MNB3701
MAY JUNE PORTFOLIO Semester 1 2025
Unique #:
Due Date: 2 June 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, QUESTION 1
Formal and informal institutions are structures that shape the rules of engagement in
a country‟s economic and social systems. These institutions determine how
businesses operate within a specific national context.
Formal institutions refer to established laws, regulations, and official policies
enforced by governments or regulatory authorities. These are written rules that
govern behaviour and business operations.
In the case of Uber in China, the following two examples reflect formal institutions:
1. Government Regulations on Ride-Hailing (2016):
In July 2016, China‟s government introduced a national regulation requiring
ride-hailing companies to register drivers and vehicles, conduct criminal
checks, and store user data within China for at least two years. This
regulation made Uber‟s pricing model of offering rides below cost
unsustainable, thus negatively impacting its competitive advantage (Singh et
al., 2020:11).
2. Raids and Legal Crackdowns:
Chinese authorities conducted police raids and declared some of Uber‟s
services illegal. For instance, in April 2015, police in Guangzhou raided Uber‟s
offices and confiscated over 1,000 iPhones. These actions represent legal
enforcement mechanisms that restricted Uber‟s normal business operations
(Singh et al., 2020:10).
Informal institutions are unwritten social norms, values, traditions, and cultural
practices that influence behaviour. They are not enforced by law but play a major
role in shaping business practices and consumer expectations.
Two examples of informal institutions from the case study are:
1. Consumer Trust in Taxi Drivers over Private Car Owners:
Chinese riders generally trusted registered taxi drivers more than private car
owners. DiDi, unlike Uber, worked with traditional taxi drivers, which helped
them gain trust and approval from both riders and local authorities (Singh et
al., 2020:10).
2. Cultural Resistance to Foreign Companies:
Cultural preferences and national sentiment favoured local Chinese
companies. Despite efforts at localisation, Uber remained perceived as a
foreign company, which placed it at a disadvantage compared to DiDi, a local
firm supported by major Chinese investors like Tencent and Alibaba (Singh et
al., 2020:11).
Varsity Cube 2025 +27 81 278 3372
MAY JUNE PORTFOLIO Semester 1 2025
Unique #:
Due Date: 2 June 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, QUESTION 1
Formal and informal institutions are structures that shape the rules of engagement in
a country‟s economic and social systems. These institutions determine how
businesses operate within a specific national context.
Formal institutions refer to established laws, regulations, and official policies
enforced by governments or regulatory authorities. These are written rules that
govern behaviour and business operations.
In the case of Uber in China, the following two examples reflect formal institutions:
1. Government Regulations on Ride-Hailing (2016):
In July 2016, China‟s government introduced a national regulation requiring
ride-hailing companies to register drivers and vehicles, conduct criminal
checks, and store user data within China for at least two years. This
regulation made Uber‟s pricing model of offering rides below cost
unsustainable, thus negatively impacting its competitive advantage (Singh et
al., 2020:11).
2. Raids and Legal Crackdowns:
Chinese authorities conducted police raids and declared some of Uber‟s
services illegal. For instance, in April 2015, police in Guangzhou raided Uber‟s
offices and confiscated over 1,000 iPhones. These actions represent legal
enforcement mechanisms that restricted Uber‟s normal business operations
(Singh et al., 2020:10).
Informal institutions are unwritten social norms, values, traditions, and cultural
practices that influence behaviour. They are not enforced by law but play a major
role in shaping business practices and consumer expectations.
Two examples of informal institutions from the case study are:
1. Consumer Trust in Taxi Drivers over Private Car Owners:
Chinese riders generally trusted registered taxi drivers more than private car
owners. DiDi, unlike Uber, worked with traditional taxi drivers, which helped
them gain trust and approval from both riders and local authorities (Singh et
al., 2020:10).
2. Cultural Resistance to Foreign Companies:
Cultural preferences and national sentiment favoured local Chinese
companies. Despite efforts at localisation, Uber remained perceived as a
foreign company, which placed it at a disadvantage compared to DiDi, a local
firm supported by major Chinese investors like Tencent and Alibaba (Singh et
al., 2020:11).
Varsity Cube 2025 +27 81 278 3372
