Nora-Sakari Case
2012
Tatevik Ghapantsyan
AMERICAN UNIVERSITY OF ARMENIA
5/24/2012
BUSINESS STRATEGY
Nora-Sakari: A proposed JV in Malaysia
Nora-Sakari: A proposed JV in Malaysia 1. Why have the 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?
The JV between Nora and Sakari was offered by Nora, Malaysian company which had already got the government order for providing 800,000 telephone lines during the 5 years. Company’s only opportunity to serve this order was JV with experienced company that possessed appropriate technologies for producing necessary equipment. They considered several opportunities but the best choice appeared to be Sakari, Finnish manufacturer of digital telecommunication switches. The advantages of Sakari were opportunity to make customized products and the fact that their switches were much more flexible due to an open architecture. In case of success this joint venture could become very efficient way for both companies reaching their objective.
NORA:
* Expanding market share in the own market by introducing new technology, * Learning from Sakari and later on adopting that technology, * Having capability to fulfill large orders, like government order.
SAKARI: * Chance to establish presence in south east region, which is a market with huge unexploited potential, * International diversification (taking existing product to new market), which will not require large investment, * Main expenses connected with the production are covered by Nora.
But Sakari has several concerns, which include using their technology by Nora in future and becoming their competitor and they wanted to get the order from UK, which was in process at that time. These two projects would be mutually exclusive because of small capabilities of the company. So they had to decide which strategy to adopt and many internal
Tatevik Ghapantsyan
AMERICAN UNIVERSITY OF ARMENIA
5/24/2012
BUSINESS STRATEGY
Nora-Sakari: A proposed JV in Malaysia
Nora-Sakari: A proposed JV in Malaysia 1. Why have the 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?
The JV between Nora and Sakari was offered by Nora, Malaysian company which had already got the government order for providing 800,000 telephone lines during the 5 years. Company’s only opportunity to serve this order was JV with experienced company that possessed appropriate technologies for producing necessary equipment. They considered several opportunities but the best choice appeared to be Sakari, Finnish manufacturer of digital telecommunication switches. The advantages of Sakari were opportunity to make customized products and the fact that their switches were much more flexible due to an open architecture. In case of success this joint venture could become very efficient way for both companies reaching their objective.
NORA:
* Expanding market share in the own market by introducing new technology, * Learning from Sakari and later on adopting that technology, * Having capability to fulfill large orders, like government order.
SAKARI: * Chance to establish presence in south east region, which is a market with huge unexploited potential, * International diversification (taking existing product to new market), which will not require large investment, * Main expenses connected with the production are covered by Nora.
But Sakari has several concerns, which include using their technology by Nora in future and becoming their competitor and they wanted to get the order from UK, which was in process at that time. These two projects would be mutually exclusive because of small capabilities of the company. So they had to decide which strategy to adopt and many internal