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Ilirija Vedrog is a manufacturer and marketer of cosmetics, domestic cleaners, and candles. The firm is located in Slovenia, a former communist country that recently won its independence from the Yugoslavian central government. The case offers unique insights into the problems facing Eastern European firms that find themselves in the throes of privatisation and westernisation. Due to Slovenian independence and a war in southern regions of former Yugoslavia, over half of Ilirija''s markets disappeared practically overnight. Consequently, the company faces difficult decisions regarding its future competitive strategy and the immediate restructuring of its productive capacity. This case was sponsored by the Indiana University CIBER Case Collection.