Capitalism Lab Final Challenge Performance and Learning Report

Presented to:
Engr. Rafael Gerardo Tensuan
Of the Management and Organization Department
RVR-College of Business
In partial fulfillment of the course requirements in Strategic Management Section K34
Term 1 AY 2021 - 2022

By:
Chua, Verrylyne N. (11937130)
Co, Anne Beatriz L. (11800542)
Fernandez, Dana Jois G. (11931213)
Jonson, Patricia Alexis A. (11922087)
Tayao, Krisha Marie C. (11932996)
Tolentino, Mikhaela P. (11925469)

February 4, 2022
 I. Vision and Mission of Company

Vision
“Bringing the world to the next level”. Our vision is to be a well-known mission-driven company
that best understands and satisfies our customers' product needs by striving for excellence and
competitiveness through quality innovations, all while making a positive contribution to society
– globally.

Mission
Our mission as a company is to provide products of superior quality with the most competitive
prices while inspiring employees to be a catalyst in creating a healthy marketplace, which is
beneficial for both people - customers, team members, suppliers, and shareholders.

II. Planned Strategy

Generic strategy

● To ensure a successful company that has a competitive advantage over the competitors,
the group will implement the Best-Cost Provider Strategy.1
● The group will focus on providing products that are of good quality and comparable to
the rivals while maintaining the lowest price among all competitors.2
● By implementing the best-cost provider strategy, the group will be able to achieve its
vision3 and mission4.

1
This is based on the 5 Generic Competitive Strategies. (Gamble et al., 2020, p. 90)
2
This is based on the definition provided for the Best-Cost Provider Strategy as stated in the textbook. (Gamble et
al., 2020, p. 90)
3
The vision statement of the company was based on the guidelines in Chapter 2 of the textbook (Gamble et al.,
2020, p. 17-19). The vision statement is also in line with The Covenant of Shared Prosperity commitment #2 about
providing only quality products.
4
This is based on Chapter 2 of Gamble et al. (2020, p. 20), particularly the guidelines in making a mission
statement, RVR COB Code of Ethics for business and Covenant of Shared Prosperity.

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 ● Through the chosen strategy, the customers will be able to make the most out of their
money as the products provided by the company are of low cost without sacrificing their
quality.5
● By using the best-cost provider strategy, the company will have more advantage over the
competitors as the buyers will rather choose to buy the group’s company as they will be
able to save more money and also be satisfied with their needs.6
● With the best-cost provider strategy, the group will be able to attract more customers
which can then result in a better performance of the company.7

Specific Strategies

● The company would hire competent individuals that can help in the success of the
corporation8. Employees would be properly trained to give them proper knowledge and
development as the corporation grows.9
● In order to gain market dominance, the group strategizes to leapfrog competitors by being
the first to market a variety of products in the market.10
● A first-mover strategy would be used as a competitive advantage to build customer
loyalty and, brand image.11
● Increase market share and profitability by expanding to international markets.12 This will
allow the company to achieve economies of scale, and therefore, offer lower prices to
customers.

5
This is in line with the RVR COB Code of Ethics for business, specifically on the second role which focuses on
offering good goods to people while giving access for the unprivileged ones.
6
This is based on the attributes of the Best-Cost Provider Strategy. (Gamble et al., 2020, p. 105)
7
This is in line with the RVR COB Code of Ethics for Business specifically on #10 which focuses on Professional
Development.
8
This is in line with the RVR COB Code of Ethics for Business regarding role #1 of business leaders about leading
people and managing resources.
9
This is in line with the RVR COB Code of Ethics for Business regarding promise #6 about promoting a humane
and enabling work community and promise #10 about investing in development.
10
This is based on the principal offensive strategies options (Gamble et al., 2020, p. 113) wherein leapfrogging
competitors is given as an option.
11
This is based on advantages of a first-mover strategy (Gamble et al., 2020, p. 116)
12
This is based on Gamble et al. (2020, p. 134) wherein companies may expand to international markets to maintain
competitiveness.

