Blue Nile’s supply chain efficiency allows them to have lower operating costs. Blue Nile bypasses the wholesalers and brokers, which gives them a great opportunity to obtain a more cost-efficient product. Blue Nile and their suppliers also have multiyear agreements whereby Blue Nile only purchases diamonds and gems when a customer places an order. The low operating cost allows Blue Nile to offer their customers discounted prices at about 20% to 35% less than the traditionally established stores. 2.
Supplier Bargaining Power Supplier bargaining power is moderate for the online jewelers. Obviously there are a fixed amount of diamonds and precious metals available for the jewelry market. Relationships with suppliers are also important because most of the online retailers use a “just-in-time” supply chain model and carry very little inventory. What offsets these strengths are the number of suppliers with quality products and the magnitude that one large jeweler can have on a supplier’s total sales. Blue Nile’s top three suppliers accounted for only 28% of
Blue Nile’s strategy was offering high-quality jewelry at competitively attractive prices and providing thorough information and trusted guidance all through the purchasing process. Blue Nile seems to be achieving the best cost provider as they offer jewelry at a lower cost. 4. What do you like and dislike about Blue Nile’s business model? I like Blue Nile’s business model.
Outsourcing operations/services v/s maintaining high quality customer service 5. High value sales (6 digit single sales) v/s high gross margin 6. Cutting prices to make sales v/s increasing net income Blue Niles sells only through the Internet. Pull back on online advertising, due to increased cost; lessen its visibility on search engines, reducing brand identity and recognition. Further increase in product line both in terms of high price and product variety, to attract a large range of customers, can affect their lean operating model increasing inventory costs.
These lead firms to use whatever resource they have as weapon to gain competitive advantage. If you at the rivalry in the online DVD rental industry, you see that it is high. Rivals in this industry carry a feebly differentiated product, which intensifies threats from rivals. In this industry, the cost to switch or change suppliers is very low; making it easier for consumers to have less brand loyalty. They can switch wherever there is a lower cost being offered.
Blue Niles economical supply chain and comparatively low operating costs allowed it to sell comparable-quality jewelry at substantially lower prices than the leading competitor. Blue Nile found a way to exclusively make arrangements that allowed diamond and gem supplier’s products on the website. These arrangements included multi-year agreements where only designated diamonds were offered only on their website. Second, they didn’t purchase a diamond or gem from suppliers until a customer placed an order. In contrast, traditional jewelers had far bigger
Small businesses are also important for innovation and new ideas. This is because it can be much easier to come up with and agree on ideas in a smaller business as there are less levels of power within the business to accept it; a bigger business can spend a long time on accepting new ideas that could benefit the business, and even further – the UK economy. This can also help as small businesses have come up with many good ideas which then get sold to bigger companies that have the power and the money to put plans into action which can then help the UK economy. The UK economy also benefits from small businesses because of the taxes they pay. Although they may pay less than a massive business there are so many small businesses that the government receives more money through taxes.
As a preparer of financial statements, management will want to produce an income statement that shows a profit (profit maximization motive). The main financial statement users are bankers, shareholders, and potential shareholders. Users will want statements that reflect the performance of management (stewardship) and predict the company’s ability to pay dividends and make loan payments (cash flow prediction). The ethics of the accountant are an issue here, as
Therefore a blue ocean is created when companies’ actions favorably affect its cost structure and its value proposition to buyers. Three basic frameworks and tools were developed as essential analytics for organizations to venture into the blue ocean of uncontested market space. The first being the Strategy Canvas, which is a significant analytical and action tool. It enables a company to envisage the competitive factors and the current state of those factors
There is no clear market leader in the industry amongst the competitors listed there are also numerous small firms and single location retailers, this increases the competition in the industry. These retailers deal in precious commodities like diamonds, gold, silver, and platinum. Attaining these precious commodities at a low cost becomes a huge part of the competitive environment. The differentiation in the industry