Question

1. Using the concept of Differences between business strategies and functional tactics, what do you learn about Blue Nile that is important to strategy implementation for them?

Blue Nile developed a simple business strategy that applied many distinct functional tactics. The strategic direction Blue Nile used was websites for the online foreign and domestic diamond purchasers at a discount. The tactics applied was they were not a brick and mortar business, their diamonds were high quality and rare, they did not hold inventory or stock, and they allowed customers to build their own jewelry. These tactics enabled them to compete with the stronghold companies DaBeers, Tiffany, and Guild. Later in their success they applied more of a long-term business strategy in terms of utilizing FedEx as well as claiming a social/ethical responsibility to how they obtained their diamonds.

1. Using the concept of Functional Organizational Structure, what do you learn about Blue Nile that is important to strategy implementation for them?

Because Blue Nile only had 193 full time employees, they organized into few functional organizational structures; marketing, operations, and logistics. Marketing was likely the most important due to the fast evolution of technology, internet sites, and applications. The web designers and online customer service team had to work diligently to stay ahead and continue to improve customers online experience. Operations and logistics ensured Blue Nile’s customers received the best quality product with the least amount of difficulty. The company had its independent suppliers as wells as its own diamond experts who validated the diamonds and records. Although Blue Nile was unable to reach countries that lacked technology, they were successful in partnering with FedEx’s best in class shipping and international reach.

1. Using the concept of Balance of control/differentiation with coordination/integration, what do you learn about Blue Nile that is important to strategy implementation for them?

Since Blue Nile was not a brick and mortar business, their differentiation was not as relevant to its customers. Blue Nile’s dividing activities was their foreign markets and diamond suppliers, they did not have diamonds on hand which meant they needed to be purchased, inspected, and shipped expeditiously and securely. The company had to operate in a differentiation mode as there was no physical store; integration was not part of their strategy. As the online market began to grow in popularity Blue Nile adopted more competition from the big name and jewelry giants. Today, Blue Nile has established five brick and mortar showrooms and stands behind their original business process, “You should not pay a premium to own a high-quality diamond. Because of our disruptive business model, we pass the savings on to you.”

1. Using the concept of Strategic Surveillance Control, what do you learn about Blue Nile that is important to strategy implementation for them?

Blue Nile monitored a broad range of events inside and outside the firm which affected the course of its strategy. Blue Nile recognized its sales and numbers grew annually on events such as Valentine’s Day, Mother’s Day, Christmas, and New Year’s. Blue Nile also realized where it outpaced net sales growth while achieving a cost savings with regard to sourcing and selling. Blue Nile did not have any debt and received tax benefits from selling stock options. Today, Blue Nile claims to be the world’s largest online jeweler. A quick Google search shows they are among the top four, James Allen, White Flash, and Brian Gavin Diamonds were the top three. Blue Nile has evolved significantly, provide education guides and tutorials for its online customers, price matching, lifetime warranty, free shipping, and of course their original policies such as conflict free diamonds and free returns.

Answer 1

1) Blue Nile was clear in its business strategy that they wanted to be seen as a value added product provider which differentiated itself from others. Also it was clear that they wanted to keep the overheads low and follow an asset light model. As a result, they did not have a physical presence and their entire marketing and distribution tactics (which was of course part of their functional tactics) was to build a great user interface for customers to be able to order and design their own jewellery. And this was backed by a robust operations or customer order fulfillment team to deliver orders on time and as per promised quality.

2) Blue Nile had around 190 employees and the organization was built around functional blocks to support the overall strategy of differentiation. The marketing or customer interface team provided a "wow" factor by delighting the consumer through a world class online interface used for ordering and designing the jewellery. The operations and supply chain team partnered with good sources of diamonds and stones and also partners such as FedEx to maximize the distribution reach and aid competitive advantage.

3) Blue Nile didnot have a physical store and in order to differentiate from their competitors, the company built a robust procurement and inspection regime to ensure diamonds used in jewellery are assured of a quality. Then they tied up with shippers and world class logistics companies to deliver the products in a timely manner. To overcome their lack of vertical integration, they offered a differentiated experience for the customers.

4) Blue Nile, through data analysis of sales data and events understood that sales are impacted by major events such as Valentine's day, Christmas and New Year day.So by monitoring the cosumer sentiment around these events, they were able to innovate and drive campaigns to increase revenue. Also continual focus on costs and lower overheads eventually ensured that their profits grew faster than their sales. Thus a continual environment of external and internal surveillance ensured good profitability for the comapny.