Project Management group case study mod#3
draculaghost2007
Groupcasestudy3-rolesanswerstoquestions.docxBudget Analyst answers- John Stewart.
1. What are the key issues surrounding this case?
The biggest concern for this project from a budget analyst perspective is the math. The cost to do anything that deals with aviation or space is costly. The 5 billion dollars that were invested into turning the satellite phone into reality could have been used better in many ways. The average consumer could not afford a $3000-dollar phone or $3 - $7-minute phone call. Other competing companies charged $1500 per phone and charged $1.50. They were able to offer lower prices because they had a lower overhead.
Another thing that limited the number of users was the number of calls a satellite could handle at a time the max was 1,100 simultaneous calls. The limit on per calls per satellite prevented the company from being able to lower their price.
If we look at the math for the company to ever to break even, there would have to be over 714 million minutes at 7 dollars used to break even. That’s if you can find that many people willing to pay $7 a minute when the average pay phone call was 25 cents. To put those numbers into perspective the satellite phone system would have to have 679 users every minute for two years to break even at 7 dollars a minute.
2. What is the nature of the problems that exist?
The cost of making the satellite system a reality was too high. The cost per phone, per minute, is too high for the average consumer. The market for this product is a niche market not everyone needs a satellite phone. The price quoted for this project was more then what was planned. New technologies came into the market that made cells phones cheaper and better.
3. Identify opportunities that may be involved.
One of the markets Motorola could have focused on was the European market. If the companies would have spent just a fraction of the money on designing a common operating system in Europe; their potential earnings from that market would have surpassed the satellite phone and would not cost billions of dollars to develop and implement. The satellite phone system could have also been created cheaper if relays on the ground where used and not satellite in space relayed.
4. In what ways were problems resolved or leveraged?
In this case, the problem was leveraged when the Ex CEO of Iridium bought all of the bankrupt assets of the company for $25 million in 2000. The following month they won a contract for $72 million from the Department of Defense.
5. Recommend and justify additional courses of action that are most likely to be effective.
Corrective actions could have been knowing the consumers of the product before creating it. Ask their opinion on what they would find useful and the cost they would likely pay. The Iridium Satelite phone system was a bit out of touch idea from the start. There were cheaper ways of achieving the same goal. New technologies in electronics were moving faster than the Iridium phone could keep up making it outdated before it was implemented.
Exutive Sponsor Answers- Danny Smith.
1. What are the key issues surrounding this case?
The real issues behind Iridium came with improper handling of advertisement, upselling of the product without proper share of its limitations, and improper handle of initial sales. Problems with the proper distribution of equipment, and the service providers and sales team falling short proved to be hurtful for the company, as the subscriber base in the initial months fell far short of the projections.
2. What is the nature of the problems that exist?
Problems with the delivering the proper equipment efficiently to subscribers, a shortage of fully trained service providers and sales personnel, and a lack of effective marketing coordination among Iridium, its gateways, and its service providers. Iridium was not properly prepared to handle launch, and with so much focus on the technology of the product and launching it properly, they forgot to train their people accordingly, get their sales team in place and with the proper response, and properly advertise the product with its advantages and limitations. Also, business travelers, the primary target market, were reluctant to replace their phones with a large handset that weighed a pound and cost over $3,000.
3. Identify opportunities that may be involved.
Although the initial marketing has been rough, by 1999 about 10,000 people were still using the service, especially in remote areas where oil-rigs or fishing boats were located. They were very satisfied with the service and said the company had become indispensable. This gave the company hope that they would jump over the hurdle.
4. In what ways were problems resolved or leveraged?
The Iridium company chose bankruptcy, and rival companies were like sharks trying to take over their business offering trade-in offers for their handsets. A new company headed by former Iridium CEO Ed Staino won bankruptcy court approval to buy the assts of Iridium and won a two-year contract with the U.S. DoD worth $72 million, chosen by their state-of-the-art technology, proving that being the best and most advanced pays off, if marketed correctly only.
5. Recommend and justify additional courses of action that are most likely to be effective.
The only way to have saved Iridium was to properly advertise the program, bringing up the limitations and additional equipment needed to surpass those, while highlighting its strong suits, and why Iridium is the company to choose due to the technological advances. While doing so, a full training department launch would have needed to be in place, ensuring that those who would benefit from Iridium sales need to properly prepare themselves to handle the product, and be knowledgeable behind it.
