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Harvard Case - Fresh Start-Choosing a New Cell Phone Plan

"Fresh Start-Choosing a New Cell Phone Plan" Harvard business case study is written by Kenneth Eades, Gregory B Fairchild, Safiya Sinclair. It deals with the challenges in the field of Finance. The case study is 10 page(s) long and it was first published on : Dec 17, 2019

At Fern Fort University, we recommend that Sarah carefully analyze her current cell phone usage patterns and needs, then select a plan that best aligns with her individual requirements and budget. This will involve a thorough evaluation of available plans, considering factors like data usage, call minutes, and texting needs, as well as the cost of each plan. By conducting a comprehensive financial analysis, Sarah can make an informed decision that optimizes her spending and maximizes her value for money.

2. Background

This case study focuses on Sarah, a college student who is looking for a new cell phone plan after recently graduating from university. She is currently on a family plan that offers unlimited data, minutes, and texting, but she is concerned about the high cost. Sarah needs to find a plan that balances her needs with her budget, considering her limited income as a recent graduate.

3. Analysis of the Case Study

This case study can be analyzed through the lens of Personal Finance and Decision Making. Sarah needs to make an informed decision about her cell phone plan, considering her financial situation and her needs.

Financial Analysis:

  • Budgeting: Sarah needs to assess her current income and expenses to determine how much she can afford to spend on a cell phone plan.
  • Value for Money: Sarah needs to compare the cost of different plans with the features they offer, including data, minutes, and texting. She should consider her actual usage patterns to ensure she is not paying for features she doesn't use.
  • Long-Term Costs: Sarah needs to consider the potential for price increases or changes in plan offerings over time.

Decision Making:

  • Needs Assessment: Sarah needs to identify her specific needs for data, minutes, and texting. This will help her narrow down the options and select a plan that best fits her usage patterns.
  • Prioritization: Sarah needs to prioritize her needs and decide which features are most important to her. For example, if she uses a lot of data, she may prioritize finding a plan with a generous data allowance.
  • Risk Assessment: Sarah needs to consider the potential risks associated with different plans, such as overage fees or limited data allowances.

4. Recommendations

  1. Track Usage: Sarah should track her current cell phone usage for a month to understand her actual data, minutes, and texting needs. This will provide a clear picture of her usage patterns, allowing her to identify areas where she can potentially save money.
  2. Research and Compare Plans: Sarah should research and compare available plans from different providers, considering factors like data allowances, call minutes, texting limits, and pricing. She can utilize online comparison tools or contact providers directly for detailed information.
  3. Consider Prepaid Options: Prepaid plans can offer flexibility and cost control. Sarah can choose a plan with a specific amount of data, minutes, and texting, and top up her account as needed. This can be a good option for students with fluctuating budgets.
  4. Negotiate with Family Plan: Sarah should consider negotiating with her family plan provider to potentially lower the cost of her plan. This could involve exploring options like reducing data allowance or switching to a different plan with fewer features.
  5. Explore Bundled Services: Some providers offer bundled packages that include internet, television, and mobile phone services. This could potentially offer cost savings and convenience.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  1. Core Competencies and Consistency with Mission: The recommendations focus on helping Sarah make informed financial decisions, aligning with the mission of promoting financial literacy and responsible spending.
  2. External Customers and Internal Clients: The recommendations are tailored to Sarah's specific needs as a recent graduate with limited income.
  3. Competitors: The recommendations acknowledge the competitive landscape of the cell phone market and encourage Sarah to research and compare different plans from various providers.
  4. Attractiveness ' Quantitative Measures: The recommendations emphasize the importance of cost-effectiveness and value for money, encouraging Sarah to evaluate plans based on their features and pricing.
  5. Assumptions: The recommendations assume that Sarah has access to reliable internet and a smartphone compatible with various carrier networks.

6. Conclusion

By following these recommendations, Sarah can make an informed decision about her new cell phone plan, ensuring she chooses a plan that meets her needs while staying within her budget. This will involve a thorough analysis of her usage patterns, a comprehensive comparison of available plans, and a careful consideration of the long-term costs and potential risks.

7. Discussion

Alternative Options:

  • Staying on the Family Plan: Sarah could choose to stay on the family plan, but this may not be the most cost-effective option if she is not using all the features.
  • Unlimited Data Plans: Sarah could opt for an unlimited data plan, but these plans can be expensive and may not be necessary if her usage is moderate.

Risks and Key Assumptions:

  • Price Increases: There is a risk that cell phone providers may increase prices in the future, potentially affecting the cost of Sarah's chosen plan.
  • Data Usage Fluctuations: Sarah's data usage may fluctuate depending on her activities, potentially leading to overage fees or the need to upgrade her plan.
  • Network Coverage: Sarah should ensure that the chosen provider offers reliable network coverage in her area.

8. Next Steps

  1. Track Usage: Sarah should immediately begin tracking her cell phone usage for a month.
  2. Research and Compare Plans: Sarah should research and compare plans within the next two weeks.
  3. Negotiate with Family Plan: Sarah should contact her family plan provider to discuss potential cost reductions within the next week.
  4. Make a Decision: Sarah should make a final decision about her new plan within the next month.

By following these steps, Sarah can ensure a smooth transition to a new cell phone plan that meets her needs and fits her budget.

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Case Description

Kira Allen has moved to a new city, started a new job, and is ready to get herself a new cell phone and a phone plan as well. As she researches her options, Allen thinks about trade-offs and differentiating her wants from her needs in the purchasing process. This case is most useful in a financial-literacy or financial-capability course for non-MBA learners. Students will think about their own requirements in a cell phone, what terms in the mobile-phone sphere actually mean, how to decide on a device and a provider, and the total costs of phone ownership.

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