...DIAMOND-WATER PARADOX: The apparently conflicting and perplexing observation that water, which is more useful than diamonds, has a lower price than diamonds. This paradox was proposed by economists in the 1800s as a means understanding the role utility plays in the demand price of a good by differentiating between total utility and marginal utility. The diamond-water paradox poses the perplexing observations: Even though water is obviously important to human activity (life cannot exist without water), the price of water is relatively low. Alternatively, diamonds are clearly much less important to human existence, but the price of diamonds is substantially higher. In other words, the utility obtained from water is obviously very great, while the utility obtained from diamonds is substantially less. The key question that arises is: Why are diamonds so much more expensive than water? Total and Marginal Insight into, and clarification of, the diamond-water paradox results by differentiating between total utility and marginal utility. Total Utility: This is the overall satisfaction of wants and needs obtained from consuming a good. That is, total utility is the accumulated amount of satisfaction, or the total value, generated by several units of a good. Marginal Utility: This is the extra satisfaction of wants and needs obtained from consuming one additional unit of good. That is, marginal utility is the incremental satisfaction generated by, and the value of, a single...
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...shows the weighing of producing controllers for X-box ones vs the X-box one produced. If too many controllers are made you don’t have enough X-box ones. This isn’t a one on one relationship because each X-box can use more than one controller. What would make the curve expand or contract? If the number go outside of the curve efficiency is lost and there become a production imbalance. Why is efficiency lost at the extremes, as when substantially more of one good and very little of another is produced? At the extremes you would either produce too many ocntrollers and not enough x-boxes or vice versa. Problem #2 Part A: Go to the internet auction site eBay® at www.ebay.com and select the category Jewelry and Watches, followed by Loose Diamonds and Gemstones, and then Diamonds, Natural. How many natural diamonds are for sale at the moment? 216,679 natural diamonds on sale at the moment. Note the wide array of sizes and prices of the diamonds. The price range was from $4,500,000 to 1 cent. The size of diamonds for sale ranged from .008 carats to 30.45 carats. In what sense is there competition among the sellers in this market? Most of the sellers are trying to set a price that allows them to get rid of their diamonds as soon as possible. How does that competition influence prices? Competition for loose diamonds if of the proper rarity will drive up the price of diamonds. In what sense is there competition among buyers? Some competitors fall into the trap...
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... The movie “Blood Diamond” is directed by Edward Zwick. This movie is considered as one of the great movies because the diamonds mined at Africa are traded in exchange for firearms and other weapons which are used in civil wars, coups and cruel military dictatorships, and what makes the story interesting is that, which side is worse? Is it the government or the rebels? So the first thing we see in this story if we will relate it to economic situation is that, people face tradeoffs. RUFs mine diamonds and sell to those people who will give them firearms in exchange for diamonds. Back to the story, this story takes place in 1999 in Sierra Leone, which during that time, is at civil war. The story stars Leonardo DiCapprio, played the role as Danny Archer, who is a diamond smuggler who needs money to leave Africa for good. There, he meets Solomon Vandy. His life changed when the Revolutionary United Front or RUF invaded their village, killed many people, and kidnapped most children and men. His family escaped, and he is sent to the forced labor camp to mine diamond. During that time, diamonds have really high value because they are traded for arms and is sold for a very high price. When Solomon is sifting sand on a river bank, he saw a 100 karat pink diamond which he initially hides then later buries. No less than a minute, it happened that there was government raid, he captured and he was sent in jail. There he meets Danny, who made deal with him. For diamond: Danny will help Solomon...
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...Effects of AOL Partnership Justification of Alternative Solutions 3 4 5 1 Introduction Alloy is a clothing and accessories company that targets Generation Y consumers as their primary audience. Alloy hosts a webpage (alloy.com) and a catalog that attracts teenagers, especially girls. The success of Alloy is contingent upon the following core issues that could either make or break the company: 1. The operating expenses are too high and need to be reduced 2. New leads to the website needs to be greatly increased Justification of Core Issues 1. Their operating expenses are extremely high because they print and ship their too many catalogs, and pay too much for marketing and merchandising issues. 2. Traffic to their website would the increase the gross margin on an order and increase ad revenue Analysis of Core Issues Alloy needs to generate new leads for their websites. They spend way too much money trying to attract new customers and they rely too heavily on mailing lists to attract new customers and it has proven to be ineffective. They would have to spend significantly more money on 2 mailing lists that won’t produce new customers at a substantial enough rate (the response rate on new names is only 1.5%.) Printing and shipping the catalog at its current volume is highly expensive and unnecessary because their catalogs pass hands up to six times. Although shipping the catalog makes a great impression on their market...