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 ● For branding strategy, Corporate Brand would be used wherein a single brand is used for
all products of the company. It allows the company to create awareness among its
consumers and be able to distinguish itself from a sea of competitors.
● A vertical integration strategy that aims for full integration13 wherein the company would
handle research and development, retail, manufacturing, and mining industries. The
advantage of vertical integration is that it allows the company to reduce costs. It allows
companies to control and manage their supplies, as well as the problems that may arise
from it.
● Entering a new line of business through internal development.14 This strategy involves
diversification through starting a new business subsidiary from scratch. This is to utilize
the company’s own resources in the industry, thus helping the company’s brand image
and profitability. Moreover, it will be used as a defensive strategy from other competing
companies in the future.
● In entering foreign markets, the company would expand through a foreign subsidiary
strategy via internal development in which each country would have factories.15 This
enables the company to have direct control in all aspects of operations. This is also to
utilize our resources and competencies successfully and profitably.

III. Realized Strategy (with endnotes based on the textbook, Covenant for Shared
Prosperity, and Code of Ethics)
● Most of the planned strategies were used in building the corporation. These are the
following:
○ Hiring competent individuals: Chief Operating Officer, Chief Technical Officer,
and Chief Marketing Officer.16 In building an organization that is capable of good
strategy execution, the hiring of competent individuals with experience, technical
skills, and intellectual capital is needed. Furthermore, hiring competent
13
This is retrieved from Gamble et al. (2020, p. 123) wherein participating in all stages of the vertical chain (full
integration) can be applied for the vertical chain of a company.
14
This is based on Gamble et al. (2020, p. 157) where diversification through internal development is one of the
approaches of diversifying the business lineup.
15
This is based on Gamble et al. (2020, p. 140) where establishing a subsidiary in a foreign market is one of the five
general modes of foreign market entry.
16
This is based on Gamble et al. (2020, p. 202) regarding building an organization capable of good strategy
execution.

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 individuals helped the organization to manage each department efficiently while
working on specific tasks such as marketing, research and development, sales, and
purchases.
○ Using offensive strategy to leapfrog competitors by being the first to sell different
types of products ranging from the categories Communication Devices,
Computer, Electronic Products, Home Appliances, and Photography Products.17
○ Using the first-mover strategy in introducing new product innovations (Portable
Media Player, Video Game Console, and Camcorder).18 This realized strategy is a
powerful and effective strategy for differentiation. Being able to be the
first-mover for innovation and technological advancement has helped the
company to gain reputation and strong brand loyalty especially since the company
was able to market these products globally. Moreover, the company utilizes
research and development for each product, therefore, it was able to set some
technical standards for the industry.
○ Expanding to three more cities as an expansion to international markets.19 This
enables the company to expand its market and gain new customers which resulted
in increased revenues, growth, and profits. Furthermore, being able to build
factories and retail stores in different cities helped the company to produce
products from low-cost inputs.
○ Corporate branding was used as stated in the planned strategy.
○ Vertical integration by handling all four industries (Retail, Manufacturing, R&D,
and Mining) as a way to gain direct control in every city.20
○ Building factories in every city via internal development.21

17
This is based on Gamble et al. (2020, p. 113) specifically on one of the principal offensive strategy options which
is leapfrogging competitors by being the first to market with next generation technology or products.
18
This is based on Gamble et al. (2020, p. 97) specifically in managing the value chain in ways that enhance
differentiation through a systematic management of uniqueness drivers.
19
This is based on Gamble et al. (2020, p. 134) relating to primary reasons as to why companies opt to compete in
international markets.
20
This is based on Gamble et al. (2020, p. 123) in which vertical integration is a way for a firm to expand the range
of value chain activities from sources ot supply to end users.
21
This is based on Gamble et al. (2020, p. 157) specifically on achieving diversification with the use of
development internally.

