Groupcase Nora-Sakari: a Proposed Joint Venture in Malaysia

Topics: Joint venture, Negotiation, Southeast Asia Pages: 6 (2430 words) Published: May 31, 2010
Because every problem almost always has more than one solution, the question of whether or not a joint venture between Sakari and Nora would be the best option for either of the companies is difficult to assess. However, there are certain benefits, which are mentioned in the case, that clearly outline the initial motivation for forming the join venture. From the Sakari side, the motivation came in the form of a new market in Southeast Asia, while Nora was motivated by Sakari’s telecom technology and the possibility of acquiring it and/or replicating it in the future. The forming of the joint venture would benefit both companies if the terms of the agreement were favorable for both parties. It is also noted in the case that Sakari had another option of expanding its operations into the European (EU) market (primarily the United Kingdom), which in turn split the corporation into two “camps” – one for the joint venture with Nora and one against it. While Sakari had a second strategy to pursue, Nora already placed a competitive bid for the TMB project and was in dire need of a partner to fulfill its contract. With the stage set, we now turn to analyzing the negotiations that Sakari and Nora held and why these two companies could not find common ground to form a joint venture. With the help of Hofstede’s Value Dimensions and the information provided by the case we see that there are a number of issues that hindered the two companies for reaching a mutual agreement. When applying the value dimensions model to compare Finland’s values to those of Malaysia, we notice that they differ significantly (by almost 50%) in each dimension. Refer to the diagram: the darker shaded regions represent Malaysia, while the lighter regions represent Finland. In the power distance dimension, Malaysia scores three times higher than Finland, showing that in general the Malaysian culture promotes a very hierarchical society with a large degree of separation between upper management and regular line workers. A possible repercussion of that was noted in the case that while Nora’s executive had the power to make contractual decisions on the spot (since they held the centralized decisional power of the company), Sakari’s negotiators “had to refer contentious items to the company board before [they] could make any decisions that went beyond the limits authorized by the board” (190). The next dimension that the companies differed on was the uncertainty avoidance. While in this dimension the two sides differed least, Nora was more inclined to take risks involved with the creation of the joint venture. They were responsible for the establishment of the factory (manufacturing) as well as operational (managerial) offices, while negotiating contracts with TMB and keeping the company in the good graces of the government. In turn, Sakari’s higher uncertainty avoidance made negotiations more difficult and lengthy as they found problems with equity ownership distributions and the technology transfers between companies. Throughout the case, as a reader, I felt as if the Sakari negotiators did not trust Nora and did not believe strongly in the success of the proposed joint venture, which further contributed to the adherence to their proposed high uncertainty avoidance. While the masculinity dimension did not play a large role in the negotiations, the issues of female leadership could have risen in the future if the joint venture has worked out. An example of such issue could be that a female executive from Sakari could be assigned to oversee certain expatriate operations in Malaysia, thus causing problems with the predominately masculine management at Nora. Furthermore the issue of individualism could not be ignored in this case. It is clear that while Nora (less individualistic, more collective) was working to ensure a collectively and mutually beneficial joint venture for both companies, Sakari’s (more individualistic) negotiators were seeking ways to make sure that...
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