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MNB3701 REPORT 2 ASSIGNMENT 4 (JAC MOTORS ZIMBABWE)
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- University Of South Africa (Unisa)
MNB3701 REPORT 2 ASSIGNMENT 4 (JAC MOTORS ZIMBABWE)
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BMZ ACADEMYBMZ Academy
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Table of Contents
Executive summary .................................................................................................... 4
Literature search ........................................................................................................ 4
Background ................................................................................................................ 6
Joint Ventures and Exportation as internationalisation strategy by JAC ................. 7
Institutional based view .............................................................................................. 7
Formal institutions ...................................................................................................... 8
Economic system .................................................................................................... 8
Exchange rate regime .......................................................................................... 9
Interest rates ........................................................................................................ 9
Political ideology ................................................................................................... 10
Corruption .......................................................................................................... 10
Implications to management ................................................................................. 11
Informal institutions .................................................................................................. 12
Culture .................................................................................................................. 12
Ethics .................................................................................................................... 13
Relativism in ethical standards .......................................................................... 13
Implications to management ................................................................................. 14
RESOURCE BASED VIEW ...................................................................................... 14
JAC resource identification ................................................................................... 14
Primary resources ................................................................................................. 15
Tangible assets of JAC ......................................................................................... 15
Financial resources............................................................................................ 15
Physical resources............................................................................................. 15
Intangible assets of JAC ....................................................................................... 16
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Brand reputation ................................................................................................ 16
Technological assets ......................................................................................... 16
Human resources.................................................................................................. 17
JAC capabilities .................................................................................................... 17
Capabilities in logistics and service ................................................................... 18
Capabilities in corporate coordination ................................................................ 18
Evaluation of JAC resources under VRIO Framework .......................................... 18
Value creation .................................................................................................... 18
Rarity ................................................................................................................. 19
Imitability ............................................................................................................ 19
Organisation ...................................................................................................... 20
JAC motors VRIO FRAMEWORK ......................................................................... 20
Managerial implication ......................................................................................... 21
Challenges faced by JAC trading internationally ................................................... 21
Economic problems .............................................................................................. 21
Exchange rates .................................................................................................. 22
Inflation .............................................................................................................. 22
Low incomes ...................................................................................................... 22
Changes in interest rates ................................................................................... 23
Managerial implications ........................................................................................ 23
Foreign Direct Investment (FDI) ............................................................................ 23
Internalisation advantages (OLI paradigm) ........................................................ 24
Locational advantages ....................................................................................... 24
Internalisation advantages ................................................................................. 25
Conclusion ............................................................................................................ 26
References ............................................................................................................... 28
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Executive summary
The primary objective of this report is to investigate the effects, both formal and
informal institutions, on the performance (success or failure) of MNEs. The institutions-
based view is an important framework that has been adopted by the report in order to
understand the success or failure of JAC Motors, a Chinese business operating in
Zimbabwe. This is because the report seeks to understand the success or failure of
JAC Motors. To put it another way, the report selected a business from one of the
BRICS nations that has operations on the African continent. The way in which
multinational corporations (MNEs) conduct their business is governed by formal
institutions that are commonly referred to as the rules of the game. These include
political ideologies and economic philosophies that Zimbabwe is following in its current
state of existence. According to this report, favourable contributions from both politics
and the economic system have been made to the success of JAC Motors. Additionally,
informal institutions such as culture and ethics had an effect on JAC Motors due to the
fact that they are distinct from those of the company's native country. JAC Motors
established a corporate culture that is inclusive to all of its stakeholders, as well as
ethical relativism, which helped to reduce outsidership liability within the organization,
as part of its effort to better align itself. This made a significant contribution to its overall
achievement. Furthermore, the resource-based view shall be utilised by this report in
an attempt to understand and explain the resources of JAC motors. VRIO framework
shall be the basis of argument as different resources such as financial assets, positive
brand reputation, technological assets and skilled labour force. These assets are
important in creating a competitive advantage towards the operations of JAC in an
emerging economy like Zimbabwe. The report also discusses challenges that JAC
faced in its Zimbabwean operations such as low income, inflation and exchange rate
issues. Lastly, the report shall explain different forms of FDI and how best can JAC
tap into opportunities that are brough by the OLI paradigm.
Literature search
Literature drawn from a variety of sources is used to support and clarify the findings of
reports (Lefebvre, Glanville, & Briscoe, 2019). In this report, secondary sources were
utilised in such a way that allowed the report to comprehend how institutions contribute
to the success or failure of an organisation. This was accomplished by using
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