Blue Nile, Inc. Case Assignment Questions
1. What is Blue Nile’s strategy? Which of the four generic competitive strategies discussed in
Chapter 3 most closely fit the competitive approach that Blue Nile is taking?
2. What does a SWOT analysis of Blue Nile reveal about the overall attractiveness of its
3. What is your appraisal of Blue Nile’s financial performance based on the data in case Exhibit
4? 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 4? Use the financial ratios in Table
5.1 of chapter 5 as a guide in doing the calculations needed to arrive at an analysis-based answer
to your assessment of Blue Nile’s recent financial performance.
2006 2005 2004 2003 2002 2001 Cost of sales as a
% of net sales
Gross profit margin
SG&A expenses as a % of net sales
Operating income as a % of net sales
(operating profit margin)
Net income as a % of net sales (net profit margin)
Current ratio n.a. n.a.
Net income as a % of stockholders’ n.m. n.m. n.m. equity (return on equity)
Days of inventory
n.a. = not available
n.m. = not meaningful (due to negative stockholders’ equity in 2001-2003)
5. What strategic issues and problems does Blue Nile management need to address?