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Nora Sakari Jointventure

A joint venture between Nora Holdings and Sakari Oy stalled during negotiations over a large telecommunications project in Malaysia. Cultural differences between Finland and Malaysia were not properly analyzed, and the parties approached negotiations with personal interests rather than finding common ground. A proposed restructuring would give Sakari 40% equity and royalties in exchange for Nora gaining a larger ownership stake and meeting its return expectations. However, Nora erred in beginning the project without a solid joint venture agreement in place. Culture is key to international negotiations, so the breakdown here was likely the main reason talks failed. Quick renegotiation is needed to meet deadlines, otherwise Nora should pursue other partners.

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688 views1 page

Nora Sakari Jointventure

A joint venture between Nora Holdings and Sakari Oy stalled during negotiations over a large telecommunications project in Malaysia. Cultural differences between Finland and Malaysia were not properly analyzed, and the parties approached negotiations with personal interests rather than finding common ground. A proposed restructuring would give Sakari 40% equity and royalties in exchange for Nora gaining a larger ownership stake and meeting its return expectations. However, Nora erred in beginning the project without a solid joint venture agreement in place. Culture is key to international negotiations, so the breakdown here was likely the main reason talks failed. Quick renegotiation is needed to meet deadlines, otherwise Nora should pursue other partners.

Uploaded by

migueljose90
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Miguel Iglesias (3966924) Nora-Sakari Joint Venture Case Notes:

In 2003 a joint venture between Nora Holdings (Nora) and Sakari Oy (Sakari) stalled during the negotiation process, leaving the future of a large telecommunications project between the Malaysian government and Nora unsettled. Many of the unresolved issues are rooted in the cultural differences between Finland and Malaysia and the customary business practices in each country. It would appear that neither party completed a cultural analysis of the other country, or of the chief negotiating participants before formal meetings began. The unresolved issues also provide insight into why the negotiations failed. There are cultural nuances rooted in some of the issues. The lack of desire to compromise indicates each side approached the joint venture with personal interests foremost, instead of working towards a common goal. For the equity problem the underlying issue is one of trust and misaligned goals. The deal must be restructured, otherwise Nora should look to other partners in support of the TMB contract. A proposed restructuring includes the following: Sakori keeps ownership of the switch technology, has 40% equity in the joint venture company, and receives 2.5% of the net sales for royalties. In return, Nora has 60% ownership in the joint venture company, and meets their minimum ROI expectations.

Before agreeing to a large contract, Nora should have ensured the joint venture was solid and not in the negotiation process. This was a major error on their part, one which Sakari tried to leverage with exuberant demands According to Deresky (2008), culture is the most important element of international negotiations and this apparent breakdown is the main reason why the negotiations between Nora and Sakari failed. Zainal should attempt to renegotiate the terms quickly. He has a deadline to meet and requires a partnership to meet the TMB requirements. If he cannot persuade a successful agreement with Sakari soon, he should look to one of the other companies for a partnership

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