ANSWER 1

The main reason behind Uber leaving China was fueled by the interference of the state in the
industry. From the given case study, following points can be noted as to what led Uber to sell its
operations to a local competitor:
1. Validation of Credit Card information – The government made it compulsory for
consumers to get their credit card validated with the company before opening an account
which was a major drawback for the users. For this, Uber added the option of Alipay
payment method.
2. Limitations of Google maps in China – Uber mainly used Google maps for their
functioning but it’s coverage in China was very inaccurate and inadequate. To overcome
this Uber, in partnership with Baidu, had to install servers over the Chinese soil to avoid
disruptions in its operations.
3. Driver Corruption – Uber had to spend a lot of money on attracting new users and
drivers, by allowing heavy discounts and commissions, which ultimately led to misuse of
the funds as the drivers started to fake trips, causing huge losses to uber.
4. Nationalization of Industry regulations – The new regulations lifted off the subsidies,
prevailing the market pricing in the industry. Uber now had to get provincial and national
regulatory approval for their operations in China, online and offline services being
regulated separately.
5. Ride hailing service driver's license – Local governments determined and issued special
drivers permit to the drivers. The regulations by the central government were almost
inevitable.

Now to sustain in the Chinese markets, the CEO Travis Kalanick, decided to hand over their
operations to a local competitor Didi Chuxing. Cheng Wei, CEO of Didi Chuxing, got a seat
at the board of Uber and Uber got 20% stake in Didi Chuxing. Didi Chuxing would now run
Uber’s Chinese operations under a new brand.
It was a very effective strategy. By leaving the market and taking a stake in the rival business
in exchange of their remaining assets, they remained involved and eliminated the substantial
costs of competing with the single market player. This allows them to keep profiting from
their competitors business and keep a way reserved for future opportunities in the market.
Funding their own operations in China was becoming extensively expensive for Uber,
causing losses of up to $1 billion every year. Competing against Didi Chuxing which enjoyed
about 85% of the market share, was nearly impossible. The move was made to avoid the
inevivatble competition and start making some actual profits for the organization. It was
probably the best option available for Travis Kalanick to survive in China.
ANSWER 2

Type of market Functions of the Examples from Evidence for Remarks

institution market the chosen the identified
institution company, if examples
applicable (provide
evidence,
maybe in 50
words, how the
company is also
performing as
the
intermediary)
Credibility They provide N/A N/A N/A
enhancer quality
certification to
products
Information Generate info N/A N/A N/A
analyzers and and helps in
advisers decision making
by providing
data and
consulting.
Aggregators Helps provide GLOBAL Diageo Signs
and low-cost LEADER IN New
distributors matchmaking BEVERAGE Distribution
ALCOHOL
through WITH AN
Agreements
economies of OUTSTANDING and New
scale COLLECTION Brokerage
Diageo’s main OF BRANDS Agreement with
function is to to The Charmer
be one of the MASS Sunbelt Group
best performing, PRODUCTION
&
most trusted and DISTRIBUTION
respected IN MORE THAN
consumer 180 COUNTRIES
products AROUND THE
companies in GLOBE
the world.
Transaction They facilitate N/A N/A N/A
facilitators buying and
selling by
providing
transaction
platforms
Regulators and Help in N/A N/A N/A
 other public resolving
institution disputes
Adjudicators Create and N/A N/A N/A
enforce
underlying rules
that determine
business
engagement and
industry
direction

ANSWER 3

India being the largest market in terms of population, mainly comprising of people under the
age of 35, plays an important targets market for Netflix. As per Frost & Sullivan’s report
(2016), consumption in hours is growing at 66% every year since 2015, which has led to the
emergence of numerous OTT’s in the nation. Netflix would consider the following factors to
evaluate the market attractiveness in India:
1. Market status – The presence of other OTT players in the market such as Youtube, Voot,
Hotstar etc. The presence of exclusive content of these OTT’s. The OTT’s have huge
business presence in the countries with big media houses backing them up, like Eros
Now. Also entry of other big players like Amazon can be hazardous.
2. Competition – The presence of YouTube, Hotstar Voot and other local players make the
market tough due to their regional content and Hotstar for providing free international
content.
3. Services – Netflix has to consider various services provided in the industry such as
movies, daily soaps, video on demand, live TV, free content, pay per view, offline
content.
4. Technology - Profile based content and advertising using location based service and big
data analytics. Netflix has to look at the technological developments of the country like
the availability of 4G network.
5. Value Proposition - Apart from content, value offering in form of user interface,
customised list of content, recommended videos will enhance user experience.
6. Barriers- Availability of free content on Youtube is a big hurdle for Netflix. Indian
market in flooded with pirated content which discourages consumers to opt for paid
content.

