Read this and analyze it. 2023 Spring Strategy Games case MoonStone, Inc. 30.05.2023 Company Built on the premise of making engagement ring selection simpler, MoonStone, Inc. has developed into the largest online retailer of diamond engagement rings. Unlike traditional jewelry retailers, MoonStone operates completely store-front-free, without in-person consultation services. The business conducts all sales online or by phone and sales include both engagement (70%) and non-engagement (30%) categories. MoonStone focuses on perfecting its online shopping experience by providing useful guidance and education, extraordinary jewelry, at competitive prices. MoonStone's vision is to educate its customer base so that customers can make an informed, confident decision no matter what event they are celebrating. It wants to make the entire diamond-buying process easy and hassle-free. In addition, an important part of MoonStone's vision, as CEO MARY said, is for the company to be seen as the "smart" way to buy diamonds, while saving 20%-40% more than one would in the typical jewelry store. Moreover, Blue Nile offers customers financing options, insurance for the jewelry, a 30-day return policy and free shipping After its IPO in 2004, MoonStone shares traded on the NASDAQ. The company has been awarded the Circle of Excellence Platinum Award, which customers use to rank the best online company in customer service, by Bizrate.com since 2002. Being the only jeweler to be recognized for this excellence is a true testament to MoonStone's solid business. Strategic Direction MoonStone is in the business of offering "high-quality diamonds and fine jewelry at outstanding prices." It is a publicly traded company, making its ultimate business objective to achieve the highest return possible for its shareholders. In order to do this, MoonStone focuses on the following: Cause disruption in the diamond industry by creating a "two-horned dilemma." MoonStone has been able to effectively put its competitors in a position where if they try to compete with MoonStone directly, they compromise an area of their own business (one edge of the horn), and if they do not choose to compete with MoonStone, they slowly lose market share and competitive positioning (the other edge of the horn). MoonStone'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 a store in order to compete (knowing that this could negatively impact the brick-and-mortar location) or not go head to head with MoonStone online. This dilemma helps MoonStone keep its strong position as the largest online jewelry retailer. Stuck in the Middle Operating in a niche segment, MoonStone is "stuck in the middle" of the diamond engagement ring market. It is not at the top end of the jewelry retail market with the likes of Tiffany & Co. or DeBeers. It is neither at the low end of the market, with the likes of Amazon or Overstock.com. MoonStone has found a strong growth market by providing high-quality jewelry at discounted prices. Unfortunately, as the company increasingly grows its market share, competitors at the high end and the low end will look to squeeze into the middle niche that MoonStone currently dominates. Tiffany & Co. and DeBeers have already begun to infuse their online presence with aspects of MoonStone's approach. Amazon and Overstock.com are likely to look to add higher-priced jewels to their offerings, as broad market acceptance of purchasing jewelry online increases. Michael Porter states that the middle is the worst place to be. MoonStone's Competitors Low quality on-line Online retailers include Amazon, Overstock.com, Bidz.com, which are well-known for their extreme discounting, thus creating tremendous competition for MoonStone (Low quality on-line competitors). Low quality on stores MoonStone's many competitors include various different retail outlets like department stores, major jewelry store chains, independently owned jewelry stores, online retailers, catalogue retailers, television shopping retailers, discount superstores, and, lastly, wholesale clubs. Many local jewelers have great relations with their clientele in smaller communities, which poses a challenge for MoonStone to achieve greater market share. High quality on-line DeBeers, which owns 40% of the world's diamond supply, 23 is establishing its presence online as a trusted advisor, just as MoonStone has done. Upon visiting DeBeers website, it is clear that MoonStone's consultative approach online has made an impression on DeBeers, as the website has an "Advice" section under Bridal rings and an "Art of Diamond Jewelry" section that both educates and serves as a source of confidence of quality. High quality on stores Tiffany & Co., one of the best-known luxury brand names, continues to stand out in the jewelry sector by opening stores in urban America and has shown to be a success because many consumers are willing to pay extra for a well-known brand name. Tiffany also offers great service at its stores through product information. Lastly, owning a piece of jewelry from Tiffany's -and receiving the iconic blue box -has an air of prestige all its own that MoonStone cannot replicate. In spite of the value associated with the Tiffany name, due to its lean business model, MoonStone's return on capital is three to four times better than Tiffany's. What would you do? Craft a strategy for MoonStone, assuming that you're the next CEO. Would you try to move towards the up-end? try to move towards the low-end? both at once? stay as it is? Do you have any additional proposals?