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The Fall Of A Company Essay

1051 words - 5 pages

The Fall of a Perceived Rising Company
BUSN 422
Wednesday, May 21, 2008

The Fall of a Perceived Rising Company
In the early 1990’s, cell phones were just beginning to emerge as the revolutionary technology. This new way of portable communication was sure to be an enormous hit with society. In the late 1990’s, Iridium wanted a piece of the action. Iridium was a “mobile communication network that allowed any kind of phone transmission (voice, data, fax, and paging) via a system of satellites” (Crawford and Di Benedetto 404-405). This system, composed of 66 satellites and many ground stations, claimed to reach any destination in the world. ...view middle of the document...

Some might have suggested that the company take out loans in order to lower the prices, however “corporate clients did not want to subscribe until their financing was in order and lenders did not want to give them credit until they had more clients” (Crawford and Di Benedetto 404-405). This put the company at a standstill until they couldn’t support themselves financially anymore.
Since iridium was not first to market with the service, they did not hold a competitive advantage. This means that they needed a different competitive advantage, and they should have lowered the price of the handsets and user charges to compete with the competition in order to help fix the company. The company used a price skimming technique when they should a penetration technique in the launch phase. Iridium was a pretty new and unique concept, so they needed a “price that was clearly low and designed to buy one’s way into the market” (Crawford and Di Benedetto 421). Lowering the prices would have lengthened the time it would take for Iridium to break even, but in turn would have helped meet their subscriber goal of 300,000.
Along with no clear price advantage, Iridium also targeted their service to the wrong market. It was said that “instead of aiming at high-ticket international business travelers and explorers, iridium targeted federal government users and similar markets” (Crawford and Di Benedetto 404-405). Many people have questioned why this market was targeted because it makes sense for the international travelers and explores to need this more than government users. In any case, we now know it was a bad target market because by 1999, there were just over 10,200 subscribers. This number was 289,800 subscribers less than their intended goal of 300,000.
Looking at the concept generation phase, Iridium should have utilized gap analysis before even starting the company. This technique diagrams the market in a gap map, showing how “various products are perceived by how they are positioned on...

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