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NoraSakariAProposedJointVentureInMalaysiaMarketingEssay
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Our team consisted of three members Miniru Cole, Syed Haseeb Sadiq, and Douglas
Hansotte. Our team decided on the case study titled "Nora-Sakari: A Proposed JV in
Malaysia" by the Richard Ivey School of Business (The University of Western Ontario)
because of its interesting content and as a team we feel that this particular case is very
informative because it coincides with the material learned in International Business MGMT
650 and provides a great deal of insight into the internal activities of developing,
negotiating, and the attempting to facilitate a joint venture between a local business and a
foreign entity. Our team has analyzed the details surrounding this particular case and look
forward to providing a full analysis of the case, which includes a summary of facts,
statement of assumptions, analysis of the situation and summary of problems, plan of
action, alternative options, and other solutions that may be viable in this the circumstance
of the case study.
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In particular this case study involved three parties: Nora Holdings SDN Bhd, Sakari Oy
Company, and Telekom Malaysia Bhd, though the latter had little involvement except for
providing the capital for the initial bid and deciding on the winning bids. In 2002 Telekom
Malaysia Bhd (TMB), the national telecom company of Malaysia, was given the authority by
the Malaysian government to develop the country's telecom infrastructure. Telekom
Malaysia Bhd did not possess the technology and expertise to take on a project of this
magnitude. For these reasons TMB called for tenders to bid on a ve-year project worth
RM2 billion (6,305,000.00 $USD) for installing digital switching exchanges in various parts
of Malaysia.
The nal objectives of this project would be as follows and were in line with the Malaysian
government's Vision 2020:
1. Invest in the digitalization of its network in order to oer services based on the ISDN
(integrated services digitalized network) standard;
2. Invest in international ber optic cable networks to meet the needs of increased
telecom trac between Malaysia and the rest of the world; and
3. Facilitate the installation of more cellular telephone networks in light of the increased
demand for the use of mobile phones among the business community in the capital of
Malaysia (KL) and in all major cities and towns in Malaysia.
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Nora felt that was eager to secure this bid because of both the nancial gain, but most
importantly it was due to the added benet of acquiring the knowledge in switching
technology from its partnership with a telecom Multi-National Cooperation (MNC).
Specically Nora was interested in Sakari Oy for the following reasons:
Sakari's technical knowledge and expertise - Sakari's SK33, a digital switching system,
which enabled the use of standard components, standard software development tools,
and standard software languages.
Components of the SK33 could easily be found in the open market.
SK33 was a modular system, its software could be upgraded to provide new services
and could interface easily with new equipment in the network, and eventually lead to the
development of new switching devices.
Flexibility in production - Sakari's smaller size enabled them to develop/produce
customized products according to Nora's needs, while in contrast large telecom
companies were less will to provide custom-made products; instead they oered standard
products that were inconsistent with the needs of the customer.
Sakari Oy was interested in this prospect because it would enable them to begin
operations in a new market, specically the Asian-Pacic market. Following the award of
the bid Nora and Sakari Oy sent their respective teams to apeak with each other because
of the initial concerns that each party had about one another.
1. Nora's capability in penetrating the south-east Asian market.
2. Sakari's concerns over the eciency of Malaysian workers in the JV in manufacturing the
product, maintaining product quality and ensuring prompt deliveries.
Nora and Sakari Oy met 20 times for the period of a year. The key points of negotiation
were equity ownership, technology transfer, royalty payments, expatriates' salaries and
perks, and arbitration. In the section "Analysis of the situation" our team will discuss the
specic negotiation points outlined in the case study and provide suggestions as to what
each party could have done, followed up with alternative actions that Nora could possibly
do to simply complete the task and nd a viable partner to enter a joint venture with.
Below is a list of the reasons as to why the negotiations did not materialize into a joint
venture:
1. Dierence in cultures;
2. Dierence in management styles; and
3. Inability of both parties to compromise on key issues;
PART II: STATEMENT OF ASSUMPTIONS
PART III: ANALYSIS OF THE SITUATION AND SUMMARY OF PROBLEMS
(start of miniru's section)
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From Nora's perspective, terminating negotiations would mean starting all over from
scratch. It will take time for it to nd another right partner, to enter into negotiations with
it and to then plan and form a JV with the chosen partner. Time is already running short as
under contract, Nora is obliged to install the digital exchanges in ve years. The lack of
time may also aect the choice of partner Nora makes in the future and that choice may
not be the best one and best suited to the requirements of the company. There is also the
possibility of the worst case scenario coming to pass whereby Nora fails to come to any
agreement with the new chosen partner during the negotiations phase. The choices
available to Nora are not as attractive since the solutions oered by companies other than
Sakario aren't as customized and hence serve not only urban environments but also rural
Print
ones. The solutions oered by companies other than Sakari are apparently not that
adaptable
and compatible either.
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