Nora Sakari 3y196o

NORA -SAKARI A PROPOSED JV IN MALAYSIA ( Revised )

Company profile • Nora , a Malaysian Company, is leading supplier of telecom equipment • Sakari, Finland Company, is leading Manufacturer of cellular phone sets and switching stations Nora was interested in forming a t venture with a conglomerate Sakari Oy (Sakari) of Finland

Nora Company • • • • •

Establishing in 1975 Paid In Capital = RM 2 million Holding : 30 Companies Employees : 2.081 person Leading telecom company in Malaysia who saw success from the cable, telephone, payphones, and other ventures like distribution • Islamic values in the workforce, which focuses on relationships, sincerity, and consistency. • The founder and chairmen : Osman Jaafar ; Deputy Managing Director = Zainal Hashim • Type of business : Cable ; Telephone ; Payphone and others

Sakari 1. 2. 3. 4. 5. 6. 1. 2. 3. 7.

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Established 1865 in Finland Product : rubber , cable and expand to telecom Niche player in the global switching market Major market : Finland – digital tools R & D , 17 % from annual sales revenue Business : telecom system and mobile phones electronic cable and related technology Sakari began as a pulp and paper mill before expanding into rubber and cable. Aatos Olkkola, Sakari’s president, led the company into computers, consumer electronics, and cellular telephones by a series of acquisitions mergers, and alliances. The Finnish economy was booming based on the large growth in the telecommunications equipment manufacturing and global telecommunications market.

Nora and Sakari 1. Sakari – manufacture of cellular phone set and swithcing systems and Nora – supplier of Telecom are vertical chain in industry. 2. Technology transfer 3. To meet the needs of the telecom industry in Malaysia and other countries. 4. To meet expanding the new market ( globalization ) 5. To meet capital gains from business combination 6. The large potential for telekom facilities ( from 20 to 55 telephone per 100 people ) 7. Continuous improvement – well growth

The key points of negotiation : equity ownership, technology transfer, royalty payments, expatriates' salaries and perks, and arbitration. Below is a list of the reasons as to why the negotiations had failed into a t venture: 1.Each company agreed to form the JV with a paid up capital of RM5 million, but there was a disagreement of equity ownership for each side ( 70 : 30 ) 2.Difference in cultures; 3.Difference in management styles ( large different in GDP , Different scale of scope ); 4.Communication problem in negotiation meeting ; 5.Inability of both parties to compromise on key issues; 6.Sakari ‘s unwilingness to share their technology with Nora 7.Royalty for the technology was also an issue. Sakari proposed a royalty payment of five percent of the JV gross sales while Nora proposed two percent of net sales. 8.Different views in employee salaries and perks ( employee compensation dispute ) 9.Fail to honor the contract and will be in a extraordinarily difficult situation. 10.Nora would be the majority stakeholder and insisted that arbitration should take place in KL. Sakari insisted on following the norm commonly practiced by the company, Helsinki. ( future disputes at arbitration process ) 11.Nora began the negotiations and assumed that the Finns were like the Americans who tend to be extremely open and state their position early and definitively.

Contingent liability • Nora and Sakari maynot be renegotiate, because the more principal problem will be meet in t venture . • Starting from equity ownership, technology transfer, royalty payments, expatriates' salaries and perks, arbitration, and the difference culture. That it will takes time for several years, so long time period, for meet the balance. This is not effective and efficiently for sustainable business growth

Nora should consider other companies to partner with, such as : • Telecom Malaysia Bhhd • Lucent , US Company • May be japanese Companies, also an option.

Thank you