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 ○ The company tried to enter a new line of business by selling Toys and Cosmetics
but it was later on decided to just stick with the products that the company first
sold.
● In completing the goals, there were some strategies used that was different from what was
planned. This is due to unforeseen circumstances while playing the game.22 These are the
following:
○ Best-cost provider strategy. Instead of this strategic approach, a broad
differentiation strategy was used.23 As a company that focuses on
technology-related products, research and development was continuously done to
improve the quality of the products to be sold in the market.24 Moreover, the
company also created new innovations that competitors do not have yet.25 This
serves as a competitive advantage that is used to entice a broad spectrum of
buyers.
○ The best-cost strategy was not maintained throughout the whole game since a low
price made the return on equity of the corporation to be lower. However, it was
made sure that the overall quality of products are in the range of the local and
average overall score or higher.
○ Even though the business tried to enter a new line of business, it was not very
successful compared to what the company is already selling. The toys (except for
the video game console) and the cosmetic product were all just obtained from the
seaport. These products are also not sold in most stores.
○ Aside from leapfrogging competitors as an offensive strategy, the group noticed
that continuous product innovation was needed even though the requirement of
quality level 70 was already achieved. This is why another offensive strategy was

22
This is based on Gamble et. al. (2020, p. 29) specifically on the 5th stage of the strategy management process
wherein a company must evaluate its performance and initiate corrective adjustments.
23
This strategy seeks to differentiate the company’s products to appeal to a broad spectrum of buyers (Gamble et al.,
2020, p. 6)
24
This is in accordance with the Covenant for Shared Prosperity commitment #2 about proving only quality
products that are of continuing value to customers.
25
This is based on Gamble et al. (2020, p. 6) wherein differentiation strategy is used to thwart rivals’ attempts of
imitating product offerings.

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 used wherein continuous product innovation was strategized to maintain a higher
rank than rivals.26
IV. Goals Accomplishment

Reported Information

Company name CHUA Corporation

The number of firms by type Retail stores: 61

(Retail, Factories, R&D, etc.) Factory: 37
R&D Center: 14
Mine: 5 (4 Mines and 1 Oil Well)
Headquarter: 1
Civic Buildings: 2
Sports Facilities: 2

Standard Actual accomplishment

Years of operation 10 to 11 years 10.05 years

Industries Retail, Manufacturing, Retail, Manufacturing,

R&D, Farming/Mining R&D, Mining

Cities operating in At least 3 4

PERFORMANCE METRICS

Annual Revenue $2 billion or higher $4.236 billion

No. of Employees 2,000 or higher 10,209

Return on Equity 20% or higher 18.47%

Operating Profit Margin 30% or higher 34.17%

Unit Productivity levels across ALL 7 or higher (for example, 499 units out of 1098 are
firms except for advertising and 30 units out of 35) 7 or higher
inventory

All products manufactured quality 70 or higher (for 19 products out of 19

levels (as shown by inspecting each example, 6 products out
product in each factory ) of 12)

26
This is based on Gamble et al. (2020, p. 113) wherein pursuing continuous product innovation to draw sales and
market share away from less innovative rivals was one of the principal offensive strategies.

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 Donations (social capital At least one civic or Helsinki: Grade School
investment) sports facility per city Stockholm: City Hall
Raleigh: Soccer Field
Palermo: Tennis Court