Market Intermediaries between OTT platforms refers to any channel of marketing which
helps spreading awareness about the various movies, series and other streaming services the
company is offering. E.g.: Magazines and online reviews play a vital role as Market
Intermediaries to help viewers and audience to know more about certain shows on Netflix.
This in return helps Netflix to make their decisions based on customer feedback and reviews
about the shows they like on their platform.
Big data helps Netflix decide which programs will be of interest to you and the
recommendation system actually influences 80% of the content we watch on Netflix. The
company even gave away a $1 million prize in 2009 to the group who came up with the best
algorithm for predicting how customers would like a movie based on previous ratings. The
algorithms help Netflix save $1 billion a year in value from customer retention.

ANSWER 4

Netflix in India is facing major problems with their standard business model of premium
subscription. Some things that Netflix can do to avoid failure in the Indian market can be:

1. Pricing strategy – As compared to other players in the market, pricing structure of Netflix
is a drawback because of cheaper rates offered by other OTT’s. Netflix also imposes a
device restriction as to how many people can view at the same time. Whereas Indian
consumers have the habit of sharing an account with friends and family. Amazon,
Flipkart, and so forth have utilized limiting and cashbacks as a component to win piece of
the overall industry in India. Unmistakably, limiting is one strategy that has functioned
admirably for the Indian business sectors. Netflix could run crusades that would trigger
the mental earnestness to purchase.
2. Fighting Piracy - Fixing content replication and evaluating may bring some transient rest
for Netflix. In the more drawn-out run, Netflix needs to distinguish where would it be
able to search for development for the more extended skyline in India. The Indian
entertainment industry is widely disturbed by piracy of data. Netflix has to find
3. Building Consumer Base - Netflix has been a premium content distributor. Thinking
about this, we can liken that Netflix would need to focus on the rich and destined to be
the wealthy class of India. Taking into account that the top 10% of Indians hold 77% of
absolute riches, we can expect that this 10% is effectively the intended interest group.
Expecting that Netflix gets even 20% of these 10% princely individuals, the number
would mean, crossing the 200 million imprints without any problem. So, Netflix has a
plenitude as far as the absolute objective crowd. In any case, Netflix additionally needs to
deliver something that Indians associate well with.
4. Quality & Quantity - A conspicuous inquiry with regards to what Netflix ought to select,
quality or amount. Being situated as an exceptional player and focusing on the premium
consumers, Netflix would need to proceed with its attention on great quality content. In
any case, not many India explicit shows won't uphold the reason by the same token.
Indian business sectors, without a doubt are unpredictable and have different
arrangements. Thus, Netflix will have to invest heavily in Indian markets to produce
various genres to cater to a larger audience.
Bollywood films are required to follow certification rules and TV programs are required to
follow the Program Code and the Advertising Code, whereas the OTT industry is free from the
hassle of censorship or any code, subject to provisions of the Information Technology Act, 2000.
The Central Board of Film Certification solely certifies films for theatrical release and has no
control over online content.

The Indian OTT industry lacks a proper Piracy control authority which is an essential to help the
companies avoid the losses caused due to free pirated content available to users.

ANSWER 5

Some of the key challenges faced by Netflix in India are as follows:

1. Existing competitors – Players like Youtube, Hotsar, Eros and Amazon have a huge
chunk of market share in the industry which makes it difficult for Netflix to acquire the
market.
2. Consumer Attitude – The Indian consumers are resistant to pay for premium content
because the market is full of free and cheaper platforms such as Youtube and Torrents.
3. Pricing – Netflix’s pricing model is very unattractive to a consumer because of their
premium pricing.
4. Local Content – Netflix has to look into the demands and preferences of consumers in
India and provide local and regional content accordingly.
5. Technological drawbacks – The internet speed in India is comparatively lower than in
other countries, which makes the screening of HD content difficult. India lacks in
adequate digital structure.

With the presence of cheaper option available to the consumers, it is difficult for Netflix to
continue with this pricing strategy, but not impossible. It should work well with the upper
middle class and upper class societies in the country. With the losing trend of DTH and cable
televisions, even middle class consumers are opting for paid subscriptions of OTT’s. And
with the quality content being provided by Netflix, more and more consumers are being
attracted and motivated to spend money on it.

Netflix’s unique selling proposition is their premium content and its recommendation
system. Without exploring and consuming the entire value; a user will not convert to the
subscriber. For vast user acquisition; For this, Netflix can use a free subscription model to
attract new subscribers. Currently they provide a month of free subscription which can be
highly consumer friendly. Netflix has recently launched a special mobile pricing for
consumers who want to stream content only on their smart phones. This would also help
Netflix a lot because most of the young population of consumers prefer to watch content on
the go with their smartphones.

External factors affecting product and pricing selection :

1. Regional Cultures – India is a land of varied cultures and languages which makes it
necessary for Netflix to provide content based on different cultures and in different
languages.
2. Income Disparities – The wide gap in income levels of the population makes it important
to come up with a pricing strategy that can target all segments.
3. Indian mindset – The Indian culture is not very open towards sexuality and nudity, so it
is important to keep a check on such content.
4. Cricket – Cricket in India Is celebrated more fondly than any other festival, so they must
look into bringing content accordingly. Like IPL
5. Adequate technology – The appropriate technology for HD premium content is not
widely used in India which creates less of a demand for HD subscriptions.