When a competitor develops and introduces a superior product that is less costly to
manufacture and even many times usable and durable, the key to people at Precision
Worldwide must decide whether to match the competitor's product, when to do so, how to
price or what sustainable competitive advantage it needs to adopt during the next strategic
period, given that it holds a large inventory of its now inferior product. This issue concerns
the steel and plastic rings which the company, Precision Worldwide, Inc. (PWI) is opting to
produce as a matter of competing intensively with a French company, Henri Poulenc, which
was at the same time posing a big threat to the viability of the steel rings PWI is producing. .
PWI is confronted not only with a substitute product which is both cheap and durable.
Compared to PWI’s steel rings, the plastic rings being produced by Henri Poulenc is both
cheaper and lasts longer. PWI is also facing the risk of earning the ire of its customers if it
manufactures but selectively introduces the cheaper plastic rings in areas where it is faced
with the ‘plastic’ competition. As a result, PWI is now confronted with a dilemma of
differences in strategic measures to undertake given the differing opinions of its key people.