Noe Hernandez
Management 425, Sect 10, 2257
October 6, 2015
982 words

Blue Nile Inc. in 2011: Will Its Strategy to Remain Number One in Online Diamond Retailing Work?

In the Article, “Blue Nile Inc. in 2011: Will its Strategy to Remain Number One in Online Diamond Retailing Work?”, we identify the Blue Nile Company sustains competitive advantage through the strong practice of Porter’s Five Forces Model. After conducting a Five Forces Analysis, the most important factors in the Blue Nile case, were the threat of new entrants and the rivalry among existing competitors in order for the Blue Nile Company to compete in the market and the ability to sustain competitive advantage. The Blue Nile company sustained competitive advantage by diminishing potential threats of entry to a moderate level. The threat level of new entrants was kept moderate by ensuring that network effects were present. These network effects were enhanced by the policies the company had. The Blue Nile customers faced high switching costs by giving up on valuable characteristics the Brand created for its consumers. Blue Nile’s strategy of providing educational information, in-depth product information, grading reports, customization, and attractive prices were all key drivers that increased costumer’s brand loyalty. All of theses unique services Blue Nile provided for the consumer became valuable for the costumer, therefore, creating high switching costs. Throughout the case we become aware of some of the government regulations that exist in the jewelry market making it very challenging for new entrants to enter the market. Blue Nile and all other major sellers of diamond jewelry had entered into partnerships with the United Nations, local governments, and non-governmental organizations to prevent the trade of illegal diamonds through blood or conflict. Potential new entrants become