Blue Nile Case Research: Managerial Accounting
Blue Nile Case
1. Blue Nile’s Strategy for success in the marketplace is to increase Blue Nile recognition and create more customer traffic. They want to build a brand loyalty among their customers to encourage repeat purchases. Blue Nile has both online and offline advertising. They offer a wide range of high quality diamonds to appeal to more buyers. Also to keep their pricing competitive.
a. I would think that Blue Nile relies on operation excellence to keep customers coming back. They continue to improve operations in every step from their website to customer service.
b. The 10-K would support this because the net sales have continued to grow pretty rapidly. The gross profits have increased in the past five years as well.
2. Business risks that Blue Nile faces that may threaten its ability to satisfy the stockholder expectations would be a limited operating history. Because of the limited operations history it is more difficult to predict or forecast sales and operating expenses, which tend to be based on estimates used through history of events. Net sales and operating expenses are tricky to predict because they depend on the timing of the orders and the volume of orders received, which can be indecisive. Blue Nile has also incurred fixed expenses that will be difficult to adjust in case of a shortfall in sales. Thus giving Blue Nile a Quarter that produces less net income than expected.
a. Some control activities that the company could use to reduce these risks could be to create a plan to ensure sales. This may be extremely difficult but through marketing, create a higher demand for Blue Nile Diamonds, attract more website sales though promotions and discounts, to also encourage repeat clients. Encourage online sales of diamonds. Make sure that the delivery time is acceptable by customers.
b. Yes most of these risks are difficult to control. Blue Nile has to depend on a lot of outside factors to increase net sales. People may not always buy
1. Blue Nile’s Strategy for success in the marketplace is to increase Blue Nile recognition and create more customer traffic. They want to build a brand loyalty among their customers to encourage repeat purchases. Blue Nile has both online and offline advertising. They offer a wide range of high quality diamonds to appeal to more buyers. Also to keep their pricing competitive.
a. I would think that Blue Nile relies on operation excellence to keep customers coming back. They continue to improve operations in every step from their website to customer service.
b. The 10-K would support this because the net sales have continued to grow pretty rapidly. The gross profits have increased in the past five years as well.
2. Business risks that Blue Nile faces that may threaten its ability to satisfy the stockholder expectations would be a limited operating history. Because of the limited operations history it is more difficult to predict or forecast sales and operating expenses, which tend to be based on estimates used through history of events. Net sales and operating expenses are tricky to predict because they depend on the timing of the orders and the volume of orders received, which can be indecisive. Blue Nile has also incurred fixed expenses that will be difficult to adjust in case of a shortfall in sales. Thus giving Blue Nile a Quarter that produces less net income than expected.
a. Some control activities that the company could use to reduce these risks could be to create a plan to ensure sales. This may be extremely difficult but through marketing, create a higher demand for Blue Nile Diamonds, attract more website sales though promotions and discounts, to also encourage repeat clients. Encourage online sales of diamonds. Make sure that the delivery time is acceptable by customers.
b. Yes most of these risks are difficult to control. Blue Nile has to depend on a lot of outside factors to increase net sales. People may not always buy