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Blue Nile Case Study

In: Business and Management

Submitted By tashby
Words 2265
Pages 10
Individual Strategic Assignment

Tim Ashby
Team 9, Cohort A
Instructor: Terry Power
BUSA506: Strategy
April 8, 2012
Total Word Count: 1994

Executive Summary

This paper provides a comprehensive review of the business model and challenges faced by Blue Nile Inc., attempting to answer the question of whether its strategy to remain number one in online diamond retailing will work. Analysis of competitive strengths, business model and business strategy have been completed, and an assessment of current strengths, weaknesses, opportunities and threats has been supported with recommendations on how to best align and act on a winning strategy in the online diamond space.

Competitive Forces – Five Forces
Competitive Rivalry * HIGH: Competition in the online diamond market is intense and sustained. Originally dominated by mature jewelry chains such as Tiffany and Zales, the diamond retail market in 2009 was highly fractured with entries from online, offline, TV and mass merchant retailers chasing a customer base substantially reduced due to economic recession.
Supplier Power * MEDIUM: Supply of diamonds is in short supply, with production controlled of non-conflict diamonds by only a few large suppliers. Blue Nile has only nominal volume compared to global sales, therefore small leverage with suppliers, and cannot self-manufacture. However, they have negotiated multiple vendor agreements, and have price certainty into next several years.
Buyer Power * HIGHEST: Buyers are large in volume, have low switching costs, are purchasing standardized products certified by 3rd parties, and are increasingly well informed. Buyers are very price sensitive, diamonds are a very substantial investment, and brand of diamond is less relevant. Further, consumer buying is seasonal and impacted heavily by macro and micro-economic influences, leading to...

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