Iridium's Failure and Strategic Management Lessons
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Questions and Answers

What significant issue contributed to Iridium's inability to sign up many subscribers?

  • Low production costs
  • High demand for their services
  • Poor forecasting and marketing (correct)
  • Effective marketing strategies
  • What was the primary reason for the high costs of Iridium's services compared to competitors?

  • Limited satellite network
  • Higher operational costs due to satellite maintenance (correct)
  • Excessive taxes and fees
  • Extensive marketing expenses
  • How did the size and weight of Iridium's handsets impact its marketability?

  • Increased portability for users
  • Limited portability and convenience (correct)
  • Enhanced user experience due to advanced features
  • Attracted more business professionals
  • Which marketing issue did Iridium face regarding its target audience?

    <p>Generic marketing strategies not suitable for its market</p> Signup and view all the answers

    What role did competitive moves play in Iridium's struggles?

    <p>Introduced lower-cost alternatives to consumers</p> Signup and view all the answers

    What was a consequence of manufacturing delays at Motorola and Kyocera for Iridium?

    <p>Loss of potential customers due to waiting times</p> Signup and view all the answers

    What is the expected lifespan of Iridium's satellites compared to ICO's satellites?

    <p>5-7 years for Iridium, 12 years for ICO</p> Signup and view all the answers

    What pricing challenge did Iridium face due to market competition?

    <p>Forcing them to charge prices much lower than planned</p> Signup and view all the answers

    What was one of Apple's major disadvantages compared to its rivals like IBM?

    <p>Lack of manufacturing capabilities</p> Signup and view all the answers

    What demographic did Apple initially target before broadening its appeal?

    <p>Tech savvy graphic designers</p> Signup and view all the answers

    Which product significantly contributed to Apple's turnaround beginning in 2001?

    <p>iPod</p> Signup and view all the answers

    How did Apple's market share in computers change from 1985 to 2005?

    <p>Decreased from 15% to 4%</p> Signup and view all the answers

    What was a key element of Apple's new marketing strategy?

    <p>Enhancing the Apple image of individuality</p> Signup and view all the answers

    What was the reason for Apple's decline in share value in 1997?

    <p>Losses of around $700 million</p> Signup and view all the answers

    What approach did Apple take to manage its brand better?

    <p>Tougher controls over dealers</p> Signup and view all the answers

    Which aspect of Apple's capabilities was crucial for its strategic planning?

    <p>Sustainable competitive advantage</p> Signup and view all the answers

    What does strategic management primarily aim to achieve?

    <p>To exploit and create new opportunities</p> Signup and view all the answers

    How has the nature of planning changed in today's business environment?

    <p>It has shifted to accommodate unpredictable inputs</p> Signup and view all the answers

    What is a key challenge faced by today's decision-makers?

    <p>Addressing rapid changes in external conditions</p> Signup and view all the answers

    What major difference exists between strategic management and long-term planning?

    <p>Strategic management focuses on future opportunities rather than current trends</p> Signup and view all the answers

    Why are organizations today required to engage in strategic management?

    <p>To adapt to fluctuating budgets and needs</p> Signup and view all the answers

    Before the significant changes in the external environment, what did managers primarily focus on?

    <p>Internal dimensions of organizations</p> Signup and view all the answers

    Which of the following factors represents a shift from the stable environments of the past?

    <p>Increasingly unstable economic conditions</p> Signup and view all the answers

    What has been a common response of top companies to contemporary challenges?

    <p>Involving in strategic management practices</p> Signup and view all the answers

    What is one of the main purposes of a clear vision in an organization?

    <p>To determine how well organizational leaders are performing</p> Signup and view all the answers

    What is often enhanced as a result of participating in the visioning process?

    <p>Self-esteem</p> Signup and view all the answers

    What is a consequence of lacking a clear vision in an organization?

    <p>Organizational decline and failure</p> Signup and view all the answers

    Which of the following is NOT a role of a vision statement?

    <p>Restricting organizational growth</p> Signup and view all the answers

    How does a well-communicated vision statement benefit an organization?

    <p>Galvanizes employees into action</p> Signup and view all the answers

    What type of challenge does a vision provide for managers?

    <p>A desirable challenge</p> Signup and view all the answers

    What is essential for translating a shared vision into action?

    <p>An adequate process</p> Signup and view all the answers

    What does a vision statement help an organization articulate?

    <p>Path and direction</p> Signup and view all the answers

    What characteristic of a vision statement ensures that it includes innovative possibilities for improvement?

    <p>Possibility</p> Signup and view all the answers

    Which of the following is NOT a characteristic of an effective vision statement?

    <p>It must be vague</p> Signup and view all the answers

    What does the actionability characteristic of a vision statement imply?

    <p>People can identify actions they can take that relate to the vision</p> Signup and view all the answers

    Which vision statement aims to be widely accessible to everyone on the planet?

    <p>A Coke within arm's reach of everyone on the planet</p> Signup and view all the answers

    What characteristic of a vision statement relates to its clarity and ease of understanding?

    <p>Communicability</p> Signup and view all the answers

    Which of the following best describes the desirability aspect of a vision statement?

    <p>It encapsulates shared norms and values of the organization</p> Signup and view all the answers

    What is the purpose of the graphic characteristic of a vision statement?

    <p>To create a powerful image of the company's future</p> Signup and view all the answers

    Why should a vision statement be feasible?

    <p>To provide realistic expectations for achievement</p> Signup and view all the answers

    Study Notes

    Iridium's Failure

    • Iridium, a satellite phone company, failed due to a combination of poor forecasting, marketing, production glitches, and unexpected competitive threats.

    • Iridium's market size forecast and value were much higher than reality.

    • Iridium's handsets were expensive ($3,000+) and calls were costly ($2-7/minute).

    • The handsets were bulky (7 inches, 1 pound), limiting portability.

    • Manufacturing delays by Motorola and Kyocera delayed customer access.

    • Marketing partners Sprint and Telecom Italia lacked preparedness to sell the phones.

    • Generic marketing strategies failed to connect with the specialized target market.

    • Competitors Globalstar and ICO offered similar services at lower costs.

    • Iridium's satellite constellation required high power and shorter life spans than competitors, leading to higher operational costs.

    Strategic Management Benefits

    • Strategic management is vital for businesses to adapt to rapid changes in the environment.

    • Businesses need to move beyond long-term planning and focus on exploiting and creating new opportunities.

    • Apple's turnaround is an example of a successful strategic management application.

    • Apple focused on its core strengths (design and new product development) while minimizing its weaknesses (manufacturing capabilities).

    • Having a clear vision is imperative for organizational success.

    • Vision statements should be clear, desirable, challenging, feasible, and easily communicated.

    • Lack of vision is linked to organizational decline and failure.

    • Strong vision statements can:

      • Provide a basis for performance
      • Reflect core values
      • Facilitate communication
      • Establish a desirable challenge

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    Description

    Explore the rise and fall of Iridium, a satellite phone company, and the strategic management lessons learned from its failure. Examine how miscalculations in market forecasting, high costs, and competitive threats led to its downfall. Understand the importance of effective marketing and strategic planning in adapting to change.

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