Action Wagon Case Study

Submitted By steven8369
Words: 964
Pages: 4
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The issue Originally, Action Wagon was founded by Joshua MacAdam and Devin bailey in 2003 as an eBay drop-off store in America’s second largest metropolis, Los Angeles. ( Action Wagon case, p4 ), but then they faced the financial problem because they underestimated the costs and also realized that the software available in the market was insufficient for the store’s needs so Joshua decided to designed the program by himself . Additionally, they still have legal issue since the government thinks drop stores and pawn shops are the same, so officers from the Los Angeles Police Department forced Joshua to cease doing business in this location ( Action Wagon case, p7 ). Since Action Wagon retail store was not making enough money to remain in the business, so Joshua began to explore other potential revenue streams, In February 2004, he concluded that the company could sell the software that he was developing for his own store to other eBay consignment stores, so he decided to dedicate himself fully to the software project ( Action Wagon case, p10). Finally Joshua got a good chance when We’ll Sell It Inc offered to buy AW’s retail operation in Feb. 2005 plus the assumption of AW’s debt and also license Auction Wagon’s software ( Action Wagon case, p11 ) so he could focused on software development, then he developed two programs called AW Professional Edition and AW Network, but still he still faced cash flow and legal problems, later on Joshua knew that he needs to generate new sales quickly, a chance to go to that direction is to approach eBay Live! 2005 convention, which is really expensive or consider closing the doors of the twp-year old company ( Action Wagon case, p1 ).

Analyze the problem
Cash flow problem

1. AW wanted to hire additional employees to provide technical support and customer service, but was unable to afford them.
2. The lower priced product AW network required much more administrative support than AW professional edition did ( Action Wagon Case, p17 ).

Legal Problem

Although Joshua had been careful in the language used in any agreements with customers, stores who used the AW Network software (and associated service) presented a potential problem. If customers would be considered franchises under the law, those customers would be entitled to certain franchisee protections-protections that AW could not afford to provide ( Action Wagon Case, p18 ).

Competitors

Competitors were a issue for AW when it was a retailer, now AW became a software company they still got the advantage as a pioneer.

Time issue

Since AW ran out of operation fund, Devin stepped down as Chief Operating Officer in April 2004, primarily because the store could not pay him enough for him to meet his personal needs, after We’ll Sell It Inc. bought the retail company from AW, Joshua asked his brother David to run the software company together, they handled as many sakes inquiries as they could, but programming demanded their attention, customers needing service or technical support demanded their attention too, they did not have enough time to handle everything ( Action Wagon Case, p18 ).

Conclusion According to the Action Wagon case, I can see Joshua was simply a programmer, he was able to develop two wonderful programs for customer to use, even press praised Action Wagon’s business, but I think Joshua did not do enough research before he began the business. For example,
1. He underestimated the cost to run the business.
2. He did not know the regulation about drop-off stores, pawn shops and secondhand stores.
3. He underestimate the services requested by AW Network program, and had no solutions when the problem came out. A lot of issues
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