Nora-Sakari Case Analysis

Topics: Negotiation, Mediation, Contract Pages: 9 (2531 words) Published: November 6, 2011
Nora-Sakari Case Analysis
The Nora-Sakari: A proposed JV in Malaysia set in 2003, focuses on the possible joint venture between Nora Holdings Sdn Bhd, a leading supplier of telecommunications equipment which is based in Malaysia, and Sakari Oy, a Finnish conglomerate, which was a leader in the manufacturing of cellular phones and switching systems from Finland. Nora as well as Sakari was part of a group of seven companies that submitted a five year bid outlined by Malaysia’s national telecommunication company, Telekom Malaysia Bhd (TMB), to develop the country’s telecommunication infrastructure to align with the government’s Vision 2020 program. Nora needed the JV with Sakari to ensure it could meet the obligations for the TMB contract, specifically the switching technology. Also, it will give them the ability to utilize the tacit knowledge gained from working with Sakari to implement their model in the Malaysian market. The problem that arises is that the negotiations between Nora and Sakari are not moving in a positive direction. Many issues had risen that have stalled the negotiations about the joint venture, which include: 1. Cultural differences 2. Differences in organizational behavior between management 3. Disagreements by both parties on significant issues pertaining to: a. Equity ownership b. Technology transfer c. Royalty payment d. Expatriates’ salaries and perks e. Arbitration

The main issue outlined in this case is Nora’s decision to either continue with negotiations with Sakari or end the negotiations to enter a JV with another company because their time is limited due to the bid contract with TMB.

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Nora-Sakari Case Analysis
Cultural differences The culture of Nora was influenced heavily by strong Islamic beliefs and values. Similar to western cultures, Nora negotiated utilizing a relational, laid back approach, while Sakari negotiators were “serious, reserved and cold” (271). Nora’s vice-chairman, Zainal Hashim made a significant mistake by not researching the types of personalities he would be negotiating with, making the assumption that Sakari executives would operate in a manner similar to Americans. A prime example of this behavior was Sakari’s senior accountant, Solail Pekkarinen being dismissed from negotiations after the second day because of his insensitivity to the local culture. It is evident that each company should have done their due diligence by heavily researching crosscultural communications to learn how to find a happy medium in negotiations between one another. This would have potentially closed communication gaps to expedite the negotiation process. Differences in organizational behavior Nora operated vastly different in their negotiations than Sakari. Nora’s negotiating team of five was led by Zainal whom not only was their most seasoned negotiator but he predominately made the final decisions. This centralized decision making approach was in stark contrast to the decision by committee approach adopted by Sakari. Internal politics within Sakari led to the “formation of two opposing camps” (271). Entry modes, along with location of the business opportunities became one of the first topics to be argued. One Sakari camp (whom predominately were Sakari managers positioned in Asia) were in favor of the Joint venture because they felt that there was high growth potential in the Asian –Pacific region and a deal was eminent with Nora. They also felt there was no need to take part in negotiating a deal within Europe because of the competitive landscape while the second camp was in favor of negotiating for a telecommunications contract in the United Kingdom because they were closer in proximity to Finland which would allow them to penetrate the European Union. Also, since they were more familiar with the area, cultural differences would be minimized and they could avoid a joint venture and steer in the direction of a...
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