ABSTRACT
At the time of devaluation, London Switches was a small independent company manufacturing consumable industrial products. There were only two producers in its industry and both home and export markets had been expanding rapidly. The industry at home was dominated by only two firms, which between them produced almost the whole UK output. When devaluation occurred, London Switches did not collect any extra market information. Its Managing Director judged that the response of the other UK producer to devaluation would be the most important determinant of London's level of sales in 1968. In taking the devaluation decisions, London's management simply assumed that the cost of imported raw materials would increase by the full amount of devaluation, and this turned out to be wrong. In an industry containing only two firms of relatively equal size, both making very similar products, he had always to charge the same prices as his competitor.
