Case Studies and Management Resources
Asia's Most Popular Collection of Management Case Studies |
 |
Case Studies and Management Resources
Asia's Most Popular Collection of Management Case Studies |
|
 |
Iridium had invested lot of money in R&D, building, deploying and maintenance of its satellite constellation. Though Motorola realized the fact that the venture would involve substantial time and cost outlays and was very risky, it was perturbed when the venture consumed more time and money than expected. By 1999, Iridium found itself in deep financial trouble with a huge amount of outstanding debt to be repaid to its bankers and creditors. Chase Manhattan, Iridium's lenders had already given three extensions for repayment of loans by August 1999. Analysts remarked that the company's troubles were not due to the concept of satellite telephones, but due to its faulty strategies.
|
Iridium had to spend a couple of million dollars every month just to maintain its infrastructure. In addition to the 66 satellites being used, Iridium was incurring heavy expenditure to maintain the spare satellites as well (to be launched in case any of the 66 satellites failed). Moreover, the company planned to offer its services to a broad customer base so as to make the business viable. |
But this market was not large enough. Consequently, in 1999, it had only 20,000 subscribers as against an estimated 60,000. Customers were not interested in using Iridium's services for various reasons. First, Iridium's subscribers' had to essentially buy the specially designed Motorola handsets. They could not use any other handset. Consumers used to sleek and cheaper handsets were not happy with the bulky handsets that weighed almost a kg10. They were not only difficult to carry around but awkward to use as well. Second, handsets were also priced on the higher side at about US $2500 to US $3000, which was as a major deterrent.
10] The more popular cellular phones weighed less than 100 grams as compared to the heavy satellite phones and
were small enough to fit in the customer's pockets.
Case Code : BSTR031
Themes: Turnaround Strategy
Case Length : 11 Pages
Period : 1999-2001
Organization : Iridium LLC
Pub Date : 2002
Teaching Note : Available
Countries : USA
Industry : Telecommunication
Business Strategy
Finance
HRM
Insurance
IT and Systems
Marketing
Operations
Leadership
More Case Studies >>
Business Environment
Business Ethics
Business Strategy
Human Resource Management
IT and Systems
Marketing
Operations
Micro Case Studies >>
Micro Case Studies
Free Case Studies
Articles
Interviews
Book Reviews
Glossary
Online Quiz
More Free Resources >>
Best Selling Case Studies
Business Case Studies
Learning With Case Studies
Cases Used in Textbooks
Prize Winning Case Studies
More Case Studies >>