Managers' Forum ~ Business Case Reviews
Nora-Sakari: A Proposed Joint Venture in Malaysia
Business Case Review by: Milva Manninen
This business case review from Richard Ivey School
of Business examines
two companies from different parts of the world negotiating a joint-venture.
The difficulties they faced because of the cultural differences between
the
two companies.
Nora was a leading supplier of telecommunications
in Malaysia while
Sakari, a Finnish conglomerate, was a leader in manufacture of cellular
phone
sets and switching systems. The joint venture company, if established,
would
be set up in Malaysia to manufacture and commission digital switching
exchanges. These would then be provided for the telecom industry
in Malaysia
and in neighboring countries, particularly Indonesia and Thailand.
Both companies are very small sized compared to
the rest of their
industry so this joint-venture would be to both companies advantage.
Nora
had won a government deal in Malaysia to provide switching exchanges
supporting 800,000 telephone lines. Sakari on the other hand
was trying to
build a strong hold in the international market. The cultural
differences
between the two countries caused the negotiations to become very difficult.
The disagreement issues included; equity ownership, technology transfer,
royalty payment, expatriate’s salaries and perks, and arbitration.
This case really illustrates how important it is
to understand the
differences in cultures in order to successfully conduct business with
another country or in another country. It is not revealed if
the deal
actually happened but the lesson to be learned is that several of the
disputes could have been avoided if the two companies would have been
more
adaptive to the differences in the cultures.
Reference: Richard Ivey School of Business, Nora-Sakari:
A Proposed Joint
Venture in Malaysia. 95G002
