Nora Sakari Memo
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To: Mr. Zainal Hashim, Vice Chairman, Nora Holdings Sdn Bhd
Subject: Nora-Sakari Joint Venture Negotiations
I have assessed the current situation with respect to the potential Nora-Sakari joint venture. Negotiations have failed for the following reasons:
Nora and Sakari have different objectives. Nora is looking to acquire technology to fulfill its contract while expanding regionally. Sakari is looking to expand into South East Asia given its sizeable population and growth opportunities.
Nora accepts the risks associated with the joint venture. Sakaris tolerance for risk is divided where half of Sakaris management opposes this approach in favor of expansion into the United Kingdom via a wholly owned subsidiary, which carries less risk given its proximity and cultural similarity.
Dissimilar organizational cultures- Noras executives can make decisions. Complex or contentious decisions must be referred to Sakaris Board delaying the decision making process.
Organizations have not had the opportunity to establish a trusting relationship. Without trust, Nora could replicate Sakaris technology and Sakari would lose their competitive advantage.
Neither organization understands the culture of the country that the other organization operates in, as evidenced throughout the negotiation process. Noras experienced negotiator utilizes a collective approach that was successful in North American negotiations. Sakaris approach is individualistic and comes off as emotionless and inflexible.
Noras motivation is to acquire Sakaris technology in order to fulfill its contractual obligations and expand regionally. Sakaris motivation is international expansion, with a focus on South East Asia given the opportunity for growth. Despite different motivations, Nora and Sakari are equally necessary to each other if they want to penetrate emerging markets. A joint venture remains the best option for the following reasons:
To expand regionally and to remain compliant with the terms of the TMB contract Nora must find a partner whos switch technology is compliant with the Malaysian specs.
SK33 is an open architecture digital switching system. Unlike its competitors, SK33 components are freely available in the open market. Its modular based and adaptable technology can be easily upgraded which can result in the development of new switching systems
Sakari can cater to small and large exchanges and will customize the product according to Noras needs.
Given the government restrictions, Sakari must find a partner in order to expand into the Malaysian and South East Asian market and will benefit from the acquisition of local knowledge.
Nora