Nora – Sakari - a Proposed Jv in Malaysia Case Analysis

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Furthermore, Sakari is willing to deliver a customized system to meet the needs of the

consumers which the larger corporations cannot provide to Nora.

Furthermore, if Nora negotiates with a third party, it would take both time and money.

According the case study, “Nora cannot afford to do it since Nora is liable to provide RM2

billion contract to supply digital switching exchanges support four million telephone line.”

As we know, Nora cannot provide this by themselves without JC Company contract because

they cannot deal with digital switching technology providers. To open the renegotiation with

Sakari, Nora should accept their proposal in terms of the technology issues moreover, salaries

and perks of the Finnish expertise that they required. Beside this, I would like to propose 40

percent for Sakari and 60 percent for Nora for the ownership in order to ensure the control of

the both parties in JV company.

According the case study, “Sakari was the leading telecom company in Europe and had

experience using high technology to enable small country to have a fast growing economy.

Nora was looking to do the same thing in Malaysia if given a piece of the contact. Malaysia

had adopted the British system and Sakri, unlike other corporations could make the components

customized”. The reason why I would like to materialize the negotiation with Sakari is that

Sakari is one of most popular and well experienced companies regarding establishing JV

company and successfully has done in the new market though the Joint Venture Company.

As I emphasized previously, the reason why Nora is looking for a JV company to manufacture

and commission digital switching exchanges to meet the needs of the telecom industry in the

Malaysia market. Nora is able to take a share of RM 2 billion bid from TMB if Nora is able to

successfully set up the Joint Venture with Sakari. Anyhow Nora needs a partner at any cost and

they are not able to provide digital switching exchange to TMB by themselves. So, we (Nora)

needs an open communication for mutual gains between both parties. Nora should try to change

in the structure of the negotiation and try to reach the agreement with the sacrifices.

When I consider the renegotiation with Sakari, I would like to propose to Sakari for

reconstructing the agreement. The first issue is about ownership issue. My point of view, Nora

should take control over the Sakari since the JV will operate in Malaysia. When it comes to

cultural issue, Nora knows and understands Malaysian cultures more than Sakari and they even

already had a close relationship with government. For the technology conflict, since Sakari is

the better understanding of technology transfer part, I think Sakari should take a control since

they are better in managing technology part in house operation. For loyalty payment issue,

according the case study, “Nora’s manager indicate that its return on investment would be less

than the desired 10 percent if royalty rates exceeded three percent of net sales.” In my opinion,

Sakari should accept three percent as Nora proposed based on financial simulation. For the

arbitration, third location would be the best other than Malaysia or Finland for both parties so

they have equal advantage of the location. Lastly for Expatriate’s Salaries and Perks, since all

technical experts belong to Sakari, I think Nora should agree with what Sakari proposed

regardless of Nora’s or Malaysia’s average salaries. Bottom line is if both parties sacrifice each

aspect of conflict side, I think possibly they are able to materialize the negotiation for JV

Company contract and could make successful win-win negotiation result.

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