Blue Nile Inc. in 2010: Will Its Strategy to Remain Number One in Online Diamond Retailing
Work?

1. How strong are the competitive forces confronting Blue Nile and other online retail jewelers? Which one of the five competitive forces is the strongest? Do five-forces analysis to support your answer.
The competitive forces are intense as there are several online and offline jewelry retailers and there has been a decline in sales due to the economic recession. Many online and physical stores offer high quality jewelry at competitive prices so customers have substitutes and jeweler companies have fierce competition. Blue Nile has managed to gain a competitive advantage with the supplier relationships as the company can get more …show more content…

Their gross profit margin is 21.63%, which indicates profit but they always want to increase their margin. Their current ratio is 1.34. It is good that they are higher than 1, but they need to try to reach a ratio of 2. Their strategy seems to be working as they are making a profit before they even have to pay their suppliers.
7. Does Blue Nile have adequate competitive strength to go head-to-head against its rivals? Do a weighted competitive strength assessment using the methodology presented in Table 4.4 on p. 123 of Chapter 4 to support your answer. Has Blue Nile built a sustainable competitive advantage in the online retail jewelry business? Why or why not?
I am not sure Blue Nile can go head-to-head against rivals because their market share is significantly lower than the top competitors. They do have sustainable competitive advantage in that they provide high quality products at reasonable prices while providing customers with extensive knowledge about the product so they get what they pay for. They need to perfect their strategy so as to gain new customers to increase their profits and eventually market share before they go against their top competitors.
8. What strategic issues and problems does Blue Nile management need to address?
They need to address their issues of having a great amount of debt so as to generate profit. They need to gain more customers so as to compete with