Iridum Essay

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IRIDIUM CASE Q.)Financial strategies used in Iridium. Ans.) Q.)Whether they have series of financing is in right order or not? Q.)Why did Iridium failed? Is it bad strategy, bad execution, wrong financing or bad luck? Bad Strategy- decision based on previous investment rather than size of expected return. In spite of known problems of Iridium, management maintained faith in Iridium either expecting recovery of the cost, or belief that future gains are available. A highly leveraged capital structure. Design limitation, including phone size. Service limitation. High hand set and service price. A lack of controlling effort on partners, marketing efforts. Life span of satellites of Iridium was very small(5 years) but it’s time to make project operational was long. So, when it launched it’s operations in 1999, it’s satellite needs to relaunched in coming few years to continue it’s operations. It increase cost on Iridium. Not a viable business plan. It has sound technology at the time of concept but at the time of execution its technology seems unattractive or old. Bad Execution- Hand set is big Service is expensive. Less numbers of subscribers. Iridium targeted customers of 2.25 million in 1999 but it achieved only 7188 satellite subscribers and 10294 total service subscribers, where as it required 27000 satellite subscribers and 52000 total service subscribers. Then company changed strategy for target customers but this target group was unable to fulfil its requirement of customers. Wrong target customer selection Unavailability of hand set during advertisement. High cost of hand set. Unable to use phone inside moving car or in buildings. Long time to develop the product causes other technologies to capture the market. Long concept- to- development time causes problem. These projects seems good investment

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