AutoParts Case:

1. List the three apparent problems OR potential problems from the case. No explanation is necessary, provide only the list.

2. List out the causes to the problems. Problems are just the symptoms (e.g., low profits) while causes are the reasons that the problem exists (e.g., pricing too high). No explanation is necessary, provide only the list.

3. List out and explain two or three recommendations that you consider to be the most appropriate in solving, or reducing the severity of, the existing problems.

3. AutoParts.com It is with a heavy heart that I relate to you the sad tale of one Adam Smith, an economist, connoisseur of all things German and his deplorable experience with an online auto parts warehouse named, perhaps not very imaginatively, autoparts.com, and touted as the world's largest online auto parts store. The first hint that something was awry occurred when one fine evening after an invigorating game of tennis, we middle-aged tennis players gathered at an eclectic south-Denver pub named Yard House. After consuming his usual dose of two (or was it three?) tall glasses of Spater, Adam boastfully stated the following words: I will single- handedly be the downfall of this company. Little did I realize at the time that Adam was determined to make this statement a truism; and narrating his story painfully, in vivid detail, to me (and a thousand other people, no doubt) was his chosen methodology for ensuring the company's downfall. Adam's woes with this firm first started about six months aforehand when he detected a problem with one of the rear wheel bearings of his ivory white 2008 Volkswagen Phaeton. He called several local parts stores in the Denver area and found that they did not stock the bearing since the vehicle itself was one of the rarest models found on the road. Indeed, most of his friends - regrettably, myself included - laughed at his choice of the "ultra-luxury" $70,000 Volkswagen, which we dubbed "the white elephant. His repeated assertions that it was a "bargain" because it had a "Bentley W12" engine only triggered further scorn. However, nobody questioned the fact that the car was rare; so rare that even the authorized Volkswagen dealers did not carry the wheel bearing, although they could special-order it (in one week from Germany) for $505. Adam, being a poor economics Professor and a self-proclaimed Thoreau, almost had a heart attack when he heard the price. Knowing the virtues of the internet, he searched and found auto-parts.com. a store that, to his delight, actually claimed to stock the product . Being a new online store, autoparts.com also offered attractive discounts, such that the aforementioned wheel bearing would cost Adam only $148 including shipping, a savings of $357. Adam was ecstatic. Lured by the cheap price, he ordered the product immediately using his credit card. The web retailer had promised delivery in 3-5 days. Adam mentioned this wonderful deal to his friend Karl Marx who, in turn, promised to help him install the product once it arrived as a gesture of comradery. (For, you see, in spite of his rather extroverted personality, Adam was not adept at handling tools and being thrifty, did not want to hire a European car mechanic.) Two weeks went by and Adam did not receive the part. He sent a polite email to the customer service representative of auto-parts.com inquiring about the delay. He got the following reply: Dear costomer We have noted your problem and are researching the matter. We will get back with you within a week. Thank you for your understanding and being a loyal autoparts.com customer. Have an autofantastic day. Infuriated by this email message, and hence unable to focus his thoughts on his latest book regarding the impact of Brexit on global wealth, Adam replied. "It takes me 10 minutes to place the order and hardly more than 30 seconds to pay for it, but it takes you a WEEK to research it? Is this your idea of customer service? You should be ashamed of yourself. He received no response to this message from the firm. 1 Two weeks later, there was still no reply. Adam sent another email, as follows: I ordered a wheel bearing (transaction number 1723762) four weeks ago. Two weeks ago, I sent you an email message (attached) and you said you would get back to me within a week. Since you have not done so, I am assuming that the part has not yet been sent out. in which case PLEASE CANCEL MY ORDER AND REFUND MY MONEY IMMEDIATELY YOU DOUCHEBAGS. He got the following response: Dear costomer. We have noted your problem and are researching the matter. We will get back with you within a week. Thank you for your understanding and being a loyal autoparts.com customer. Have an auto fantastic day. Adam's indignation at this annoying machine-triggered email. I shall not attempt to describe. Suffice to say that, when the rage subsided to tolerable levels, he started searching online for more information about the company. After considerable research, he found the phone number of the president, Mr. Thorstein Veblen and called him (surprisingly he actually answered the phone) and gave him a piece of his mind. The president, however, calmly heard Adam and agreed to refund his money and cancel his order. He claimed that an overwhelming response to our web-site, by conspicuous consumers, which far exceeded our wildest imagination" was the cause of the problem. Professor, please accept my apologies. It is really a guessing game trying to figure out demand and pricing issues when you start a great new customer-centric web business. We probably priced our products too inexpensively to begin with. Since then. Adam has been very vocal in telling his fellow economists and acquaintances (both offline and online) about his negative experience with Auto-parts.com and (sadly) the fact that he ultimately had to part with $505 plus tax for the wheel bearing. His obsession with autoparts.com, and desire to command every conversation, has recently reached intolerable levels such that many of his fellow tennis players have started enquiring politely if Adam would be joining the group for post-match festivities and if so, unsurprisingly found some other pressing issue to attend to. Interestingly, Adam received the following email recently from the firm: In order to thank you for being a loyal customer of Autoparts.com, we are offering you a 10 percent discount on all purchases, good for the next 7 days