Question

Six is using a newer process known as C.V.D., or chemical vapor deposition, which uses low pressure in a vacuum filled with gases that react to create layers of carbon that gradually consolidate into a single stone. The new method is cheaper and easier to monitor than the older one and hence capable of being scalable as a jewelry business. "Synthetics will never be as big as our natural business, and our investments into the space are dwarfed by those elsewhere," Mr. Cleaver said. "But we have a massive advantage over everyone else, given the know-how and infrastructure provided by Element Six. So it's something we have decided to be very serious about." (A $94 million plant that De Beers is building in Gresham, Ore., is expected to generate half a million rough carats a year after its completion in 2020.) De Beers itself has been "growing" diamonds at Element Six for 50 years, gradually producing stones from a hydrocarbon gas mixture in a high-pressure, hightemperature reactor. This statement, along with Mr. Cleaver's assertion that their information and infrastructure gives De Beers a massive advantage, reflects which element of Porter's 5 Forces?

1 - Bargaining power of buyers
2 - Rivalry among existing competitors
3 - Threats of new entrants
4 -Bargaining power of suppliers
5 - Threat of substitutes

Answer 1

De Beers' investment in CVD technology and established infrastructure relates to Porter's 5 Forces and represents high barriers to entry, deterring the threat of new entrants in the synthetic diamond market.

Step-by-step explanation:

The discussion regarding De Beers' use of Chemical Vapor Deposition (CVD) technology to create synthetic diamonds, and the infrastructure advantages it holds, relates to Porter's 5 Forces, specifically to the threats of new entrants to the market. De Beers' assertion about their massive advantage due to their know-how and infrastructure is an indication that the barriers to entry in the synthetic diamonds market are high. These barriers, resulting from De Beers' established technological, manufacturing, and distributive capacities, can deter new competitors, adhering to the principles outlined in Porter's analysis.