,MNB3701 MAY JUNE PORTFILIO (COMPLETE ANSWERS)
Semester 1 2025 - DUE 2 June 2025; 100% correct solutions
and explanations.
Question 1:
Formal institutions are established laws, regulations, and
official policies set by governments or regulatory bodies that
directly impact how businesses operate. In China, these
institutions play a critical role in shaping the environment for
foreign companies like Uber.
1. Regulatory Framework:
The Chinese government imposes strict regulations on
foreign companies operating in the transport and
technology sectors. Uber had to navigate complex legal
requirements, including licensing rules and compliance
with local transportation laws.
Example 1: Uber was required to partner with local
companies to obtain necessary licenses for ride-hailing
operations.
Example 2: The introduction of a new law in 2016
regulating online ride-hailing services directly affected
Uber’s operations, as it mandated drivers to hold local
licenses and vehicles to meet specific criteria.
2. Foreign Investment Restrictions:
China has formal restrictions on foreign ownership in
certain sectors, including transportation and internet-based
services.
Example 1: Uber had to operate through a joint venture
with a Chinese partner to comply with investment
restrictions.
, Example 2: Uber’s inability to establish full ownership led
to its eventual merger with Didi Chuxing, a local
competitor, due to regulatory pressure and market
limitations.
Informal institutions refer to cultural norms, social practices,
and unwritten rules that influence business behavior and
decision-making in a specific context.
1. Consumer Preferences and Trust:
Chinese consumers tend to favor local brands they perceive
as more trustworthy and culturally aligned.
Example 1: Didi’s deeper understanding of Chinese
consumer behavior gave it an edge over Uber, which
struggled to build the same level of brand loyalty.
Example 2: Many users preferred payment platforms like
Alipay and WeChat Pay, which were more integrated with
local services than Uber’s default options.
2. Business Culture and Guanxi (Relationships):
Chinese business culture places high value on personal
relationships and networks (guanxi), which are essential for
navigating regulatory environments and gaining
competitive advantages.
Example 1: Didi’s strong connections with government
officials helped it gain favorable regulatory treatment.
Example 2: Uber’s foreign identity limited its access to
these informal networks, reducing its ability to influence
policy and respond to regulatory changes effectively.
Question 2:
Semester 1 2025 - DUE 2 June 2025; 100% correct solutions
and explanations.
Question 1:
Formal institutions are established laws, regulations, and
official policies set by governments or regulatory bodies that
directly impact how businesses operate. In China, these
institutions play a critical role in shaping the environment for
foreign companies like Uber.
1. Regulatory Framework:
The Chinese government imposes strict regulations on
foreign companies operating in the transport and
technology sectors. Uber had to navigate complex legal
requirements, including licensing rules and compliance
with local transportation laws.
Example 1: Uber was required to partner with local
companies to obtain necessary licenses for ride-hailing
operations.
Example 2: The introduction of a new law in 2016
regulating online ride-hailing services directly affected
Uber’s operations, as it mandated drivers to hold local
licenses and vehicles to meet specific criteria.
2. Foreign Investment Restrictions:
China has formal restrictions on foreign ownership in
certain sectors, including transportation and internet-based
services.
Example 1: Uber had to operate through a joint venture
with a Chinese partner to comply with investment
restrictions.
, Example 2: Uber’s inability to establish full ownership led
to its eventual merger with Didi Chuxing, a local
competitor, due to regulatory pressure and market
limitations.
Informal institutions refer to cultural norms, social practices,
and unwritten rules that influence business behavior and
decision-making in a specific context.
1. Consumer Preferences and Trust:
Chinese consumers tend to favor local brands they perceive
as more trustworthy and culturally aligned.
Example 1: Didi’s deeper understanding of Chinese
consumer behavior gave it an edge over Uber, which
struggled to build the same level of brand loyalty.
Example 2: Many users preferred payment platforms like
Alipay and WeChat Pay, which were more integrated with
local services than Uber’s default options.
2. Business Culture and Guanxi (Relationships):
Chinese business culture places high value on personal
relationships and networks (guanxi), which are essential for
navigating regulatory environments and gaining
competitive advantages.
Example 1: Didi’s strong connections with government
officials helped it gain favorable regulatory treatment.
Example 2: Uber’s foreign identity limited its access to
these informal networks, reducing its ability to influence
policy and respond to regulatory changes effectively.
Question 2:
