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Iridium Case_Team 3

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Iridium LLC
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  OPIM 5894 Advanced Project management Iridium LLC  Team 3 ã Richard Buskey ã Jonathan Weiss ã Daniel Mahzonni ã Prashant Mishra ã Vijay Gadigeppa ã Jonathan Koenig  Iridium LLC   ã What caused iridium to fail: was it a bad strategy, bad execution or bad luck?  – Bad Strategy ã Marketing and Sales mistakes ã Overpriced phones: $ 3,000 ã Prices: $3.00 - $7.50 per call ã Mixed predictions regarding the mobile satellite market  – Leslie Taylor Associates predicted a user base of 7 mill. subscribers and revenues of $8  –  20 bill. by 2003  – Forrester Research predicted that the global satellite market would be as much as $36 bill. by 2005. ã Very ambitious project  – Iridium had signed 256 operating agreements with local providers in over 100 countries by July 1999. The company still had to negotiate agreements with another 140 countries and territories.  Iridium LLC   ã What caused iridium to fail: was it a bad strategy, bad execution or bad luck?  – Bad Strategy (Contd.) ã Project Financing  – Iridium LLC was a spin-off from Motorola  – Assumption: Once project complete, would resemble a utility company with high margins and steady cash flows  – Not planned adequately for the entire project; no contingency plan  – Need based financing vs requirements based financing  Iridium LLC   ã What caused iridium to fail: was it a bad strategy, bad execution or bad luck?  – Bad Execution ã It failed to answer over 1 mill. sales inquires due to internal confusion and experienced logistical problems trying to distribute phones ã In March 1999, it was unable to fill 15,000 orders for satellite phones because the manufacturer could not ramp up production fast enough. ã Iridium announced that it had only 7,188 satellite subscribers, 10,294 total service subscribers and cumulative cash revenues of $195,000 as of March 31 [Expected: 27,000 subscribers, 52,000 total service subscribers and $4 mill. of cash revenues] ã Non-aesthetic hand-sets ã Advertising: Spent $180 mill. campaign

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Jul 23, 2017
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