How do you tell if a string contains another string in POSIX sh?

Here's yet another solution. This uses POSIX substring parameter expansion, so it works in Bash, Dash, KornShell (ksh), Z shell (zsh), etc.

test "${string#*$word}" != "$string" && echo "$word found in $string"

A functionalized version with some examples:

# contains(string, substring)
#
# Returns 0 if the specified string contains the specified substring,
# otherwise returns 1.
contains() {
    string="$1"
    substring="$2"
    if test "${string#*$substring}" != "$string"
    then
        return 0    # $substring is in $string
    else
        return 1    # $substring is not in $string
    fi
}

contains "abcd" "e" || echo "abcd does not contain e"
contains "abcd" "ab" && echo "abcd contains ab"
contains "abcd" "bc" && echo "abcd contains bc"
contains "abcd" "cd" && echo "abcd contains cd"
contains "abcd" "abcd" && echo "abcd contains abcd"
contains "" "" && echo "empty string contains empty string"
contains "a" "" && echo "a contains empty string"
contains "" "a" || echo "empty string does not contain a"
contains "abcd efgh" "cd ef" && echo "abcd efgh contains cd ef"
contains "abcd efgh" " " && echo "abcd efgh contains a space"

Pure POSIX shell:

#!/bin/sh
CURRENT_DIR=`pwd`

case "$CURRENT_DIR" in
  *String1*) echo "String1 present" ;;
  *String2*) echo "String2 present" ;;
  *)         echo "else" ;;
esac

Extended shells like ksh or bash have fancy matching mechanisms, but the old-style case is surprisingly powerful.

Sadly, I am not aware of a way to do this in sh. However, using bash (starting in version 3.0.0, which is probably what you have), you can use the =~ operator like this:

#!/bin/bash
CURRENT_DIR=`pwd`

if [[ "$CURRENT_DIR" =~ "String1" ]]
then
 echo "String1 present"
elif [[ "$CURRENT_DIR" =~ "String2" ]]
then
 echo "String2 present"
else
 echo "Else"
fi

As an added bonus (and/or a warning, if your strings have any funny characters in them), =~ accepts regexes as the right operand if you leave out the quotes.

#!/usr/bin/env sh

# Searches a subset string in a string:
# 1st arg:reference string
# 2nd arg:subset string to be matched

if echo "$1" | grep -q "$2"
then
    echo "$2 is in $1"
else 
    echo "$2 is not in $1"
fi