RANKING GOALS

Annual Revenue 5th or higher 1st

No. of Employees 5th or higher 1st

Stock Return to Investors 5th or higher 3rd

Operating Profit Margin 5th or higher 2nd

V. Reflections on Strategy Implemented and Accomplished Goals

After playing the game, the group members discussed as a group to know how each
person tried to implement the planned strategies. Even though every member of the group had
successfully finished the retail challenge, the final challenge was on a different level since it
required operating in more cities and also the need for vertical integration. Navigating through
the game in accordance with the necessary goals needed was not an easy task since being able to
be familiar with every corner of the game is essential. Of course, this was through trial and error
as well as trying to accomplish the tutorials provided by the game. Every single process of
product creation and execution was crucial in accomplishing the goals. Unlike in retail challenge
wherein products are just obtained from the seaport, the final challenge pushed the members to
think more critically and strategically from research and development, mining for resources,
manufacturing products, and retailing. As seen from the accomplished goals from the
representative file, two goals were not met and it was (1) return on equity and (2) unit
productivity levels of 7 or up. Playing the game with over ten competitors was not an easy task
since aside from gaining profitability, the members needed to maintain a rank. Other goals were
also tricky to maintain and accomplish such as the operating profit margin and stock return to
investors.

As stated, the areas that needed to be improved the most were the return on equity and the
unit productivity levels. For the return on equity, the strategy done on the retail challenge which

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is to increase price was not really the underlying problem. The members believe that price is not
the only factor in gaining a higher return on equity but also the optimization of the production
units. There are firms that had low utilization percentages which explained why the unit
productivity level for all units did not reach 7 or higher. This also seemed to be a factor as to why
the return on equity got lower especially in the later years of operations. In addition, one of the
strategies set by the group is to provide low-cost products that are of high quality. However, this
might be also one of the reasons why the members find it difficult to increase the return on
equity since it was only a realized strategy that raising the price of the products would actually
help raise the return on equity. Furthermore, another thing that the members were able to notice
even in the retail challenge is that with too much revenue, there is a lot of idle cash in the
company. Due to this, the company reduces its profitability based on the return on equity since it
does not balance or maintain costs while the company’s revenue grows.

Since crafting a strategy is a work in progress, it is important for the group to always
monitor how the game is moving while the years pass by.27 Two of the things that were
monitored were the balance sheet and income statement that helped in checking what went
wrong in the business operations. In playing this game, the balance sheet and income statement
provided were helpful for the group because checking the balance sheet and income statement
made the group make informed decisions on what to do on a certain problem. An example was
regarding the operating profit margin wherein we could see what cost we can lessen to increase
its percentage. It was also helpful for the group since the members can see the health of the
company in the game giving them a chance to know what strategies to execute and to focus on
what needs to be done. In addition to that, while playing the given challenge there are some firms
and factories that were not generating profit or even contributed negative figures despite the fact
the stores are positioned somewhere and have a good customer index. This was a problem that
the supply and demand bars helped with. It is critical to understand the company's financial
capabilities to successfully undertake an internal function.28 Internal capabilities that are
well-executed and have a high competitive value will definitely contribute to the success of the
goals of the company.

27
This is based on the lesson regarding how crafting a strategy is not a one-time event wherein a blend of proactive
moves and adaptive reactions is needed due to the evolving nature of strategies (Gameble et al., 2020, p. 9).
28
This is based on the lesson regarding the identification of competitively important resources and capabilities
(Gamble et al., 2020, p. 66)

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 Building a corporation is not something that one person can do alone and that is where
the importance of employees comes into place.29 In the game, all group members used the
advantage of hiring competent and trustworthy employees who can manage each store as it is
hard to check every store one by one most especially that in the final challenge, the number of
firms has doubled or even tripled as compared to the basic retail challenge. Moreover, based on
the representative file, all employees, specifically the Chief Operating Officer, Chief Technical
Officer, and Chief Marketing Officer that were hired have greatly helped the corporation to reach
almost all of the goals needed in the game in a way that all works have been done effectively and
efficiently. In addition to that, the group highly believes that employees are a vital part of a
company which is why it is important for us to value employees just like how we value our
customers for the reason that without the employees then the company would not gain any
customers at all.30 Furthermore, the group made sure that each firm of the corporation is in its
highest level of training to ensure that employees would be able to do their job and
responsibilities well. Moreover, the group believes that employers must invest in their employees
so that they will be informed and equipped with the duties of being an employee which can
surely bring success to the whole corporation.31 With that being said, all throughout the game, the
group has always given importance to the employees and we are thankful for the employees
since they are the backbone of the company.32

