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BCG Medium Profitability Competitive Response Pricing Strategy

Styrofoam Situation

#Financial / PE #Manufacturing #B2B
ProHub Comment

This is a classic defensive strategy case that tests the candidate's ability to resist the knee-jerk reaction of matching competitor prices. The case emphasizes understanding customer priorities and leveraging existing competitive advantages (service reliability) rather than engaging in a price war that would erode profitability.

Estimated Time 15 minutes
Difficulty Medium
Source Darden
50 / 100
Your client is the CEO of Cup Co, a national supplier of Styrofoam cups to restaurants. While profit has been steady, she is worried about the influx of cheaper products from China by a new competitor (Chalice Inc) and has called you in to give a recommendation on how to ensure continued profitability.

Clarifying Information

  1. Cup Co’s customer base consists of only of restaurant chains in the US (think McDonalds etc)
  2. For the purpose of this case, assume Cup Co has only one product
  3. Cup Co manufactures its product in the US
  4. Chalice Inc is a Chinese based Company with no other product in the US