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Fast Turtles

on 29 May 2014

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Transcript of Iridium

The vision of Iridium was conceived in 1985 after the wife of Motorola engineer, Bary Bertiger, complained that she was unable
to use her cell phone while vacationing in the Caribbean

Bary Bertiger envisioned a technology that would allow effortless communication from
and to any corner of the earth

Primary Objectives
Provide communication coverage for mobile phone users anywhere on the planet

Be one of the first movers in the satellite communication industry

Focus on a target market segment of business travelers

Iridium Failed to:
Consider the time to build and implement the infrastructure to support its system

Truly understand the changing demand for the
service and product it had to offer

Recognize how its “escalating commitment” to the
project blinded Iridium to actual costs and potential revenue

Abandon the project when outlooks were bleak

Consider the costs and limitations of its services
and products and how these would decrease

Diversify its board of directors
Six Steps to Decision Making
1). Define the problem
2). Determine the objective
3). Explore the alternatives
4). Predict the consequences
5). Make a choice
6). Perform sensitivity analysis
Collins, M. (2005). One World…One Telephone: Iridium One
Look at the Making of the Global Age. History and Technology

McIntye, D.A. (2009). Iridium. Time Magazine

Noble, C. (2000). Coming Back to Earth. Eweek
Down to earth reasons for the Iridium failure. The Independent

Finkelstein, S., Sanford, S. H. (2000) Learning from Corporate Mistakes: The Rise and Fall of Iridium.

Martin, M. (1999). Iridium Fails to Find a Market: Satellite Phone Misses Its Orbit. The New York Times.

Iridium Growth Story Remains Intact Despite Weak Subscriber Growth. (2012).Satellite News

Samuelson, W. and Marks, S. (2012). Managerial Economics
(7th Edition). Hoboken, NJ: John Wiley & Sons, Inc

Ezekiel Griffin II, Keith Parsons, Ryan Pedersen, Carlos Prince
BUSU 620: Managerial Economics
Professor Kurt Martsolf
Wednesday, May 28th, 2014
Step 1
Define the Problem
Mobile services for people traveling
to remote areas was challenging
Step 2
Determine the Objective
Develop low orbiting satellite mobile
services to people traveling for business
to remote areas of the globe
Step 3
Explore the alternatives
Iridium was aware of other satellite providers and cellular services that would compete for market share
Step 4
Predict the consequences
This is the critical point of
the process that Iridium
loses their direction
Step 5
Make a choice
Iridium made the choice to accept a role with the government when it appear the product was a total failure with other private sector competitors
Step 6
Perform sensitivity analysis
Iridium did not performed a sensitivity analysis to determine market success
Even with an optimistic outlook, a well designed decision tree would have suggested not to start in the first place.
Secondary Objectives

Protect its stake in Iridium

Protect its reputation

Financial Returns - CEO Dr. Staiano

As noted in the attached handout, a demand analysis would have helped Iridium determine if their demand price is elastic or inelastic
Thank you
Fast Turtles
Full transcript