Ernest Oppenheimer founded the CSO (1930). Oppenheimer believed that by limiting the quantity of diamonds put on the market the stability of the diamond trade could be maintained.
The function of the CSO is to stimulate and control the demand for diamonds.
These functions help to expand the economic pie because only limited amount of diamonds were offered to the market to keep its prices intact and the demand for diamonds high. The entire industry benefits from this.
2. How does that expanded economic pie end up getting divided among the various players in the diamond industry? Why?
All diamond mines were offered to participate in the CSO. If they participated then all diamonds were delivered to the SCO who sorted all the rough diamonds and categorized them. Then the CSO paid its suppliers in cash on delivery, different countries were charged with different commissions. The SCO had full discretion as to what diamonds to sell, to whom and when.
The division of the economic pie depended on the arrangements the CSO made with its counterpart and was mostly based on the quality of the output.
3. Should De Beers pull the plug on the CSO’s stock lining strategy? Depending on your answer, what specific actions would you recommend?
1. What function does the CSO perform as a global intermediary? How do these functions help expand the economic pie in the diamond industry?
CSO stands for Central Selling Organisation. After Rhoodes flooded the market with diamond inventory and therefore decreased its price, Ernest Oppenheimer founded the CSO (1930). Oppenheimer believed that by limiting the quantity of diamonds put on the market the stability of the diamond trade could be maintained.
CSO stands for Central Selling Organisation. After Rhoodes flooded the market with diamond inventory and therefore decreased its price, Ernest Oppenheimer founded the CSO (1930). Oppenheimer believed that by limiting the quantity of diamonds put on the market the stability of the diamond trade could be maintained.
The function of the CSO is to stimulate and control the demand for diamonds.
These functions help to expand the economic pie because only limited amount of diamonds were offered to the market to keep its prices intact and the demand for diamonds high. The entire industry benefits from this.
2. How does that expanded economic pie end up getting divided among the various players in the diamond industry? Why?
All diamond mines were offered to participate in the CSO. If they participated then all diamonds were delivered to the SCO who sorted all the rough diamonds and categorized them. Then the CSO paid its suppliers in cash on delivery, different countries were charged with different commissions. The SCO had full discretion as to what diamonds to sell, to whom and when.
The division of the economic pie depended on the arrangements the CSO made with its counterpart and was mostly based on the quality of the output.
3. Should De Beers pull the plug on the CSO’s stock lining strategy? Depending on your answer, what specific actions would you recommend?
1. What function does the CSO perform as a global intermediary? How do these functions help expand the economic pie in the diamond industry?
CSO stands for Central Selling Organisation. After Rhoodes flooded the market with diamond inventory and therefore decreased its price, Ernest Oppenheimer founded the CSO (1930). Oppenheimer believed that by limiting the quantity of diamonds put on the market the stability of the diamond trade could be maintained.