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Bridget Tolan
Dr. Kashlak
IB 282
Case Study II
24 March 2015
Nora-Sakari Joint Venture
The proposed joint venture between Nora and Sakari is not a viable joint venture
for a number of reasons. At first glance, however, there seem to be some positive aspects
that attract the companies to one another. Sakari, a Finnish company, is supported by an
economy that is bolstered by telecommunications equipment manufacturing. Likewise,
Nora, a Malaysian company, is supported by an economy that depends on electronic
exports. Nora itself was a leading company in the telecom industry in Malaysia. In order
for Malaysia to thrive as a developed country in the future, it desperately needed to
upgrade its telecom infrastructure in rural areas within the country, rather than export. In
order to facilitate these upgrades, Telekom Malaysia Bhd (TMB) offered five companies
a five-year opportunity to develop and update various forms of telecommunication
around the country. Nora secured a share in this contract with TMB, mainly to have the
opportunity to form a partnership with a multinational corporation in order to acquire
new technology from said partnership. Thus, Nora was on the hunt for a viable option,
and after meetings, considered Sakari a serious contender.
Sakari’s digital switching system called SK33 appealed to Nora. SK33 was
standardized, and thus required freely available components. SK33’s software could also
be upgraded, which could lead to new developments in switching systems—new
technology that Nora was interested in developing. Management at Nora highly valued
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and prioritized research and development and development of resources for their
company. They hoped to learn from other companies through joint ventures, but wanted
to eventually be able to develop and sustain their own technology. Sakari’s SK33 would
be the perfect building block for Nora’s personal development. Similarly, Sakari was
looking for a partner who was also interested in research and development to further their
own global competitiveness. They also hoped to form joint ventures to enter new
markets. Also, because Sakari was a smaller company, it was able to adapt to both larger
(urban) and smaller (rural) needs much more easily because it could customize products
based on needs. This trait was vital to Malaysia’s growth in rural areas.
While it seems like Nora and Sakari are a good fit, they ran into a lot of problems
during the negotiation process. Cultural beliefs and differences were the main problems
in deciding on an agreement. Nora believed in promoting Islamic practices in the
workplace, just as the majority of Malaysians did. They found emphasizing relationships,
sincerity, and consistency to be effective management practices. Conversely, the Finnish
people from Sakari were serious, reserved, and observant. This caused problems with
communication in negotiation meetings. They also had issues determining equity shares
of each company. Nora still believed in following no longer enforced Malaysian
regulations because it was still a common practice there. They also disagreed on salaries
for experts hired to train technical employees. Nora believed Sakari’s proposed salaries
were incredibly high, and Sakari did not research the going rates in the area. Vice versa,
Sakari believed Nora’s proposed rates were too low. Based on the large difference in
GDPs of Malaysia and Finland, this seems like an expected problem. These problems
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illustrate some of the differences in thought processes between the two companies.
Another main problem was Sakari’s unwillingness to share their technology with Nora,
which was Nora’s main goal in joining a partnership in the first place.
In my opinion, Nora should consider other companies to partner with. Nora needs
a joint venture in order to fulfill their contract with Telekom Malaysia Bhd. They also
need a joint venture that minimizes cultural differences, and a partner that will help them
learn and develop their own technology. One of Malaysia’s major trading partners is the
United States. English is widely spoken among business people in Malaysia. Also,
management at Nora has more experience negotiating and communicating with the US.
Ideally, Nora should form a joint venture with Lucent from the US, the top major
telecommunication vendor. Lucent also went for but who failed to get the bid for the
contract with TMB, which Nora did receive. Therefore, perhaps Lucent would be more
open to a joint venture with Nora. Nora has also worked with and had joint ventures with
Japanese companies, so they are also an option. I believe it is in Nora’s best interest to
work with a company who respects their cultural beliefs.