Nora – Sakari - a Proposed Jv in Malaysia Case Analysis

Nora – Sakari: A proposed JV in Malaysia Case Analysis

Based on what I have learned during the organizational behavior’s lecture on the last session,

in order to influence an outcome of the negotiation, both parties trust each other side’s

intentions, mutual gain is emphasized, open and honest communication is emphasized and,

long-term rather than short term business relationships are stressed for integrative bargaining.

A joint venture negotiations between Nora and Sakari eventually failed because of a mutual

ignorance of one another’s cultural differences. One of the biggest reason that they failed the

negotiation was that there is huge gap between what Nora and Sakari possibly could sacrifice

for successful negotiation on the contract for each other. In addition, lack of preparation and

lack of understanding on the differences due to national culture is another reason for failing the

negotiation.

According the case study, following are the reasons that how far they are from the real contract.

First of all, Sakari proposed an equity split in the Joint Venture (JV) Company of 49 percent

for Sakari and 51 Percent for Nora. However, Nora proposed a 30 percent Sakari and 70 percent

for Nora. Second, Sakari proposed to provide the JV Company with the basic structure of the

digital switch where by the JV Company would assemble the switching exchanges at the JV

plant and subsequently install the exchanges in designated locations identified by TMB. On the

other hand, Nora proposed that the basic structure of the switch be developed at the JV

Company in order to access the root of the switching technology. Third, Sakari proposed a

royalty payment of five percent of the JV gross sales however, Nora proposed a payment of

two percent of net sales. Fourth, there is a huge gap in the Sakari’s expected salaries and perks

from the JV Company and what Nora willing to provide. Finally both Nora and Sakari

disagreed on the location for the dispute resolution. As a conclusion, this negotiation case needs

to address and improve the lack of preparation and lack of understanding on the differences

due to national culture is another reason for failed negotiations.

When I consider Nora’s perspective, they needed to ensure compliance with the terms of the

TMB contract, JV negotiations between Nora and Sakari must be done. Nora was looking to

secure a partner that would enable them to comply with the TMB contract. Moreover it would

be good opportunity to learn from Sakari that how they successfully replicate that model in the

Malaysian market. Establishing JV Company would be the best option because, if they were

able to reach the negotiation, Nora would take advantage from JV in terms of technology

transfers. As we know, Sakari was one of the successful telecom companies in Europe. Thus,

it would be such a big opportunity for Nora to replicate from the Finnish technology and adopt

their success for Malaysia market.

Moreover, Sakari also would take an advantage from the JV Company contract with Nora

because the venture would enable Sakari to acquire knowledge and gain access to the market

of South East Asia. Sakari’s main goal was to acquire knowledge and, gain access of South

Asian markets for Telecom products would be launched if the negotiation was successfully

done.  

Another reason that the JV Company would be beneficial for Sakari is that the huge potential

for telecom facilities was the one of the reason in the low telephone penetration rate for the

most South-East Asian countries. According the case, “In 2011, mobile broadband penetration

rates for Indonesia, Thailand, Malaysia and the Philippines ranged from three to 30 connections

per 100 people compared to the rates in Japan, Finland, United States and Sweden which

exceeded 75 connections per 100 people.”

Eventually, Sakari would take advantage from what Nora’s has such as local knowledge of

Malaysia and Asian market. Moreover, Nora had strong government relationship and they

already had a contract with them. Beside this, Nora had strong relationship with companies

based on developed countries.    

If I am a negotiator of Nora side, I would like to fulfill the TMB contract that I would like to

restructure the contact with Sakari and request them for final attempt for the negotiations

because, Sakari’s network is easily adjustable and can cater large exchanges in urban areas.