Read the case and answer the questions given at the end. There are 2 questions

The shutdown of Kozmo online store

A case of Poor operations management

Kozmo, the Web courier went belly up in 2001, less than four years after it introduced its service promising to deliver to customers' doorsteps just about anything they wanted in about an hour. Kozmo raised more than $250 million in financing from venture-capital firms, and from heavyweights including Starbucks Corp. and Amazon.com Inc., en route to a planned initial public offering before falling under the weight of an overly ambitious expansion and poor operations management.

New York-based Kozmo, the 3-year-old company announced that it would stop delivery service in all nine cities it operates. New York-based Kozmo, which dispatched legions of orange-clad deliverymen to cart goods to customers doors, is the latest dot.com dream to evaporate in the market downturn. Amazon com, venture capital firm Flatiron Partners and coffee giant Starbucks were among the investors in Kozmo.

From the very beginning, supply chain management was to be a core competency of Kozmo. The promising dot.com would deliver your order everything from the latest video to electronics equipment in less than an hour. The technology was superior, the employees were enthusiastic, the customers were satisfied. But eventually, Kozmo ran out of time and money.

Kozmo was started by a pair of twenty-something former college roommates. They got the idea for the company on a night when they craved videos and snacks and wished a business existed that would deliver it to them. Kozmo offered free delivery and charged competitive prices when it launched in New York. Though customers loved the service, the costs of delivery were high. After co-founder and former Chief Executive Joseph Park stepped down, Burdo slashed Kozmos overhead, instituted a delivery fee and oversaw several rounds of layoffs. The company also closed operations in San Diego and Houston. The company had reached a milestone when it reported profits at one of its operations for the first time. Kozmo later saw two more operations reach profitability as a result of brisk holiday business.

Kozmo said that investors promised a total of $30 million in private funding. But next month the company learned that an investor had backed out of a $6 million commitment. Kozmo executives had been working on a merger deal with Los Angeles-based PDQuick, another online grocer. The deal collapsed when funding that was promised to PDQuick did not materialize. Sources said Kozmo still has money but decided to close now and liquidate to ensure that employees could receive a compensation package.

Kozmo Chief Executive Gerry Burdo was upbeat about Kozmos future, saying he was looking to steer Kozmo away from its Internet-only business model and toward a clicks and bricks approach. But some analysts say Kozmos business model only made sense in the context of a densely packed city such as New York. Vern Keenan, a financial analyst said the service had a chance to work in only a few other cities around the world, such as London, Stockholm or Paris. This seemed like a dumb idea from the beginning, Keenan said. This grew out of a New York City frame of mind and it simply didnt translate.

Questions:

1. What could have prevented its shut-down?
2. As an operations manager what did you learn from this case?