6/12/2016

NoraSakariAProposedJointVentureInMalaysiaMarketingEssay

New for 2016 - Get the grade from your tutor or your money back! (/guarantees.php)

Nora Sakari A Proposed Joint Venture In

Malaysia Marketing Essay
Published: 23, March 2015

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.
(/services/essay-writing-service.php)
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.
https://www.ukessays.com/essays/marketing/norasakariaproposedjointventureinmalaysiamarketingessay.php

1/6

6/12/2016

NoraSakariAProposedJointVentureInMalaysiaMarketingEssay

Background information on parties involved

Nora Holdings Sdn Bdh
Nora Holdings Sdn Bdh of Malaysia was established in 1975 with a paid-up capital of RM2
million. Nora became a leading company in the telecom industry in Malaysia and
consisted of 30 subsidiaries including two public listed companies: Multiphone Bhd. And
Nora Telecommunications Bhd. Nora employed 5,669 employees and since its
establishment gained experience in cable-laying projects; manufacturing telephone
handsets; installing, operating, and maintaining payphones in the cities and major towns
of Malaysia; and distributing Apple computers; distributing radio-related equipment;
supplying equipment to the broadcasting, meteorological, civil aviation, postal and power
authorities in Malaysia and; manufacturing automotive parts.
Sakari Oy
Sakari Oy of Finland was established in 1865 and began as a pulp and paper mill
production company. In the 1960s Sakari expanded into the rubber and cable industry. In
1975 Sakari entered into the computers, consumer electronics, and cellular phones
industries via a series of acquisitions, mergers and alliances. In 1979, a JV between Sakari
and Vantala, was set up to develop and manufacture mobile telephones and gained a
large percentage of the world, European including the United Kingdom, Malaysian, and
Thailand market for the production of mobile phones and mobile phone handsets. In
using the technology gained from their previous acquisitions and working experience,
Sakari Oy gained an edge and distinct advantage in the telecom industry by selling
switching systems licensed from France's Alacatel and by developing the software and
systems to suit needs of small Finish phone companies. In order to avoid competition,
Sakari concentrated on developing dedicated telecom networks for large private users
such as utility and railway companies.
In 2001, Sakari was Finland's largest publicly-traded industrial company and derived the
majority of its total sales from exports and oversea operations. However, in recent years
the company made eorts and succeeded in globalizing and diversifying its operations to
make the most of its high-tech capabilities. As a result, Sakari emerged as a more
inuential player in the international market and had gained international brand
recognition. One of Sakari's strategies was to form JVs to enter foreign markets. Sakari
attributed its emphasis on R & D as its key success factor in the telecom industry.
(/order/)
Summarization of Events
In January 2003, Nora Holdings SDN Bhd submitted its bid for TMB's RM2 billion contract
to supply switching exchanges supporting four million telephone lines with the
assumption that the Nora-Sakari JV would materialize by the time they would begin
operations. Nora was one of seven companies short listed by TMB. Each company was
awarded one-fth share (1,261,000 $USD) of the RM2 billion (6,305,000.00 $USD).
https://www.ukessays.com/essays/marketing/norasakariaproposedjointventureinmalaysiamarketingessay.php

2/6

6/12/2016

NoraSakariAProposedJointVentureInMalaysiaMarketingEssay

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)
https://www.ukessays.com/essays/marketing/norasakariaproposedjointventureinmalaysiamarketingessay.php

3/6

6/12/2016

NoraSakariAProposedJointVentureInMalaysiaMarketingEssay

Analysis of Situation and Summary of Problems

Analysis of Situation
The situation in the case is that the Nora has obtained a contract to from TMB, and needs
a collaborator to help fulll the agreement. To ensure fulllment of the terms within the
TMB contract, a joint venture agreement with their rst choice, Sakari, must be
successfully negotiated. The negotiation process has broken down due to the
disagreement over numerous issues concerning the development of a joint venture. The
overall issues for this breaking down of the negotiation process are that they both have
dierent objectives, conicting underlying goals, and cross cultural mis-communication
issues. The disagreements of objectives are based in the areas of equity, technology
transfer, royalty payments, and expatriate issues. The underlying goals of both of the
companies are focused the futures of both companies. Nora hopes to possess the Sakari's
technology, help the development of its country's infrastructure, generate prot, and
becoming player in South East Asian market. Sakari main goal is to move into the Asian
due to market potential growth at the lowest cost possible. Also, both companies have
failed to realize that cultural communication issues are playing a major role in how the
negotiations are being conducted.
26
Individualism is the one side in opposition to its opposite, while collectivism is the extent
to which individuals are incorporated into groups. Malaysia has a much great focus on the
group with a rating of 63 on the Hefstede's matrix in terms of how individualized the
population is. This result would mean that Malaysia is a high context society where
leadership within the group is of extreme important. The case states at one point the top
Malaysian managers did not attend some of the negotiations, namely the very last
meeting before the process broke down. Without top management involved, lower level
Malaysian managers within the negotiation process may have felt weaken by the loss of
their leadership. We nd Finland on the individualist side with a score of 26. Societies such
as Finland's we nd that people are more focused on the development of individualistic
persona and skills. This led to Finnish management team relying less on leadership and
more on the ideas of each other being applied within the negotiation process. The result
of this methodology being applied to the negotiation process led to one of their
employees being sent home and possibly intimidating the leader-less Malaysian
management.
(/services/example-essays/)
From Noras perspective, accepting the terms proposed by Sakari enables it to fulll the
TMB's contract. Furthermore Nora does not have to search for other companies and in
essence start from scratch all over again. However, an obvious disadvantage is that some
terms are not favorable to Nora.
Option 2: Terminating the negotiations
https://www.ukessays.com/essays/marketing/norasakariaproposedjointventureinmalaysiamarketingessay.php

4/6

6/12/2016

NoraSakariAProposedJointVentureInMalaysiaMarketingEssay

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.

(https://www.facebook.com/sharer/sharer.php?u=https://www.ukessays.com/essays/marketing/nora-sakari-a
marketing-essay.php) (https://plus.google.com/share?url=https://www.ukessays.com/essays/marketing/nora-sa
marketing-essay.php) (https://twitter.com/intent/tweet?
Request Removal

text=Nora%20Sakari%20A%20Proposed%20Joint%20Venture%20In%20Malaysia%20Marketing%20Essay&url=https

If you
are the original writer of this essay and no longer wish to have the essay
published
sakari-a-proposed-joint-venture-in-malaysia-marketing-essay.php&via=ukessays)
(https://m.reddit.com/submit
onurl=https://www.ukessays.com/essays/marketing/nora-sakari-a-proposed-joint-venture-in-malaysia-marketing-essa
the UK Essays website then please click on the link below to request removal:

REQUEST THE REMOVAL OF THIS ESSAY (/MODALS/CONTENT-ADS/REMOVAL.PHP?TYPE=ESSAY)

More from UK Essays

Marketing Essay Writing Service

Essays

More Marketing Essays

Examples of Our Work

Marketing Dissertation Examples

Place Your Order Today

Take the next step and invest in your future
PLACE AN ORDER
https://www.ukessays.com/essays/marketing/norasakariaproposedjointventureinmalaysiamarketingessay.php

5/6