The Rise and Fall of Iridium Case Study Solution
Initial Strategy and the Subsequent Changes
Initially, the company hoped for 50,000 subscribers per month, after the launch of Iridium. But the company faced many problems till May 1999, as Iridium had only 10,000 subscribers. After this, the company announced to sell its phone as a Y2K insurance policy, since the network orbited above the earth and theydid not expect to face any problem in the future. (Chambers, 1971)
Assumptions and Its Contribution to Product Failure
The market share of the Iridium handset slid is only around 15%. Moreover, the company estimated $3.5 billion of expenditure but later on it reached $5 billion. This wrong assumption exposedlead the company to borrow a massive amount.. The company recognized how its “escalating commitment” to the Iridium project, which blinded it from recognizing the actual cost. Iridium failed to consider the time limit to build infrastructure for its system and implement it. (The Rise and fall of Iridium, 2020).
Motorola failed to sustain its leadership position, which is sometimes blamed on its unsuccessful attempt to commercialize its Iridium mobile network base on satellite technology. The company failed to assume the change in demands of the customer and in the market trend, as the price of the hardware was falling globally, but still Iridium was offering them at higher prices, which led it towards expose themselves towards failure.
Customer Adoption Issues
The Iridium value network failed to assume the overall project cost, which led the company towards a huge amount of borrowing. The company even failed in changing its working style according to customers’ demand. The whole mobile market changeditself and especially the newly launched company Globalstar, also adopted the market strategy and sold the products at a low price with light equipment. But Iridium was still selling its product at an expensive rate with heavy equipment. Easily movable products always attract customers,but the company had miserably failed to facilitate its customer through these products.
Assumptions to Support Customer Adoption
Iridium value network assumes that to provide the product at market rates with low weights, support in resolving customer adoption issues. The company adopted the strategy of selling its product as a Y2K insurance policy. The company also looked forward to plan a new financial plan with investors and lenders. (The Rise and fall of Iridium, 2020)The new financial plan will help to meet current bankruptcy issues with satisfying the need. Currently, the satellite will only support 10,000 calls, because of this the other customers can’t even try the wireless handset, and they won't even purchase it. The company launched 66 satellites in space, which indicated that the phone will not function or operate inside the buildings. The customers have to come out of the building to use this wireless handset. The value network, assumedthat the new financial plan will help to meet all issue that the customers face.
Forecasting Demand
As discussed above; there are numerous methods for forecasting. The ARMA, ARIMA, SARIMA, and more will help in forecasting the demand for a radical product. (Chambers, 1971) The assumptions that would help in forecasting the potential demand is the past trend, culture, consumer behavior, need to product, and nature of the product. This will help the company in forecasting the potential demand for a product. (Oti-Yeboah, 2018)...................................
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