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to read pages 1-16 on the article called \"Nora-Sakari: A Proposed JV in Malaysia (Revised).\" Then answer these questions below:

Case: Nora-Sakari: A Proposed JV in Malaysia

1).Why have negotiations so far failed to result in an agreement? Is the formation of the JV between Nora and Sakari the best option for both companies to achieve their respective objectives?

2).As Zainal, what would you do to ensure that Nora fulfills the TMB contract?

3).If Zainal decides to renegotiate (and assuming that Kuusisto agreed), how should he restructure the terms of the deal?

Solution

The negotiations between Nora and Sakari have been taking over 2 years and amount of RM3 million has been spent in promoting the proposed JV between the 2 entities. However, agreement had not been reached and the participating companies were not sure about Joint Venture. Notable Differences in the work ethics and value sets of the two companies: Malaysian chosen a more centralized approach to decision making, as Nora’s executive had the authority to compose on the spot decisions related to the JV while on the other hand, the Sakari team had to tale every minute detail to the Company Board before they could take any deisions. Lack of trust between the contracting parties Sakari negotiators never show faith in the industry practices and ideologies of Nora. They were doubtful about a complete technology transfer agreement and provide only the basic structure of the digital switch. Nora was not happy with this proposal. Sakari planned a royalty payment of 5% on the JV gross sales while Nora proposed 2% on net sales.