Question

Consider HEB selling two products, Hill Country Fare chicken fajitas and Tyson chicken fajitas, which substitute for each other. Suppose that Walmart introduces Great Value chicken fajitas, a product that seems to the typical consumer to be identical to Hill Country Fare chicken fajitas. Being careful to consider factors that may affect the following:

a. Will a price war be initiated?
b. If so, which firm would be more likely to win the price war?

Answer 1

Part a)

It could start a price war since they are immediate contender and if HEB or Walmart build up a low-price technique the another organization would set up lower cost until the negligible expense can be up to out of line rivalry.

Part b)

In my supposition Walmart could win this value war since everyone realizes that Great Value is a Walmart brand and they have better control to this item. Additionally, to accomplish a lower cost than the brand name Walmart need to do a few dealings with its providers to be left at a lower cost to diminish the cost.