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 joint
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.

8.

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, Sakaris 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 joint
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 Joint 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