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...Introduction Blue Nile is the largest online retailer of diamonds in the United States. The company offers more than 60,000 diamonds on its website. The national average for an engagement ring is $3,200 but Blue Nile exceeds this number by having a $5,600 average price1. With no physical stores, no intermediaries and offering products four times cheaper than rivals, Blue Nile has proven to be a successful online retailer. Blue Nile is directly competing with both online diamonds merchants and physical stores diamonds retailers. Physical stores selling diamonds have tried to encourage customers that buying a diamond is a sensational experience that can only be realized in stores (and not online). They have highlighted the idea of seeing, touching and comparing diamonds that is exclusively possible in a store. Blue Nile has many competitors such as Tiffany and Co, Diamonds.com, and Zale Jewelers Stores. (Blue Nile. (n.d.)). These companies have tried to demonstrate that the price of the diamond is worth the unique and exclusive experience offered only in stores. Organizational background Everything started in 1999, when Mark Vadon, a consultant at Bain and Co. went to a Tiffany and Co. store in San Francisco, looking for an engagement ring for his future fiancée. He was a casual man wearing casual cloth. Vadon said that Tiffany and Co. salesperson ignored him and did not help him finding a ring because he did not look like a potential and interesting customer. After this...
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...Business Model of De Beers: Rhodes and Oppenheimer followed both a strategy of supply control. Due to the fact that supply overtook demand, the prices for diamonds were supposed to be lower. In this case the company would not have been that profitable. Therefore Rhodes established the “London Diamond Syndicate” and Oppenheimer transformed it into the “CSO - Central Selling Organization”. Both companies were founded to prevent an oversupply. By buying the diamond supplies of other producers, the CSO controlled 90% of the world trade. In order to conceal the monopoly position externally, these subsidiaries were never named after the parent company De Beers. They were supposed to appear as independent companies of the diamond trade. The core business of the CSO was to intermediate between the purchase of the diamonds from mines and the distribution of gems to different customers, such as diamond polishers or cutters. These customers were tied to the company with exclusive contracts, which made it possible to deal with diamonds outside of De Beers. The contracts included many special conditions. For example, it was not allowed to sell diamonds to retailers who could reduce prices in the market. The contracts turned the customers to slightholders, the only people who were able to buy diamonds from De Beers. For their position as slightholders they had to pay a basic fee twice a year. Once they could no longer pay the fee, they lost their position and were expelled. Each...
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...technology, medicine, and many production lines may harm people if there is a lack of honesty or deception in the results from research. De Beers is the world’s largest diamond producer. De Beers has been charged with price-fixing and other anticompetitive conduct. Under scrutiny since World War II for refusing to provide industrial diamonds for the war effort they were forced to leave the American market. In 1994, an indictment was filed against the De Beers Diamond Company for violating the Sherman Antitrust Act by fixing the price of industrial diamonds. In this indictment the Government contended that the subsidiary company General Electric (G.E.) conspired with De Beers to fix the price of industrial diamonds. These acts that De Beers were accused of were unethical because being the world’s largest diamond producer they were able to control the market and keep the prices high by making the world believe that diamonds were scarce. The purpose of DeBeers was the exploitation of diamond mines in South Africa. Along with deceiving the market on price fixing and forcing competitors to buy their products De Beers committed other 3 unethical acts towards their employees and as well as diamond consumers. The DeBeers diamonds are extracted from the South African mines and marketed in London, at the address of the Diamond Trading Company,...
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...1. BACKGROUND INFORMATION Timeframe2010 | Country(s) InvolvedUSA, Canada, UK trough websites | Key Individuals & TitlesIt was founded by Mark Christopher Vadon and Ben Elowitz on March 18, 1999 | Company Type & SizeThe company sells the products on its websites. Because of its unique business model the company sells its products at much lower prices than the competitors. The company had 183 full time employees, 5 part-time employees, and 1 independent contractor. | 2. BRIEF SUMMARY OF CASE SITUATION Business or Industry DescriptionBlue Nile had grown to become the world’s largest online retailer of certified diamonds and fine jewelry. | Blue Nile’s Current SituationBlue Nile reported $302 million in 2009. In 2010 Blue Nile management was concerned about the lingering effects of poor economic condition in the United States on the diamond jewelry industry and how it should pursue expansion in international business. | 3. INDUSTRY AND COMPETITIVE ANALYSIS Industry Macro-Environmental Characteristics-According with U.S Department of commerce U.S jewelry sales totaled $58.8 billion by 2009.- Diamond jewelry sales were particularly hard hit by the recession, with industry sales declining from $32.5 billion in 2005 to an estimated $29.5 billion in 2009.- The Jewelry Board of Trade estimated that there were some 22,415 specialty jewelry firms in the U.S in 2009, down from 26,750 specialty jewelry retailers in 1999. | Strategic Group MAPBlue Nile Zale Tiffany ...
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...bases with thorough research of the jewellery crafts of India. Their factory located at Hosur, Tamil Nadu (India) spreads over 135,000 sq ft. The brand’s winning virtues in design and overall quality have shaped a class of discerning buyers who seek the best in jewellery products. Leadership and innovation are two of the other brand features that Tanishq is consistently identified with. These values have helped the brand bond with its consumers like no other Indian jewellery retailer. PRODUCT LINE & THE COLLECTIONS PRODUCT LINE: Tanishq Diamond Cut and crafted with utmost care, Tanishq diamonds come with a certificate of authenticity, stating the karat, colour and clarity of the stone, to enable you to know exactly what you are paying for. No gemstone expresses human emotions more powerfully than a diamond and Tanishq transforms these precious stones into breath-taking masterpieces,each unique and splendid in design. When it comes to diamonds at Tanishq you will be spoilt for choice from many collections we have to offer. Tanishq Gold From the traditional harams, mangalsutras to the...
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...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...
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...Diamond Foods Accounting Scandal BACKGROUND: Founded in 1912 as a walnut grower cooperative, Diamond Food’s primary business involved buying walnuts from local California growers, processing the product, and reselling it. The San Francisco-based company converted from a cooperative to a public corporation in July of 2005, issuing its initial shares for $17. By 2010, Diamond Foods (DMND) had expanded and acquired a number of snack food companies including Kettle Brand® Chips and Pop Secret® popcorn and was negotiating the acquisition of the Pringles brand from the Procter & Gamble Company (Diamond Foods, 2014). The addition of the Pringles brand would make Diamond the second-largest global snack foods company behind PepsiCo, Inc., owner of the Frito-Lay brand (Byron & Ziobro, 2011). Although the new ventures took precedence, Diamond’s walnut business remained the highest commodity cost to the company. In order to maintain relations with the growers, Diamond had to assure they offered a competitive price for the product; however any recorded increase in walnut price would decrease both the company’s reported earnings and their reported earnings per share (EPS). Despite rising walnut prices, the company consistently posted EPS that defied analyst projections. Between the 2010 SEC Form 10-Q second quarter filing and the SEC Form 10-K of FY 2011, the price of Diamond stock jumped from $39 dollars per share to $90 per share (SEC, 2014). On January 9, 2014, the Securities and...
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...and how they affect a firm's ability to respond during periods of strong or weak demand, and (3) develop the alignment between supply chain structure and strategic position for a firm. To this end, the case highlights the supply chain structures and performances of three firms in the diamond retailing industry: Blue Nile, Zales, and Tiffany. Blue Nile’s supply chain structure is geared toward a pure centralized e-business; Zales sells merchandise primarily through stores but recently added an online channel; and Tiffany also uses an online channel but most of its diamond and other high-end products are sold through stores. The case is designed to foster discussion of the three supply chain structures and encourage students to evaluate the firms’ performance in terms of components of customer service such as response time, product variety, product availability, customer experience, order visibility, and returnability, coupled with cost factors that include inventory, transportation, information, and facilities. 1. What are some key success factors in diamond retailing? How do Blue Nile, Zales, and Tiffany compare on those dimensions? As with most retailing, the key success factors in diamond retailing can be measured by customer service factors and cost factors. Given the varied supply chain components and supply chain costs. Blue Nile has a distinct advantage in product variety and product availability since customers can “build their own ring” by choosing from an inventory...
