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Strategic Management Concepts and Cases 11th -515-524.pdf 1 Threats of potential new entrants
A high return of the industry will attract some potential entrants into the industry, potential entrants will lead to more intense market competition, which may affect the structure of pricing. The number and quality of potential entrants are determined by the entry barriers that have been established, and some of the firm’s response to the current market. Barriers to potential entrants to the invasion include: high capital demand, economies of scale, product diversification, limited distribution channels, government regulation as well as the establishment of supplier and consumer loyalty. As far as Blue Nile is concerned, it is difficult to invade, because it is a diamond enterprise, enterprises should be established as a basis of much capital, but the general enterprise does not exist such ability, even if there is the ability to invade, also need a certain professional knowledge and do some in-depth market research.For example, how to get the trust of the suppliers is a challenge. Blue Nile is a large-scale enterprise, the general business of the entry is difficult to affect its status in the industry. At the same time, after many years of market accumulation, Blue Nile already has its own customers. Even if the new brand is also very difficult to shake their trust in blue. The most important advantage is that the diversification of products, customers can according to their own preferences, and holidays, to select different diamonds to make their own exclusive.
2.Bargaining power of buyers
the bargaining power of the consumer directly affects the entire market, such as they generally expect low prices or special services. Their bargaining power is directly forced to reduce the price or quality of the upgrade, which also makes the company’s operating profit decreased. In my view, there is almost no such problem in Blue Nile, because we can see that Nile Blue provides customers with a more convenient way to buy jewelry. Simple design and operating system to provide customers with tens of thousands of independent certified diamonds and the classic collection of jewelry, to give customers tens of thousands of extraordinary choice. And in the price is the traditional jewelry retailers homogeneous product price of 6-7 fold. To provide customers with product identification knowledge, so that consumers can make a wise choice, is the main principle of Nile Blue. At the same time, its service is also in place, as the retailer’s website, its products almost oriented around the world. However, most countries and regions enjoy free postage for mailing services.
3.Bargaining power of suppliers
Similar to the threat to the bargaining power of consumers, suppliers’ bargaining power also directly affects the market, suppliers want to further reduce the cost to achieve by driving up prices or reducing the quality of the product. Nile blue with quality suppliers to establish a good cooperative relationship, can get the same quality of the price of the same quality, while the diamond manufacturers are willing to put their bare drilling through Nile Blue exclusive sales. The advantage of Nile blue is that it has a good relationship with more than 40 suppliers, which can guarantee the material to be supplied in time, and it is not easy to be controlled by the supplier
4.Threats of substitutes
The product strategy of marketing should be turned to the customer as the center, the customer requests the demand, the enterprise auxiliary customer design and the development product, satisfies the customer personalization demand. Therefore, this method is called “production and consumption of the connection”. Marketing process is not only the process of selling products, the first is a process to meet the needs of customers, and customer needs are many, not only the physical and material needs, but also psychological and spiritual needs, therefore, marketing products should be a product as a whole. While, it’s not easy to be replaced.
5.Threats of competitive rivalry within the industry
Blue Nile’s decision to offer the highest quality diamonds in spite of it operating in an online environment where it could easily position itself purely as a “discounter” has been key to creating this dilemma. Competitors with brick and mortar locations are then left to decide whether they should sell their product online at a lower cost than a customer would find in-store in order to compete (knowing that this could negatively impact the brick- and-mortar location) or not go head-to-head with Blue Nile online.13 This dilemma helps Blue Nile keep its stronghold as the largest online jewelry retailer.