In playing Capitalism Lab, even though the goals are for the company to earn a profit, the
members kept in mind that the purpose of starting a business was also to give back to the
community. Even though it was just a game, real-life situations must still be thought about so
that we can apply to reality what we have learned in strategizing gameplays. Capitalism Lab has
opened the group’s eyes to what it looks like owning firms, mines, and other businesses and how
it feels like in giving back to the community. The group has realized that what most companies
are missing at this point is the concern for the society with whom it is dealing. Thus, in the game,
the group has decided to practice business ethics. Through this mindset, some of the RVR COB

29
Crafting strategy is a collaborative team effort that comprises of managers in various positions and organizational
levels (Gamble et al., 2020 p. 26).
30
This is in line with the RVR COB Code of Ethics promise #6 specifically on promoting a humane and enabling
work community within the organization.
31
This is in line with the Covenant for Shared Prosperity commitment #1 which is to recruit, train and develop our
employees and managers to be the best that they can be.
32
This is in line with the RVR COB Code of Ethics promise #5 specifically in respecting the human rights and
dignity of the people that are part of the corporation.

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Code of Ethics was applied. The first Code of Ethics touched is the purpose to lead people and
manage resources to promote human development and the common good.33 In complying with
the Covenant of Shared Prosperity, the group made sure that justice and fairness are practiced in
the company.34 Furthermore, the group looks after the employees, customers, suppliers,
stockholders, and environment, as they are always the priority. After the goals are accomplished,
the group believes that every company has to manage its company, not just strategically but also
ethically. It is an extra step to improve the community and the society’s welfare which would
have a great impact on its long-run profits.

Overall, even though not every goal was accomplished, it is better to look at the bright
side. Every effort put in accomplishing the goals is appreciated. We also learned throughout the
whole process that giving up does not really solve anything. Rather than giving up, it is better to
take more risks to accomplish a goal rather than not doing anything at all. Accomplishing goals
takes time, effort, and practice, and not all the goals that we set will be accomplished. We believe
that the process is more important than the outcome and that the challenges that we have
encountered are necessary for growth and improvement.

VI. Learnings about implementing strategy

Effective and efficient implementation of strategy is necessary when it comes to

strategizing the actions that a business would take whether in the game or the real world.
Planning a strategy was easy but putting them into action was actually harder than expected.
Since during the planning stage, the members have only finished the retail challenge, no one
knew what to expect in the final challenge. The planned strategy that we were going to
implement was inspired by how the retail challenge was accomplished. However, implementing
strategy can vary from every situation since the future is something that no one can really
predict. This was the reason why unplanned strategies got implemented instead of sticking to
what was originally planned. Despite this, we were able to make use of the resources that we
have and took risks that might help the business when necessary.

33
This is in line with the RVR COB Code of Ethics for business regarding recognizing the role as a leader.
34
This is in line with the Covenant of Shared Prosperity commitment #6 regarding delivering reasonable and just
returns to and fair treatment of shareholders.

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 Decisions are very important especially during the start of the game because this serves
as the foundation for success in maintaining goals up until the 10th to 11th year.
Decision-making plays a vital role in the game as every decision can either give a positive or
negative effect on the results of the game. One wrong move can have a grievous impact on the
rankings and stability of the corporation which is why it is important to think twice before taking
action. In accordance with the RVR COB Code of Ethics, as future Lasallian business leaders, all
group members have taken into consideration our roles in society and one of those is the
importance of each of our decisions as it can affect the well-being of people engaging inside and
outside of our corporation, today and in the future. Moreover, all group members have noticed
that every after a year or even just months, there are a lot of changes in the game as the demand
for goods is constantly changing, and at the same time, all of our competitors are also doing their
own strategies in order for them to be successful as well. Furthermore, nobody is sure whether
the implemented strategy would be a success or a failure as there may even be regret because the
decision we made might actually not be a good option. However, this is inevitable so instead of
feeling discouraged, a new and improved strategy could be implemented to either fix the failure
or to boost the success. In playing Capitalism Lab, the group has learned that having a good start
is important but we must also never forget the importance of being able to adjust our strategies to
numerous unfortunate circumstances. For the reason that, even though the start of a corporation
is good, if it is not managed well all throughout its lifespan then it will surely have a negative
result.

