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Business Information System II The Rise and Fall of Iridium Questions 1Who was to blame for Iridiums failure Why At what point could you have known Iridium would fail 2What is your evaluation of Iridiums system design What impact did the choices that were made have on subsequent evolution of the venture 3What is your evaluation of Iridiums organizational design What changes could you have made to increase the probability of Iridiums success Q1 In the case of Iridium several parties are to blame for the failure They are Dr Edward Staiano the former CEO of Iridium was responsible for Iridiums development in a significant way When he came from Motorola the company offered him stock options besides his fixed salary to create a financial incentive With the stock options he could only have made money personally if the project succeeded so he seemed to be blind for any negative development concerning the result of the project The fact that he was a very overambitious character and personally connected to the project in public he stuck to the untenable business plan Parallel to this he made the mistake to underestimate the development of the cellular telephone market and overestimated the market for sattelite phonesHe predicted 500000 subscriber at the end of 1999In spite of supply problems and a lack of testing he launched the project so even if some of the few customers were willing to pay 3000 for a handset they couldnt get one or service didnt work properlyAll these factors indicate so called escalating commitment Motorola Executives Robert Galvin chairman of Motorola at the time was the one who initially supported the project Due to recent losses he together with his son Christopher saw Iridium as a potential symbol of Motorolas technological prowess for the entire world to see and a good investment opportunity without considering the high risks Motorolas history is full of very prestigious
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