Supply Chain Mgt – Blue Nile case
Read the Blue Nile case attached. Summarize and discuss it by answering the following questions:
– What are some key success factors in diamond retailing? How do Blue Nile, Zales, and Tiffany compare on those dimensions?
– Evaluate various metrics of the three companies, such as Return on Equity (ROE), Return on Asset (ROA), profit margin, asset turns, Accounts Receivable Turnover (ART), Inventory Turnover (INVT), Account Payable Turnover (APT), and Cash-to-Cash cycle (C2C).
– Which of the three companies do you think is best structured to deal with weak economic times?
– What advice would you give to each of the three companies regarding its strategy and structure?
No figure or diagram allowed
Do not use bullet-type summary
470 words is fine /no longer than that
Blue Nile and Diamond Retailing1 a;
A customer walks into your jewelry store with printouts The Diamond Retailing Industry in 2008
of diamond selections from Blue Nile, a company that is
the largest retailer of diamonds online. The list price for ,For bOth WhOICsalers _and, retallers m. the dlamond
the customer’s desired diamond is only $100 above your 1ndUStry’ 2008 was tummg Into a very dlfficult yeah It I.
total cost fora stone of the same characteristics. Do you was $10 Pad at the supply em? that the dealers trade
let the customer walk or come down in price to assocmtion, the World Federation of Dlamond Bourses,
competefi issued an appeal tor the diamond producers to reduce
This is a dilemma that has faced many jewelers. [he SUpply Of new gems entering the market in an effort 7
Some argue that jewelers should lower prices on stones m reduce supply’
to keep the customer. Future sales and add-on sales such HOWCVeTa [he nglfl’s largest producer, De Beers, v.
as custom designs, mountings, and repairs can then be appeared “”mOT’ed» refusmg to give any comment to
used to make additional margins. Others argue that “mall producuoln‘ The company had recently opened
cutting prices to compete sends a negative signal to loyal the Vo9rspoed mme m South Africa’ WhiCh’ When fully
customers from the past who may be upset by the fact operational, could add 800,000 carats a year into an
that they were not given the hest price. already oversupplied market. Historically, De Beers had
AS the economy tightened during the holiday exerted tremendous control over the supply of dia- p
season of 2007, the differences in performance monds’ gomg so far as to Pumhase large quantities of
between Blue Nile and bricks-and-mortar retailers rough dlamonds from other producers. In 2005, the-.53
were startling. In January 2008, Blue Nile reported a European Comlmssmn forced De Beers to Phase 0‘“ its i
24 percent jump in sales during its fourth quarter. agreement to buy diamonds from ALROSA. the world’s ‘v’
For the same quarter, Tiffany posted a 2 percent drop in second urges? diamond Pmducera WhiCh account“ for
domestic same-store sales, and Zales