Having clear goals is really helpful in knowing what strategy to implement. This is to
know what the business is looking forward to in the future. It would be hard to implement a
strategy without knowing what outcome must be achieved and also will be heart to measure the
progress that the business made if there are no goals that were set. Without these goals, the
business has no clear purpose and nothing to strive for if the business doesn't have them; as a
result, they stagnate and struggle to achieve significant goals. Goals serve as stepping stones to
the desired outcome. They must be included in every company strategy and become an integral
component of day-to-day operations. With the use of these goals, one may create a standard for
one's own performance and then assess how high or poor one's performance is in comparison to
the benchmark. It is also extremely clear how well or poorly one has performed compared to
one's past results. As a result, goals are an effective approach to assess one's success and

11
afterward take the appropriate action. In addition, it helped the members to focus on their
learning and organize their time and resources so that they can get the most out of them. As a
takeaway for the group, the goal-setting process lays the groundwork for one's motivation. The
goals and objectives provide a specific target to shoot towards and a reason to be passionate
about achieving it.

During the start of the business operations in Capitalism Lab, wherein the goals and
strategies have to be implemented in the game, the members were able to learn how important it
is to have enough capital in order to build the factories and to undertake research and
development on the products we have to manufacture. In the final challenge, it was unexpected
that the starting capital was not enough to reach the revenue of 2 billion since we also have to
perform mining for raw materials. With this, the role of debt financing was definitely needed to
accomplish our goals and strategies. Moreover, borrowing money from the bank, without a
doubt, helped the business from going bankrupt. Since there are strategic plans and goals set by
the group, the risks associated with borrowing capital from a bank were already expected,
therefore, it is essential to budget the resources and smartly invest this money into the business
for factories, research and development, mining, and retail stores. Moreover, budget is needed in
implementing strategies because it helps develop the activities of the company which allows the
organization to allocate resources efficiently, to know what activities to prioritize, and to evaluate
specific goals or strategies. Furthermore, associating budget in the process of implementing the
strategies helped in setting realistic goals since the organization would be able to estimate the
time in attaining the goals. Overall, the higher the risks, the higher the potential return that the
company would gain. This is one of the trading principles that the group learned in playing
Capitalism Lab. However, as mentioned, it is important to have strategies planned in order to
surpass the risks and to successfully achieve the goals.

Through the teachings of the RVR COB Code of Ethics, the Covenant for Shared
Prosperity, and strategic principles, the members learned a very big lesson about implementing
strategy. It is for the business to have a purpose. The mission and vision of the company should
not just be a decoration that makes the business look ethical and beneficial. A strategy about
giving back to the community must also be implemented. This strategy of giving back has
always been effective because it affects the business positively. It is a down-to-earth reason why

12
purpose matters to every organization. As Lasallians who accomplished this game, the takeaway
was, managing a business is challenging because a businessman should consider several things -
strategies, goals, values, and environment in order to be successful. However, what weighs the
most is the ability to give back without sacrificing the figures of the company, because, in this
way, the company will have a smooth-sailing relationship with their stakeholders, while
satisfying their customers. Given that, all members of the company will function efficiently and
will be reflected in the overall image of the company. Considering everything that has been
mentioned, the group sees Capitalism Lab as a holistic simulation that covers theories and
principles in business, while aiming to enhance the ethical values of the players, which is really
good practice because it is the real deal in the corporate world.

VII. References

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Gamble, J., Peteraf, M. & Thompson, A. (2020). Essentials of strategic management: The quest
for competitive advantage (7th edition). New York, NY: McGraw-Hill. Ebook version
via McGraw-Hill Connect

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