Blue Nile Case Study
1. How strong are the competitive forces confronting Blue Nile and other online retail jewelers? Do a five-forces analysis to support your answer. If you were to forecast the future, what would this analysis look like in 10 years?
Potential entrants: Major online retailers, major jewelers, Village Silversmith
Current Competitors: Ice.com, Gemvara, Diamond.com, Jamesallen.com, Astley Clarke
Substitutes: Smaller/local Jewelry stores
Buyers: Couples to be engaged
Suppliers: Diamond mines, precious metal mines
10 Year Forecast: As many retailers slowly switch to selling their products online, Blue Nile may have more competition. The bad news for those potential entrants to the online markets is Blue Nile’s strong foothold in the current luxury online retailer. It will become harder and harder for new entrants as Blue Nile’s reputation only gets stronger.
2. What is your analysis-based appraisal of Blue Nile’s financial performance based on the data in case Exhibit 5? Create a chart that calculates for each year available 2005-2009 (1) a liquidity ratio: the current ratio (2) a profitability ratio: the net profit margin (3) an activity ratio: inventory turnover (net sales/inventory). How well is the company doing financially? Is there evidence that Blue Nile’s strategy is working—what is the story of the numbers in case Exhibit 5?
-From 2005 to 2007, Blue Nile’s revenue and earnings grew. Their stock prices rose over those years and even though the 2008 recession, Blue Nile did better than many other companies. In 2009, they bounced back a little bit, showing how good their company is. They have the market power reputation to pull through a major recession that hit almost every single company in the world. Even when the luxury companies got hit the hardest, Blue Nile still came out on top. Their resilience is amazing, but their strategy is obviously working.
3. What does a SWOT analysis of Blue Nile reveal about the overall
Potential entrants: Major online retailers, major jewelers, Village Silversmith
Current Competitors: Ice.com, Gemvara, Diamond.com, Jamesallen.com, Astley Clarke
Substitutes: Smaller/local Jewelry stores
Buyers: Couples to be engaged
Suppliers: Diamond mines, precious metal mines
10 Year Forecast: As many retailers slowly switch to selling their products online, Blue Nile may have more competition. The bad news for those potential entrants to the online markets is Blue Nile’s strong foothold in the current luxury online retailer. It will become harder and harder for new entrants as Blue Nile’s reputation only gets stronger.
2. What is your analysis-based appraisal of Blue Nile’s financial performance based on the data in case Exhibit 5? Create a chart that calculates for each year available 2005-2009 (1) a liquidity ratio: the current ratio (2) a profitability ratio: the net profit margin (3) an activity ratio: inventory turnover (net sales/inventory). How well is the company doing financially? Is there evidence that Blue Nile’s strategy is working—what is the story of the numbers in case Exhibit 5?
-From 2005 to 2007, Blue Nile’s revenue and earnings grew. Their stock prices rose over those years and even though the 2008 recession, Blue Nile did better than many other companies. In 2009, they bounced back a little bit, showing how good their company is. They have the market power reputation to pull through a major recession that hit almost every single company in the world. Even when the luxury companies got hit the hardest, Blue Nile still came out on top. Their resilience is amazing, but their strategy is obviously working.
3. What does a SWOT analysis of Blue Nile reveal about the overall