Case Study – Iridium
1.Iridium is a company established in 1987 with the concept of a satellite based wireless personal communications networks that could be accessed from anywhere on earth. They started with huge amount of investments in R&D, infrastructures as well as on deploying and maintaining its satellite constellation. Due to huge investment, company has to generate larger revenue through its service to subscribers. Company could only be successfully when it analyze its all aspects of business and synchronize it. It has to analyze its external environment such as competitors market and identify customers segment to which it is willing to cover, customer needs and cost effectiveness (affordability).
Company success depends on its analysis of market, finance, and customers needs. Wining companies are those that meet customer needs economically and conveniently and with effective communications. So critical success factors of Iridium is to be customer focused and expand its customer base with affordable service. Iridium success depends on its value added services, diversification of services, quality of services and time to time adoption to new technology and its applications to provide customers better quality products (handsets) and services.
2. Iridium strength is on its R&D capabilities and its infrastructure of 66 satellites, which could be able to provide worldwide services to its customers. Iridium is technologically prudent company. Iridium is into MSS market and started new beginning in the 5e of personal communications. Company’s path
braking services were being aided as the technology that would change the face of global communications industry. Iridium’s main weakness was not to assess that markets actual situation. It invested heavily in technology infrastructure without assessing actual needs of the market and customers. Too much time and money invested in R&D, deploying and maintaining its satellite constellation. Due to heavy investment, Iridium need sizable subscriber base and for it company needs larger market segment but it targeted only global business travelers and high-end customers, which are not sizable. Its quality service and prices are not up to mark and handset is not of good quality and not easy to use. The actual threats are coming from its competitors in the market. Players like Global star, Odyssey and Inmarsat P/ICO, which entered the MSS (Mobile satellite service) market and have the strong growth potential. The second threat is coming from its financiers because company borrowed heavily and repaying liabilities posses’ major threats to Iridium. Iridium has enormous opportunities because of increasing numbers of cellular services users. The area of MSS services is increasing many folds and expected to increase from $4 billion in 1999 to $19 billion in 2002. The subscriber base for other services like data and paging was expected to increase and their revenue were expected to increase to $ 2 billion in 2002.
3. The first strategy will be to make Iridium services affordable and cost effective in competition to other market players so that customer base could be increased which is very much necessary to Iridium’s survival. It should target larger market segments to provide variety of services to variety of people according to their needs. It must provide value added services with communication like SMS, data transfer, video transfer etc. It must improve its gadgets and make them easy to use and handle. Cost effectiveness and better services to customers and customer-oriented approach will be the key strategies to be adopted by Iridium.
4. In the future where technologies are changing very fast, Iridium has to try and develop new type of handsets with lesser weight and more suitable to use as well as having latest technologies and added features. The call rates are going down and down therefore Iridium has expand its customer base by providing them additional services apart from regular services like video transfer tech. on cellular services and data & voice transfer as well as Internet connections on the mobile services. They have to improve life p of satellites so that their capital cost could be reduced considerably. Basically Iridium sets it self in the highly competitive and changing business environment of mobile services. Apart from other challenges competitors are giving Iridium a tough time.
Cost-effectiveness and better services are the critical environment factors, which will affect Iridium and keep it on its toes to competed and be successful in the market. So I recommend Iridium to look thoroughly the customers preferences and choice and do change in its services accordingly. It must properly balance between its technical expertise and marketing management. Marketing of services and product should be customer focused. Synchronization of all parts of the business keeping in mind only customer needs and preferences will do the wonders for Iridium.
“Reviving Iridium”, in Concepts and Cases: Strategic Management – A Dynamic Perspective, by Carpenter and Sanders. Pearson: Prentice Hall, 2007. Pp 615.