Budget Analyst answers
-
John Stewart.
1.
What are the key issues surrounding this case?
The biggest concern for this project from a budget analyst perspective is the math. The cost
to do anything that deals with aviation or space is costly. The
5 billion dollars
that
w
ere
invested
into turning the satellite phone into reality could have been used better in many ways. The
average consumer could not afford a
$3000
-
dollar
phone or $3
-
$7
-
minute
phone call.
Other
competing companies charged $1500 per phone and charged $1.50. They were
able to offer
lower prices because they had a lower overhead.
Anot
her thing that limited the
number
of users was the
number
of calls a satellite
could
handle at a time the max was
1,100 simultaneous calls.
The limit on per calls per satellite
prevented t
he company from being able to lower their price.
If we look at the math for the company to ever to break
even
,
there would have to be over
714 million minutes at
7 dollars
used
to break even. That’s if you can find that many people
willing to pay $7 a minu
te when the average pay phone call was 25 cents. To put those numbers
into
perspective the satellite phone system would have to have 679
users
ever
y
minute for
two
years to break even at
7 dollars
a minute
.
2.
What is the nature of the problems that exist?
The cost of making the satellite system a reality was
t
o
o
high. The cost per phone, per
minute
,
is
t
o
o
high for the average consumer. The market for this product is a
nich
e
market
not everyone needs a satellite phone. The price quoted for this project
was
more then what
was planned
. New technologies came into the market that made cells phones cheaper and
better.
3.
Identify opportunities that may be involved.
One of the markets
Motorola
could have focused on was the European market.
If
the companies would have
spent just a fraction of the money on designing
a
common
operating system in Europe
;
their potential earnings from that market would have
surpassed the satellite phone and would not cost billions of dollars
t
o develop and
implement.
The
sate
l
lite
phone sy
stem could have also
been created
cheaper if relays on
the ground where used and not
sate
l
lite
in space relayed.
4.
In what ways were problems resolved or leveraged?
In this
case,
the problem
was leveraged
when the Ex CEO of Iridium bought all of the
bankrupt
assets of the company for $25 million in 2000.
The following month they won a
contract for $72 million from the Department of Defense.
5.
Recommend and justify additional courses of action that are most likely to be effective.
Budget Analyst answers- John Stewart.
1. What are the key issues surrounding this case?
The biggest concern for this project from a budget analyst perspective is the math. The cost
to do anything that deals with aviation or space is costly. The 5 billion dollars that were invested
into turning the satellite phone into reality could have been used better in many ways. The
average consumer could not afford a $3000-dollar phone or $3 - $7-minute phone call. Other
competing companies charged $1500 per phone and charged $1.50. They were able to offer
lower prices because they had a lower overhead.
Another thing that limited the number of users was the number of calls a satellite could
handle at a time the max was 1,100 simultaneous calls. The limit on per calls per satellite
prevented the company from being able to lower their price.
If we look at the math for the company to ever to break even, there would have to be over
714 million minutes at 7 dollars used to break even. That’s if you can find that many people
willing to pay $7 a minute when the average pay phone call was 25 cents. To put those numbers
into perspective the satellite phone system would have to have 679 users every minute for two
years to break even at 7 dollars a minute.
2. What is the nature of the problems that exist?
The cost of making the satellite system a reality was too high. The cost per phone, per
minute, is too high for the average consumer. The market for this product is a niche market
not everyone needs a satellite phone. The price quoted for this project was more then what
was planned. New technologies came into the market that made cells phones cheaper and
better.
3. Identify opportunities that may be involved.
One of the markets Motorola could have focused on was the European market. If
the companies would have spent just a fraction of the money on designing a common
operating system in Europe; their potential earnings from that market would have
surpassed the satellite phone and would not cost billions of dollars to develop and
implement. The satellite phone system could have also been created cheaper if relays on
the ground where used and not satellite in space relayed.
4. In what ways were problems resolved or leveraged?
In this case, the problem was leveraged when the Ex CEO of Iridium bought all of the
bankrupt assets of the company for $25 million in 2000. The following month they won a
contract for $72 million from the Department of Defense.
5. Recommend and justify additional courses of action that are most likely to be effective.
