Students are introduced to a spreadsheet model for evaluating the potential profitability and relative merits of three retail product proposals and single-point estimates of numerous inputs. This case is effective in MBA courses covering new product introduction, cost analysis, risk analysis, and decision analysis. A small firm operating in the U.S. prepaid-phone-card industry considers offering a $5 telephone card with 60 minutes of service to Mexico. The sales group believes the card will be a market success. The brand manager, skeptical of the card’s potential profitability, has been assigned the task of analyzing its costs. Three carriers have offered different pricing proposals for the new card.
Darden Business Publishing – University of Virginia