MNB3701 Portfolio 2025 May/June – Due 2 June 2025

MNB3701 Exam Portfolio 2025
Due: 2 June 2025

Question 1
Identify and explain the formal and informal institutions in China that affect
Uber’s operations. Give
TWO examples for each institution from the case study to support the arguments
made.

(Chapter 2 formal institutions: political, economic and legal systems)

Formal Institutions
Formal institutions refer to rules, laws, and regulations officially established by
governments or authorities. In Uber’s case in China, these institutions significantly
influenced how the company operated.

Example 1 Government Regulations on Ride-Hailing Services
The Chinese government had strict rules regulating foreign ride-hailing companies.
Uber struggled because it was not fully compliant with Chinese laws, such as
needing a local partner or license to operate legally. These legal requirements
were major obstacles for Uber and made it difficult to compete with domestic rivals.

Example 2 Legal Preference for Local Firms
Chinese formal institutions often favor domestic companies through policies and
regulations. For example, Didi Chuxing had government support, giving it an
advantage over Uber. The state encouraged local innovation and protected it,
which meant that Uber faced legal and policy challenges not faced by its local
competitor.