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...was up until the mid-19th century that India and Brazil were the only producers that supplied the world with diamonds. Diamonds were so scarce that royalty found it extremely difficult to acquire them and the conception of making diamonds available to the public was unthinkable (Tsounta). In 1867 diamonds were discovered in South Africa and the diamond supply increased but this did not displace the ideology that diamonds are a precious and rare commodity that exists to this very day. Cecil Rhodes was a businessman that rented pumping equipment to diamond miners. Through his business he recognized the potential of the expanding diamond mining industry. He reinvested his profits in the acquisition of time and claims and by 1880 he had a large enough share of claims form a separate company that focused on managing the diamond mines. This was the beginning of the DeBeers Consolidated Mines Limited in 1888 (Kretschmer). DeBeers then began to exploit the diamond mines in South Africa. While diamonds were a rare resource only a couple of centuries ago, the prices began to fall due to the discovery of the extremely rich mines in South Africa and other countries of Africa. DeBeers worked with other producers in a parallel effort, successfully set up a cartel to control international prices of diamonds (St. Antoninus Institute). DeBeers had control of 95% of the world's diamond production by 1890. Ernest Oppenheimer and J.P. Morgan founded mining giant Anglo American PLC. They were DeBeers’s...
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...their business models. A very similar competitor that Blue Nile faces is Diamonds.com. Diamonds.com has expert gemologists. They offer "more than 40,000 loose diamonds" in a selection of settings. (Page 326) Their customers have the option to customize their purchases. They provide their customers with widespread educational knowledge for purchasing a diamond. They have excellent customer service by providing free shipping, an appraisal of the diamond, and non-customized orders receive 30 days to return the purchase after delivery. (Page 327) Diamonds.com offers substitute diamonds that are readily available and easily accessible to their customers. Another competitor in the diamond industry is Whiteflash.com. They too provide their customers with the option to customize jewelry. One service that they provide that is unique from their competitors is their diamond trade-up policy. This policy provides customers with a less expensive option to purchase a new Whiteflash diamond by trading in or exchanging their old diamond for a new, more expensive one. Their customer service features are not as high as Blue Nile and Diamonds.com since they offer a 10-day return policy for their loose stones and standard setting jewelry. (Page 328) Whiteflash does not provide in-depth educational materials. Their variety of jewelry and diamond options makes Whiteflash a strong competitor in the retail jewelry industry. Ice.com only provides finished jewelry products. They are a slightly...
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...Brief Overview of Company Kettle Chips UK (2010) explains that in 1978 “Cameron Healy founded Kettle Foods in Salem, Oregan, USA with the aim of providing high quality, naturally sourced products.” They then go on to tell how in 1987 Cameron discovered that the British loved crisps, encouraging him to establish Kettle Foods in the UK, one year later Kettle Foods in the UK was launched in Norfolk – in order to be as close as possible to potato growers. They also state how in 2008 they were not only “…the 6th fastest growing grocery brand in the UK but …also identified as one of the country’s Top 100 Grocery Brands (source: The Grocer).” In 2010 Kettle Chips were acquired by Diamond Foods; whose food brands include Emerald snack nuts, Pop Secret popcorn and Diamond of California nuts. (The Oregonian, 2010) Introduction Kettle Chips managed to maintain their top position in the premium crisps segment, with an estimated 4% market share in 2010 of the total crisp market – giving them a total of 23.8% rise in value shares in crisps and snacks from 2008 to 2010. (Mintel Oxygen, 2011) Mintel (2011) explains that although Kettle Chips maintained its lead as the only brand of size in the premium segment, competition is rapidly increasing from other companies such as Tyrrells and Walkers’ Red Sky, causing their sales growth to slow down in 2010. Although Kettle Chips are an international brand this report will mainly be focusing on their UK business. Approach This report...
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